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2014 Phoenix: Time to Buy?

Phoenix looks great for first time buyers. Prices per square foot are at their highest rate since August of 2008, which is an average of $131 per sq ft for residential resale homes. In August of 2011, the valley hit a low point of $79 per sq ft, so this rise in 28 months is very encouraging. The valley is just about where it would be in price per square foot if normal inflation had transpired (sans the dramatic roller coaster ride) from 2001 to 2013. Investors gobbled up cheap properties with glee when the prices hit rock bottom in the winter 2008. Multiple offers were common on lower priced properties with investors purchasing with cash clearing the playing field of first time buyers needing to finance with VA and FHA loans. Even those buyers with conventional loans were no match to cash waving investors. The Price Per Sq Foot rise signals the end of the long goodbye to investors who started to leave the valley slowly in the spring of 2012.  With most of the investors gone, firScreen Shot 2013-12-27 at 12.18.27 PMst time buyers can now have their turn purchasing homes on the lower to mid-range segment of the market.

*Data is provided by Michael Orr, Director, Center for Real Estate Theory and Practice, ASU, 12/17/13. 

Posted in Arizona Real Estate, Cave Creek Real Estate, Chandler, Chandler AZ, Gilbert Real Estate, Glendale Real Estate, Gold Canyon Real Estate, Mesa Real Estate, Paradise Valley Real Estate, Peoria Real Estate, Phoenix Real Estate, Queen Creek Real Estate, Real Estate Market Outlook, Scottsdale Real estate, Sun Lakes Real Estate, tempe, Tempe Real Estate, Uncategorized | Tagged | Leave a comment

No Housing Bust in Sight for Phoenix

Reporter-Phoenix Business Journal

Rumors have been percolating lately that the rapid rebound of the metro Phoenix housing market may soon lead to another bust.

Arizona State University’s Michael Orr, on the other hand, thinks that notion is ludicrous — so much so that he carved out a new section of his latest monthly housing report to debunking it.

The speculation refers to the thousands of metro Phoenix homes that were scooped up by small and large institutional investors during the downturn. Many of those properties have since been flipped into income-generating rentals, largely providing housing for those who lost their homes during that time.

But for the past year or so, Valley home prices have been rebounding much faster than anyone had previously predicted. Orr’s latest report, released Monday,indicated a 30 percent year-over-year spike in the Valleywide median home price in April.

Some now fear that the price surge will entice those same investors to soon dump those properties back on the market all at once.

But Orr believes the impact that investors have had, and could have, on the market is largely overstated.

“Such talk gets a lot of attention because we are over-sensitized to bubble talk after the disruptive events of 2004 to 2006,” Orr said in the report. “However, this idea falls flat when we examine the actual number of homes involved.”

Investors went on a “buying spree” when foreclosures and short sales began flooding the market several years ago. Institutional investor activity peaked last summer — New York-based Blackstone Group LP being the most active by far — but has since waned as prices have increased, foreclosures have taken a nosedive and there’s a severe shortage of homes for sale.

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Phoenix Real Estate Investors Consider Selling

By Catherine ReagorThe Republic | azcentral.comFri Jun 7, 2013 4:45 PM

Two of metro Phoenix’s biggest housing investors are more concerned with selling than buying right now.

Scottsdale-based American Residential Properties raised $287.7 million in an initial public offering last month. The real-estate investment trust sold 13.7 million shares of stock at $21 each.

Scottsdale-based Colony American Homes had planned to raise $260 million through an IPO on Wednesday but postponed it because of falling REIT prices. REIT share prices have fallen more than 10 percent since mid-May.

There is no word yet on when the division of Santa Monica, Calif.-based Colony Capital plans to reschedule its public offering. Colony had expected to sell 20 million shares Wednesday.

Both American Residential and Colony American own thousands of metro Phoenix homes that they rent out. The landlord companies purchased many foreclosures and short-sale houses, but those bargains are much more difficult to find in the Valley’s housing market now.

Both companies have said they plan to hold their houses in metro Phoenix for at least a few years. Both companies also have slowed their buying in metro Phoenix this year because of rising home prices.

Some market watchers are concerned about the impact large institutional homebuyers such as American Residential, Colony American and New York-based Blackstone will have on metro Phoenix’s market.

Tom Ruff, Information Market real-estate analyst, said the biggest home investors own a total of 10,000 Valley houses. That is less than 1 percent of the region’s 1.5 million homes.

Some interesting research from Ruff: The median price big investors paid for a Phoenix house was $106,500 in 2012, and $121,000 so far this year. The typical house purchased by the big investors has 1,626 square feet, four bedrooms, two bathrooms, was built in 2004 and needs some work.

Cushman & Wakefield addition

A well-known group of office brokers has switched brokerages. Jerry Noble, Patrick Devine, Greg Mayer and Ashley Bourget have joined Phoenix’s Cushman & Wakefield office from CBRE.

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Incredible rise! Phoenix median home price up 60%

By Catherine ReagorThe Republic | azcentral.comMon Jun 10, 2013 5:26 PM

Metro Phoenix’s median home-sales price climbed to $181,399, an almost 60 percent increase from the real estate crash’s low price in August 2011.

Despite the increase in sales prices, Arizona State University real estate analyst Mike Orr doesn’t project another housing bubble in the Phoenix area anytime soon.

“We predicted prices would rise significantly during the strong annual buying season that lasts until June,” said Orr, director of the Center for Real Estate and Practice at ASU’s W.P. Carey School of Business.

The main reason for higher home sales prices is the chronic shortage of available houses for sale in the Phoenix area, he said. The number of houses listed for sale in the region fell 7.3 percent in April.

Because of rapidly rising home prices, some market watchers are concerned that many investors who bought inexpensive short sale and foreclosure homes and turned them into rentals during the past few years, will try to resell those homes now and create a bubble of oversupply.

“Some commentators talk ominously of a bubble bursting when these homes come back onto the market,” Orr said. “Such talk gets a lot of attention because we are over-sensitized to bubble talk after the disruptive events of 2004 to 2006.”

He said even if all the big investors put their homes on the market next month, that would only add 10,000 to 11,000 houses to the number of listings, and the Valley’s market would still be undersupplied based on demand.

Rising mortgage interest rates are another concern for some housing analysts and prospective buyers.

Orr said sometimes higher interest rates create a greater sense of urgency for homebuyers, which works to increase to demand instead of reducing it.

His forecast is for metro Phoenix home sales prices to continue to climb in coming months, but at a slower pace.

Posted in Arizona Real Estate, Carefree Real Estate, Cave Creek Real Estate, Gilbert Real Estate, Glendale Real Estate, Gold Canyon Real Estate, Mesa Real Estate, Paradise Valley Real Estate, Peoria Real Estate, Phoenix Real Estate, Queen Creek Real Estate, Real Estate Market Outlook, Scottsdale Real estate, Sun Lakes Real Estate, Tempe Real Estate | Tagged , | Leave a comment