Viewpoint

a Tale of Two Markets

Viewpoint 09/13/2011

a Tale of Two Markets

I haven't written many Viewpoints this year.  Not because I'm not following the market, and not because I don't enjoy writing, but because there haven't been many changes to write about.  We're already in September, and I haven't seen anything this year which is different from what I've written about over the last couple of years - how depressing...

Today I thought I'd share some thoughts on the current state of the market, as well as a few other interesting links.  Please read on.

Maricopa County Real Estate - A Tale of Two Markets

Links worth Reading

Evernote power tip

On a Personal Note

Maricopa County Real Estate - A Tale of Two Markets

It's definitely a seller's market out there.  Take a look at the current inventory level:

(all photos may be enlarged by clicking on them)

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12,491 Single Family homes for sale in Maricopa County.

Seems like a lot, until you compare that with the number of homes that have sold in the last 30 days (or are currently Pending Sale):

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15,264 Homes!  Holy Moly!

So, in 30 days, we'll put 15,265 homes into escrow, and there are currently 12,491 homes available for sale.  That means there's less than 1 month's inventory of homes available for sale!  Wow - that's a true seller's market.

And I'm not the only one seeing it.

Check out Dru Bloomfield, my friend & colleague, who wrote a post about a potential buyer trying to spread the word to would-be sellers out there that there aren't enough homes to buy.

Also see my broker & ultra blogger Jay Thompson, asking the mainstream media to mention some of the record sales numbers and other positives about the market, along with their usual doom & gloom stories.

Bottom Line - homes are flying off the shelves right now, often times with multiple offers and a bidding war among buyers (actual results for any given home &/or neighborhood may vary).  These are the sure signs of a seller's market.

It's definitely a buyer's market out there.  Take a look at the distressed activity and the sales prices from the charts below:

From my Distressed Activity post last month:

Occupancy of homes sold:

 

There are almost 3 times as many vacant homes selling as those which are occupied.  History, and common sense, tell us a seller with a vacant home will be more motivated to sell, and will most likely accept a lower sales price.  A 3 to 1 vacant home ratio is keeping prices low, which favors a buyer's market.

Type of Seller:

 

There are, and have been for the last couple of years, twice as many homes sold with some sort of bank-involvement than with traditional sellers who have equity in their home.  Again, we know banks are going to discount their homes more than traditional sellers want to.  So, the 2 to 1 bank-involved ratio works to keep prices low and favors the buyers.

From my Maricopa County Sales Charts post last month:

Average Price per Square Foot:

The average price per square foot is down 10% from last year, which was already much lower than the previous years.  It's lower than the previous bottom seen in January of this year, and it's trending downward over the last few months.  If this isn't a sure sign of a buyer's market, I don't know what is!

Next let's look at the foreclosure activity:

July 2011 Foreclosure Rate Heat Map:

Look at the foreclosure rate in these cities:

  • Laveen:  1 in every 22 homes is in some state of foreclosure
  • Queen Creek:  1 in every 37
  • Buckeye:  1 in every 50
  • Surprise:  1 in every 74
  • Gilbert:  1 in every 119
  • Peoria:  1 in every 173

There's no way the sellers can put upward pressure on prices when there are this many foreclosures.  And if there are this many foreclosures, with depressed pricing, in our suburbs, there's no way prices are going to trend significantly higher in the closer-in cities.  Score another point for a buyer's market.

The Tale of Two Markets

Ask any buyer out there, and it's a seller's market.  Not enough homes to choose from, homes are selling very quickly, the competition is fierce - it's just flat out difficult to buy a home right now.

Ask any seller out there, and it's a buyer's market.  Homes only get showing activity if they're priced very aggressively.  Even when competing against homes which aren't in as good shape - price higher to account for the higher quality, and risk sitting on the market while the other homes sell.  It's very difficult to sell your home right now, unless you're willing to compete heavily on price.

Personally, I've never seen such a two-headed market before.  And to be honest, I'm thankful for the number of investor-buyers out there who are absorbing the distressed activity as fast as they are.  If prices were higher, or interest rates were higher, or rents were lower..  If something changes and inventory starts to accumulate, we could be in for a world of hurt.  Fingers crossed we can keep moving forward until the eventual end of the bank-involved market, however long that takes.

Links Worth Reading

Inside and outside the industry, I found these links interesting.

Dru Bloomfield (mentioned twice in the same newsletter? – she had a great month of writing..!) found an inspection service which uses a special camera (infrared maybe?) to detect potential problems behind the walls.  Very cool.  Very useful.  Very James Bond. 

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Freshome.com published 30 Spectacular Infinity pools.  Summer's drawing to an end, but every one of these makes me want to jump in, relax, and find a cold beverage.  (while I eat my heart out!) 

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ZenHabits.net wrote The Amazing Power of Being Present.  A nice reminder of the need to, and some helpful hints for how to, slow down during a stressful, busy day.

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Economist Mish Shedlock wrote some Good news Bad news about foreclosures.  The news is better for states without judicial foreclosures, but bad news anywhere in the country is still an overall drag.

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Dilbert - we've all been there before!

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Evernote Power Tip - Linking to other notes

I’m an avid (evangelical?) user of Evernote.  One day soon I’ll write more about it, but for now I’ll just describe it like this:  Evernote is a place to remember and store EVERYTHING, and it’s always at your fingertips.  (and it’s FREE!)  I have it installed on my laptop, my desktop, my android phone, and an ipod touch, and all my notes are instantly available on every device.  Client notes, scanned pdf files, notes about the kids’ school and doctors, hotel confirmation numbers – everything – everywhere – easy.

If you haven’t used Evernote before, I suggest you check it out.  If you have, I thought you might like the following idea:

The newest version of Evernote’s Windows Desktop app (Version 4.5) allows you to link one note to another, and it’s really easy.  In the notes list, right-click on the note you want to link to (the destination note), and select Copy Note Link from the mouse menu that appears.  Then, in the note where you want the link, place your curser wherever you want the link, and hit paste.  (Edit => Paste, right click => paste, or ctrl + v  - they will all work).   You’ll see the title of the destination note in a hyperlink.  Easy peasy.

Here’s an example of where this would be useful.

Say you’re going on vacation, and you’ve done lots of research about where you’re going.  Maps, restaurants, entertainment and theme parks, hotel confirmation, whatever.

You can have one note called Vacation, which could serve as a table of contents, linking out to all your other research.  You might have one long note with lots of pictures & web clippings about things to do while you’re away.  You’ll have another note with hotel information.  You’ll have a third note with maps – screen clips, links to google maps, and directions.  Rental car confirmation.  A list of restaurants, with locations and menus clipped from the web.

Rather than trying to find the right note from your cell phone while you’re on the move, you can have one note easily accessible, with links to everything else you need.

Pretty cool feature.  I used to use this feature for my client files in OneNote; now that Evernote has it available I’ll probably start doing that as well.

On a Personal Note

I’ll call it a successful summer, all things considered.  (mostly considering the tough economic environment!)  The kids saw the beach (Santa Monica), the mountains (Pine, AZ), and the lake (Pleasant), and got to see plenty of family in between.  Plus a trip to the MLB All Star Weekend festivities.

Now we’re back in the school routine and heading full speed into fall.

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Your looking forward Realtor,

Chris Butterworth

Rentals, Investors, and the Future of the Market

Viewpoint 05/27/2011

Rentals, Investors, and the Future of the Market

First of all, I need to come right out and say it - there will be some over-simplifying in this Viewpoint.  We'll be discussing very complicated concepts with lots of variables and moving parts, yet this isn't a Harvard reviewed journal - my goal has always been to make things easier to understand and talk about.

Next we'll need to define a very important term:  "Normal Market".

Normal Market:  Think about the 1990's.  Relatively low interest rates.  (yes, 10% in 1991 seems high by today's standards, but it was much lower than the 15% from a few years earlier.)  Relatively stable appreciation.  People could buy a home, then sell it a few years later and buy a bigger home, using the proceeds from the sale as their down payment on the purchase.

Example:  My wife & I bought our first home in 1995 for $132,000, making a 10% down payment.  In 1998 we sold that 3-bedroom home for $160,000, and used the proceeds ($38,000 give or take) as the down payment on our larger, 4-bedroom home.  Our appreciation was a little higher than expected; we were fortunate enough to buy in a desirable neighborhood which was going through a renaissance of sorts.

It might be a generation (20-25 years) before we return to that kind of Normal.  Everyone who bought a house after the year 2000 has been severely impacted by the Great Recession and the decimation of home prices.  Many, if not most, who bought during the peak boom years (2004 - 2006) have lost their home.  Good news is they aren't burdened by negative equity; bad news is they have to start saving for a down payment all over again, along with rebuilding their credit.  Those who bought earlier in the decade are sitting in homes worth about what they paid for them, maybe even less.  Good news is they've paid close to 10 years on their mortgage, and they might have even taken advantage of mortgage rates in the 4's to refinance to a 15 year loan.  Those who bought late in the decade are in a similar position as the early-decade buyers, except they are starting with a brand new mortgage.

So, if it's going to be that long before the market is Normal, what are we left with?

Who are today's homeowners?

1. First-time buyers.  Lots of first-timers have joined the ranks of homeownership over the last few years, especially during the tax credit craze in 2009.  The vast majority of these purchases have been at the lower end of the pricing spectrum - buying either fixer-uppers which have been foreclosed by the bank or already-fixed-up homes from investors (usually).

2. Investors, however, have been the largest pool of buyers over the last several years.  And investors do 2 things with their houses:

a) Fix n Flip - they make the homes pretty & sell them for a profit, often to a first-timer.

b) Fix n Hold - they make the homes pretty & rent them out, often to people who have lost their own home.

3. Longer term homeowners.  Those who bought their homes before the big boom.  Many of these folks are somewhat stuck in their homes, unable or unwilling to make a move until the market heals.

How will these homeowners impact us, and/or be impacted by us?

Let's talk about 1 & 3 first; they're the easiest.

Many first-time buyers are in great shape today.  Imagine being in your 20s and owning a 3-bedroom home which you only paid $120,000 for, financed at 5.5%.  Today you're carrying an FHA mortgage at under $1,000 per month.  And that's on a fixed rate, can never increase, will be paid off in 30 years, mortgage!

Granted, the job market isn't what we'd like it to be.  Nor is the housing market.  So these kids can't move at the drop of a hat.  But, if they stick around for a few years (5, 7, 10..?)  Pretty soon they're making more money, they have equity in this home, and they can think about moving.  They'll have the option of either selling this home (like my personal example above), or keeping it as a long-term rental - eventually this home could be paid for, free & clear, and generating income every month for the rest of their lives!

Longer term homeowners are in a position which isn't too much different.  The job market and home market are dictating they need to stay put today, but eventually our economy recovers and they'll be in a position to make a move.  However, I bet there are many people out there who originally wanted to move, but after being in their home for longer than they wanted, have seen their lives move on while their mortgage has gotten smaller - there will be plenty of people who decide to stay put and pay their home off completely.

And that brings us to the investors - the largest group of recent buyers.  What will happen to them over the next few/several years?  Or more importantly to us non-investors, how will they affect us over the coming decade?

Investor Mindset - Profits

An investor buys a home as a tool to help turn his money into more money.  This can be done in a couple different ways:

1. Rental Income.  If you buy a home for $120,000 and pay cash for it, you've invested $120,000 but you don't have any monthly mortgage payments.  If you can rent that house out for $1,000 per month, you'll earn $12,000 per year, which is a 10% Return On your Investment (ROI).  (yes, I'm ignoring taxes, insurance, vacancy, maintenance, etc. etc. - simplicity, remember?)

The example above works even if the home isn't bought with cash.  If the investor puts $12,000 into the home (10%) and borrows the rest, he only needs to earn $100 per month, which is $1,200 per year, to earn that same 10% ROI.  So as long as the rent covers his mortgage payments, this is equally profitable.

2. Profits from Sale.  Let's again assume you pay cash for a $120,000 home.  You rent it out for whatever the market bears - $700, $800, $900?  But then, after a few years, the market comes back, home prices go up, and you sell the house for $160,000.  You end up earning $40,000 in rents and then $40,000 in profits:  $80,000 (a 67% ROI) in 4 years.

So, given that, investors stand to make more money when either rent rates or home prices rise.

What happens next?

We talk about recovery and getting back to normal, mostly while looking at the inventory of homes hitting the market for sale.  I've written many times about the distressed and vacant listings being a leading indicator for the recovery.

But I haven't heard anybody address the concept of these thousands of investor-owned homes as a sort of hidden inventory.  The recovery works well if these homes are permanently "off the market".  But what happens if, as prices rise, investors begin putting homes up for sale?  One or two at a time won't have any effect on prices.  Thousands at a time would affect the market the same way thousands of bank-owned homes are doing today.  And if there's an avalanche of new listings competing with each other..  It'll cause the triple dip!

So these investor-owners, the very ones who are saving our collective bacon today by clearing thousands of listings from the market each month, could become a serious headwind against the recovery if they decide to liquidate their holdings as prices rise.

Next let's look at interest rates.

Interest rates are low, and have been for a decade and a half.  But that doesn't mean they can't rise again.  In fact, the longer our economic problems play out, the greater the likelihood that the bond market will push interest rates higher - long before the Federal Reserve decides to take action.  (And if that happens, look out.  Ask Greece what it feels like to lose the market's trust.)

What would happen if interest rates go back to 10%?

That $120,000 home I mentioned earlier, the one a first-time buyer could buy for less than $1,000 per month..  At 10% interest, that same home now carries a monthly payment of about $1,300.  That's a BIG difference.  $300 per month (30%) more for the exact same house at the exact same price.

So our first-time homebuyer has to make a choice:

a) Buy the house and spend 30% more each month on housing payments.

b) Buy a less expensive house to keep the $1,000 monthly housing budget in tact.  (about $85,000 in this example)

c) Forget buying and continue to rent.

Let's assume some first-time buyers choose each of the three choices - some stretch their budget, some buy a smaller home, and others decide not to buy.

We all know about supply and demand's effects on prices.  This scenario would have a negative impact on demand.  1/3 of all these buyers decide to rent, which reduces the demand for homes to buy (but increases the demand for rent...)  Another third of the buyers are going to move their demand to a lower price range - this should put downward pressure on prices at the $120,000 range, yet potentially put upward pressure on prices at the $85,000 range.  And, since 2/3 of the buyers are not looking at $120,000 homes, the lack of demand should put further downward pressure on prices.

Now, while housing prices are probably falling, rental rates could very well rise.  Rents are usually in balance not as much with housing prices, but with the cost of owning a home.  If the cost of owning a home increases by 30%, it's very likely that investor-owners will be able to ask a higher amount for rent.  When it cost $1,000 per month to buy a 3-bedroom home, the rent might have been $900.  But when it costs $1,300 per month to buy, there's a lot of room for rents to increase.  Add in the extra demand from those who can no longer afford to buy, and there's quite a bit of upward pressure on rents.

Let's recap..

Prices are about as low as we can imagine.  Yet rising prices could trigger investors to sell.  And if enough investors sell, they could add enough inventory to causes prices to fall.  So, rising prices could cause falling prices.

Interest rates are at historical lows, coming off record lows just a few months ago.  It's hard to imagine interest rates going anywhere but up.  Yet, rising interest rates could have a negative impact on prices and a negative impact (to the consumer) on rental rates.

In the end..

I can talk about home prices and what-ifs all day long, but when the dust settles and the smoke clears, it's still all about jobs.  As long as the unemployment rate falls, and people can find jobs &/or feel more secure about the job they have, the rest will take care of itself.

It's hard to budget when you don't have any income.  And it's hard to get excited about moving when you're afraid you're going to lose your job.

Sometimes we forget about a key variable outside of our current discussion.  Yes, there are a lot of investor-owned homes which could hit the market as inventory.  But there are also a lot of people who have been taken out of the labor market, who could enter again and hit the market as buyers.

What will happen?  I don't know.  We're in uncharted times.  But I have a much better understanding today of how my grandfather must have felt in the late 1930's.

Your looking forward to the Roaring 20's Realtor,

Chris Butterworth

Pleasant Valley – Neighborhood Spotlight

Viewpoint 4/28/2011

Pleasant Valley – Neighborhood Spotlight

Sometimes a single neighborhood can act as a microcosm for the city as a whole.  Yes, this is contrary to my normal disclaimer about market conditions varying greatly from city to city and neighborhood to neighborhood.  But hear me out..

Pleasant Valley is a medium sized subdivision in the northwest valley.  I’d call it upper-middle class; the kind of homes which feel like luxury to those who aren’t used to such things, but which the truly affluent would turn their nose up at.  Spacious homes (2,800 – 4,500 sqft), large lots, and the surrounding by mountain views help keep the neighborhood a desirable place to live.

PleasantValley

The subdivision was built out in the early to mid 2000’s, far enough away from the hustle & bustle to feel tranquil, yet only a few minutes away from amenities and infrastructure.

OK – this is starting to sound like an advertisement – why am I bringing all this up?  Because these facts show what the neighborhood has been through:

  • Some homeowners bought before the price run-ups in 2004-2006.
  • Most homeowners bought during the boom years.
  • Prices went through the roof and have since been decimated.
  • Many people lost their home.
  • Through all this the neighborhood has remained a desirable location.  (much the way Phoenix is still a destination city for people in other parts of the country.)

Let’s take a look at Pleasant Valley in detail, through the ups and downs, and see if we can extrapolate any information for the greater Phoenix area at large.

Historical Data

Number of Sales per Quarter (Red) and

Average Sales Price per Quarter (Blue)

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The red line (# of sales) shows us an obvious seasonality – sales peak in Q2 and Q3, then dip in Q4 and Q1.  This is true of Maricopa County as a whole, although it’s more pronounced in Pleasant Valley.

But unlike Maricopa County, this also shows us an upward trend through the boom and bust years.  (I placed a marker on the chart to represent April, 2011 * 3, since the Q2 number is falsely shown as one month.)  2009 was a big sales year for the county, but it was not 50% bigger than 2005.

The blue line mirrors Maricopa County much more closely – a price run-up of about 150% from 2003 into 2006, then a slow decline through 2007, then a sharp drop-off in 2008.  Prices today are slightly less than they were in 2003.

Here are the actual numbers (for my number crunchers out there.)

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Occupancy

Now let’s take a look at distressed activity.  MLS didn’t always require sellers to identify short sales and lender-owned property, so I’m using occupancy for the chart below.

Owner Occupied Sales (red) and Vacant Sales (blue)

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Again the trend is similar to, but not exactly like, Maricopa County as a whole.  More owner occupied sales early in the decade.  More vacant sales in 2008 and 2009.  Fairly even in 2010 and 2011.

Next I wonder how many of those owner occupied sales could still be distressed.  I said before MLS didn’t require a short sale notification until a couple years ago, so let’s look at the recent data:

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Hmmm.  OK – so even though the owner occupied and vacant sales numbers were about even over the last couple of years, the owner occupied sales are heavily weighted with short sales.  In 2010, there were 24 distressed sales compared with 10 non-distressed.  And in Q1 2011 the numbers were 7 to 1 – wow!

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Current Market Analysis

Looking at the historical numbers above, it’s pretty easy to think this is a neighborhood in trouble – a real buyer’s market.  Prices are way down from their peaks, and bank/distressed activity dominates the market.  Well, not so fast…

Recent Sales

These are the homes which have sold since 1/1/2011.

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Of note:

  • 12 sales in the last 120 days, an average of 3 sales per month.
  • Avg CDOM (Cumulative Days On Market) hovers around 2 months.
  • Avg Sold Price is very close to Avg List price – no big discounting going on recently.

Current Listings

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Of note:

  • 1 Active listing.  Read that again – 1 house is for sale.  (and quite frankly it’s listed at a price so far above the market that it’s not really a listing – leaving 0 homes available to buy at today’s prices.)
  • 7 Pending Sales – these are homes which have negotiated through the contract and are heading towards closing.
  • 8 Active With Contingencies – these are homes which have offers on them but which are still negotiating &/or looking for backup offers.

If you count the Pending and AWC as “homes which have been for sale but which are no longer available”, and add them to the homes which have sold, here’s what you get:

  • 28 homes have been available for sale this year.
  • 27 homes have been bought.
  • 1 home remains available – the one asking $200,000 above market price.

So now I ask – is it really a buyers’ market?

Kind of, but not really.  If you wanted to buy a home in Pleasant Valley today, I can’t take you over there, show you all the available inventory, and ask you to take your pick of the litter – and then advise you to make a low-ball offer to some desperate seller.  Not possible.  (and not advisable).

But it’s not a sellers’ market either.  Even though there are more buyers than sellers right now, sellers aren’t afforded the luxury of padding their price.  The market is ruthlessly efficient right now; buyers will bid against each other for properties priced fairly, but will demand discounts from homes which are overpriced.

This is true for most of Phoenix right now.

Buyers can get great homes at great prices, but only when you compare those prices in a big-picture, historical context.  Getting into Pleasant Valley at prices less than what the builder originally sold them for – that’s awesome!  But don’t think you can walk into any listing and offer 70% of their asking price – not gonna happen.

Sellers can unload a home in a matter of days, if it’s in good condition and priced aggressively.  In fact, they might even start a bidding war among multiple buyers.  But don’t think it’s a sellers’ market and you can ask 5% more than the last home sold for – that’s not gonna happen either.

We’re in a strange market right now.  It’s been this way for quite awhile, and it’ll be this way for longer than we’d like.  Buyers get frustrated because they have to compete so hard to buy the home they really want.  Sellers get frustrated because there are so many buyers, but none of them will pay what the seller really wants to receive.

Buyers – plan on spending a little more than you expected.

Sellers – plan on receiving a little less than you expected.

Once we get realistic expectations in place, the market isn’t so bad – there are plenty of homes selling.  No need to be frustrated, right?

Your trying to keep frustration at bay Realtor,

Chris Butterworth

Income and Wealth Distribution in the United States

These numbers are staggering, and I’ve now seen them in 2 different sources.

The Wealth-Income Pyramid, from zerohedge.com:
“The key to understanding “recession” and “recovery”:  The Wealth Pyramid
The top 20% are prospering and spending money; the bottom 80% are not, but thanks to vast wealth disparity, the top slice of households can keep consumer spending aloft.  This provides an illusion of “recovery” that masks the insecurity and decline of the bottom 80%”


“This goes a long way to explaining how "consumer spending" can be "recovering" even as the incomes of the bottom 80% stagnate or fall. The top 5% of Americans by income are responsible for 37% of all consumer spending-- about the same as the entire bottom 80% by income (39.5%).”
I recommend reading the entire article; the author does a good job of showing 2 different classes of Americans – the haves and the have-nots.

Of the 1%, By the 1%, For the 1%, from Vanity Fair:
“Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.”

“It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall.”
The article goes on to outline several reasons why the growing disparity between the wealthy and the poor will ultimately be bad for the country as a whole.

My Viewpoint (the short version):

I grew up a staunch believer in big capitalism and small government – you work hard, you create value, you get rewarded.  I’ve moderated over the years, becoming much more liberal, especially socially.  But articles like these bring what we’re seeing and hearing from people we talk with out into the open.

The have-nots ARE working hard, sometimes working 2 or 3 jobs, but they aren’t getting rewarded.  The current system/environment, especially with its high unemployment, feels like a throwback to the times of the industrial revolution – “if you won’t do this hard work for this low pay, there are 100 people in line behind you who will.”  Meanwhile the CEOs and land-owners are getting rich.

Yes, it’s fair, and it’s the capitalism our county was founded on.  But our country was also founded on fairness and equality – no unfair taxes just to line the King’s pockets, all men were created equal, and all that jazz.  The current wealth gap is starting to breach these fundamental values.

I don’t know what the answer is – I’m certainly not a politician – but something’s gotta give at some point…

Your working to get by Realtor,

Chris Butterworth

Maricopa County Sales Charts – March 2011

Here’s a look at the recent trends county-wide.  I’m pulling a rolling 13-month history so we can see the last year’s trends plus a comparison of this month to the same month last year.

Specific Zip Code reports are now available!  If you’d like to see how the sales activity in your zip code compares with the county as a whole, just click here to sign up, and you’ll receive your zip code report via email each month.

and now, on to the reports.  (click each chart to embiggen)

Number of Homes Sold by Month

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Average Sold Price

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Average Price per Square Foot

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Average Number of Days on Market

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** The data for all these charts represents Single Family Homes sold in Maricopa County via the MLS.  All data was pulled from the Arizona Regional Multiple Listing Service, and is thought to be accurate but is not guaranteed.  Please do not make any life-changing decisions based solely on the information contained herein.

My Viewpoint?  I’ve said many times before that you can’t make a trend out of one month.  But it’s still nice to see every chart moving in the right direction – sales are up, prices are up, days on market are down.  Personally, I’ll hold my applause until I see the Distressed Activity Charts moving in the right direction…

Questions, comments, suggestions?  Please give us a call/email anytime – we’d love to hear from you!

Your keeping an eye on the trends Realtor,

Chris Butterworth

Are Property Taxes a Perpetual Liability?

I thought this was interesting..

Economist Mish Shedlock published an email correspondence with a reader, where they discuss the concept of property taxes being similar to a mortgage you can never pay off.

Imagine the perpetual loan, a loan that no matter what you do, you can never pay off. To help conceptualize the idea, think of it as a perpetual interest-only loan in which you are forbidden to completely pay off principal.
As preposterous as that deal may sound, it is highly likely you are in one.
If you own a house, you are in exactly that deal, except it conveniently not called interest. Instead it's called a property tax.

It’s a thought provoking discussion, but I’m not sure they’re looking at all angles..

My Viewpoint:

Property Taxes are just another option our government(s) have of raising the funds they need.  If they don’t have property taxes, the funds will come from somewhere else, such as increases in sales or income taxes.  In addition, they aren’t necessarily a penalty against homeowners, because renters live in a home which is still “owned”, even if by somebody else.

What would happen if the local government decides to raise property taxes aggressively?

The first round or two of property tax increases won't make a big difference.  (and that's assuming they can even get passed when put to a vote.)  Eventually though, higher taxes will make owning a home noticeably more expensive.  This will cause 1 of 2 things to happen:

1) Property owners (landlords) pass this increase on in the form of higher rents.  If this happens, nothing changes in the rent vs buy discussion, and the city/state gets their extra revenue.

2) Renters refuse to pay the higher costs - either by moving to less expensive housing or by finding a landlord who isn't trying to pass on the extra cost.  (renters have more flexibility to move on shorter time horizons.) If this happens, the gap between renting and buying will grow, and home prices will fall.  Falling home prices reduces the property tax valuation, so the city/state ends up without any increased revenue - a scenario with the same deficits but less ammunition to fight them (and a host of angry homeowners.)

In normal times, outcome #1 is feasible.  Today, I'm leaning towards #2.

Your would prefer lower taxes Realtor,

Chris Butterworth

Interview with a Lender, part 2

My interview with a Lender covered so many topics I couldn’t fit it all into one Viewpoint.  In this week’s follow-up we cover foreclosures and title insurance, inflation vs deflation with respects to interest rates, changes at FHA, and the average American consumer.

Read the Viewpoint here.

See our Viewpoint archives page here.

Sign up to receive these Viewpoints by email here.

Your feeling a little smarter after this interview Realtor,

Chris Butterworth

Interview with a Lender

Last week’s Viewpoint takes a good look at what’s happening in the lending industry these days, including a few changes which were implemented this year.  I think it’s a good read whether or not you’re in the industry…

Read the Viewpoint here.

See our Viewpoint archives page here.

Sign up to receive these Viewpoints by email here.

Your sharing his viewpoint Realtor,

Chris Butterworth

The Case Against “The Case Against Home Ownership.”

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Last week’s Viewpoint takes Time Magazine to task for their recent articles’ short-sightedness in trying to build a case against home ownership.  It’s a good read for anyone weighing the pros & cons of renting compared with buying…

Read the Viewpoint here.

See our Viewpoint archives page here.

Sign up to receive these Viewpoints by email here.

Your sharing his viewpoint Realtor,

Chris Butterworth

Viewpoint – Statistics: Do you even know what you’re saying?!

Statistics: Do you even know what you’re saying?!

In our Viewpoint e-newsletter we break down today’s real estate market & statistics, economic environment, and current headlines in an attempt to better understand where we are and where we’re headed.

Yesterday we sent out another issue, “Statistics: Do you even know what you’re saying?!”, which looks at numbers being reported by the media and what they really mean.

newspaper2 Read the full article.

library-books Visit our newsletter archives.

rss_48 Sign up today, and receive our e-newsletters as soon as they’re released!

Please give it a read; we think you’ll find it valuable.

Your sharing his viewpoint Realtor,

Chris Butterworth

Viewpoint – the Rich get Richer

The Rich get Richer

In our Viewpoint e-newsletter we break down today’s real estate market & statistics, economic environment, and current headlines in an attempt to better understand where we are and where we’re headed.

Yesterday we sent out another issue, “the Rich get Richer”, which looks at how various parts of Phoenix have fared over the last few years, and what you can do to maximize the investment portion of your homeownership experience.

newspaper2 Read the full article.

library-books Visit our newsletter archives.

rss_48 Sign up today, and receive our e-newsletters as soon as they’re released!

Please give it a read; we think you’ll find it valuable.

Your sharing his viewpoint Realtor,

Chris Butterworth

Viewpoint – How Arizona’s financial woes will affect your home’s value

How Arizona’s financial woes will affect your home’s value

Earlier this week we sent out our Viewpoint e-newsletter, where we break down today’s real estate market, economic environment, and current headlines in an attempt to better understand where we are and where we’re headed.

Read the full article here.

Here’s our newsletter archive page, where you’ll find previous articles which might interest you.

Here’s where you can sign up to receive our e-newsletters by email as soon as they’re released.

Please give it a read; we think you’ll find it interesting.

Your telling it like it is Realtor,

Chris Butterworth

Viewpoint – is now *Really* the right time to buy?

Is now *Really* the right time to buy?

We sent out our Viewpoint e-newsletter yesterday, where we break down today’s real estate market & economic environment in an attempt to better understand where we are and where we’re headed.

Here’s the full article, taking a detailed look at the rent vs buy debate.

Here’s our newsletter archive page, where you’ll find previous articles which might interest you.

Here’s where you can sign up to receive our e-newsletters by email as soon as they’re released.

Please give it a read; we hope you find it interesting.

Your having lived on both sides of the equation Realtor,

Chris Butterworth

Viewpoint – 3 Directions 2010 could take

3 Directions 2010 could take

We released our Viewpoint e-newsletter yesterday, and have agreed to make it available online for those of you who prefer feed-readers to email inboxes.  (Thanks, Dru, for the well-intentioned kick in the butt!)

Here’s the Water Cooler Sound-Bite:

2009 saw a lot of sales volume, but it was offset by the amount of new distressed listings hitting the market. Unfortunately the market won’t recover in earnest until the bank-owned REOs stop coming in waves, which is likely to be in 2011.

Here’s a link to the full article (including lots of charts, graphs, and opinions.)

Here’s a link to our newsletter archive page, where you can read previous newsletters that interest you.

Here’s where you can sign up to receive these newsletters via email.

Give it a read, and please let us know what you think.

Your sharing his viewpoint Realtor,

Chris Butterworth