I was looking at comparables for a property and came across a fourplex I purchased in 2000 and sold in 2001. This was a repositioning strategy project. That means it was a mis-managed property with bad customers and low for the  market rents. It was easier to do these back then. 

This property has had an interesting history. It was built in 1981 before the 1980′s real estate boom in Arizona and the year we moved here from Austria.

Built in 1981 – not sure of the sale price.

1988: Sold for 5,000

1991: Went back to the bank in a foreclosure sale for ,000

1992: Purchased for ,000 from the bank. 

2000: Purchased by me for 9,000 – some fix up, new tenants, higher rents.

2001: Sold by me for 5,000 – good cap rate. 1031 into something bigger.

2004: Sold for 6,000 – still good return for buyer.

2005: Sold for 6,000 – crazy.

2006: Sold for 0,000 – crazy.

2011: Purchased for 8,000 as a short sale.

2012: Could probably be sold for 0,000-0,000

This is a clear example of why investment property should not be your own home. Your home is just that a shelter and home, but an investment is something else. This looks scary, but this property could have had the mortgage paid off 2-3 times over this period, assuming it was not purchased at peak and the mortgage would have been paid for by the tenants, the customers, but that is a separate topic.

Lately I have to tell a lot of people that ‘this home is pending’ or ‘under contract’ and sometimes I get a question, “what does that mean?”

It means that a seller and buyer have come to terms, to an agreement on the sale/purchase of that particular real estate and put in writing. The property is sold subject to the terms of the purchase contract and any addenda attached to it.

Once this happens the seller cannot accept another offer, unless that subsequent offer is in a back up position. A back up contract may go into the first position, subject to the term of the back up agreement, if the first position offer falls though. 

A transaction that is pending is one in which the seller has more confidence that the transaction will close. There are less contingencies to fulfill. 

A transaction is AWC when there is less certainty and security about the purchase contract. This is more common with short sales where there is an additional party involved in the decisions and sometimes bank owned properties. 

I’m seeing more AWC designations for normal sales.

It can be confusing. It is not something set in stone even though there are rules. Some agents leave a property active even though it is under contract, at least until the inspection period is over. This is a clear violation of the MLS rules and essentially false-advertising and very annoying. The proper designation would be AWC and once the property is over its inspection period Pending. 

Q. Can we put an offer on a house if it is currently under contract?

A. Yes, but.

You can put in an offer on a house that is already under contract if the seller will take it. The seller does not have to take any additional offers after a home is under contract. In fact, the seller is under no obligation to accept an offer period, ever and at any time. 

Though:

Once a home is under contract it’s under a legal document by which both parties have to abide or suffer the consequences if it is broken. 

Many times a seller will take subsequent offers from buyers even if the homes is already under contract, but those offers will be in a back-up position and there are usually additional clauses in the back-up contract protecting both the buyer and seller. 

It is common for sellers in a short sale situation to take back-up offers, because it is more common for the first position buyer to back out, when possible, for a multitude of reasons. One of which is getting tired of waiting for the bank’s approval or when the buyer found another home. Not to lose time, the seller will have a back up offer to put in place of the one that just fell through. Homes were a seller is more willing to take a back up offer are usually designated as AWC or active with contingency.

It is also possible that a seller will take a back up offer if he/she feels that the current buyer is not well qualified or that there is a chance the current offer will fall through.

Everyday we get multiple inquiries about specific properties from new visitors to our websites and these days well over 50% of the properties and in the last few days nearly 80% of the properties people inquire about I have to send back an email that the property is under contract. Most often these are short sale properties kept active to attract back up offers. However, often when one wants to make an appointment to view them, one is presented with a response akin to a brush off or commonly no response at all: these home should not be active, rather pending. The formal term is AWC or active with contingency. 

Anyway, there is a lack of inventory and it’s getting harder to buy a home. The graphs below make this fact rather clear, but actually being out in the field and trying to buy a home will make that even more clear.

2012 started of with only 3.2 month of inventory.

Compare that to the last few years. A nice balance in the market is somewhere around 5 months, in general. If the inventory goes above that, buyers have more choices and sellers have to be more appeasing if they are serious. Below that and buyers have to scramble against each other for the same limited product.  Notice now the peak inventory is usually February! Then notice what happens later. 

June and July are peak months for sold properties and the activity for this peak begins in the spring or about a month or two from now – normally. 

If inventory is so low now, how is the market going to look as we head into the busy season? There is no way to prepare, except to start now and be vigilant, active and financially prepared as a buyer.

→ Inventory levels by city.

→ Inventory levels by zip code.

Just to spice things up below is a graph of the median sales price of homes in Chandler and Phoenix. Things are looking up. Pun is intentional.

MANY PEOPLE selling their homes are still looking for prices higher than buyers are likely to pay – and the difference between asking and selling prices can be as much as 20 per cent.

For while property website surveys published this week show residential property price falls since the peak of the property boom of between 43 and 52 per cent nationally, estate agents say that actual selling prices are now down by around 60 per cent and more.

The lack of specific information about property sales prices means that buyers and sellers are still largely in the dark about what is actually happening in the property market.

This should change in June, when a property price register detailing recent sales, with addresses and prices, is published by the Property Services Regulatory Authority (PSRA).

The figures published by property websites MyHome and Daft are all based on asking prices.

Meanwhile, the CSO’s most recent residential property price index, published in late December, showed prices paid for property down by 52 per cent from the peak – but its figures are based on mortgage drawdowns and exclude cash transactions, which many agents now say account for one-third and more of their sales.

Sherry FitzGerald puts the fall in selling prices from the peak in 2006 at 62.4 per cent in Dublin, and at 59.8 per cent nationally. Douglas Newman Good’s CEO Keith Lowe puts the fall in greater Dublin at 65 per cent, while Edward Hanafin, a director with Lisney in Cork, says that prices there are off the peak by about 50-60 per cent “and more for apartments”.

Given the continued uncertainty of the market, and the probability that prices will continue to fall in 2012, what should people who still want to buy – or sell– this year do? At what level should buyers pitch an offer, and how can vendors put a realistic price on their home, given the uncertainty?

Sherry FitzGerald director Simon Ensor says that a further fall in prices of 5 to 10 per cent is a definite possibility, so if you’re making an offer on a property, you could pitch it by at least that much below the asking price. As always, of course, it depends on the kind and location of the property.

Ronan O’Driscoll, director of residential at Savills, says: “If you’re looking at an apartment in a rural location you could make a ridiculously lowball offer, and perhaps get a bargain, because there’s such a minute market for them.

“However, there’s little point bidding €150,000 for a three/four-bed semi in an established suburb of Dublin, Cork or Galway which has dropped in price from €700,000 to €350,000 since the peak.”

This is because the kind of property most in demand at the moment, according to most agents, is the solid three/four-bed suburban semi in areas not too far from city centres.

“Further depreciation of good family homes is less likely,” says Ensor, “because the buyer who might have bought a two-bed apartment will now go straight for the three-bed semi.”

Ensor says that there is more happening in the market than people think. “Some people who can buy are doing so. They just want to settle down, knowing they’ll be there for 25 years.”

MyHome managing director Angela Keegan agrees that prices for traditional three-bed semis are likely to stabilise first. But for sellers wondering how to price their property for sale “local information is absolutely critical” she says.

“You need to talk to people who have bought or sold in your area recently, and talk to local agents.”

Ronan O’Driscoll says that buyers who have a house to sell shouldn’t bother making an offer on another property, even if their home is in a good location: “Sell the house first and have a pile of money ready to pounce.”

Frank Conway of Moneycoach points out that sellers – many caught in negative equity – are seeking economic prices that will pay off their mortgage and advises sellers to ask for more than they might get, with a view to bartering.

He, like all pundits, agrees that lack of confidence and lack of credit are the main factors keeping the market subdued, and believes it will stay that way in 2012 until this changes.

Measures in last month’s budget – changes to mortgage interest relief, the capital gains tax incentive, continued low rate of stamp duty – are seen as possible positives for the property market for 2012. The effect of the planned property tax is as yet unknown.

But continued price falls are not necessarily bad, says Daft economist Ronan Lyons in the Daft price survey report. “ . . if the size of the correction in house prices is determined by fundamental factors, then it is better for the prices to race to the finishing line than crawl there”.

Report by FRANCES O’ROURKE – Irsih Times

Ireland Property – Daft Property – http://daftproperty.blogspot.com

It’s quite an exciting time in the Phoenix real estate market. Good things are happening, despite the continued distress in the housing market and overall economy. There are some negatives to this turn in the market and we’ll get into those, but they pale in comparison to what the market went through in the last half decade. 

This is now the year 2012 and it just keeps getting better. I know for many the financial and economic situations vary. In 2008/2009 when so few properties sold, it was hard to make ends meet and our reserves were depleted, the real estate portfolio value went down, even some properties were purchased a decade ago had no equity and the near future was bleak. Some people are still in hard times, but the important thing to remember is that the opportunity, the tools and options are there to improve life. They are there in much more abundance than a century ago. Despite the death of the short lived American Dream, it’s possible to have a decent life, but it takes effort and self reliance. 

The worst of it is behind us, at least for the short term and hopefully the politicians who are supposed to represent the people start doing so, instead of supporting themselves. Much of what happens, economically, will depend on them, but you can’t depend on them. I hope that makes sense. You may get social security, but plan on not getting it. You may always have a good job, but plan on other means of support. 

Maybe it’s the awesome weather we’re having, but I know 2012 will be great, but now let’s get into the past, into the most recent residential sales data in Greater Phoenix. 

The first striking number is active listings. With the help of Canadians amongst other, the inventory of active homes in Phoenix has been depleted to a measly 24,700 properties. Down from last month, last quarter and down nearly 20,000 units from December 2010. It’s simply mind boggling how the market has changed this last year. It’s even more amazing because the normal trend has been broken this year. 

Normally inventory increases and sales decrease in the late fall and early winter. Not this year. Sales have gone down, but I suspect that it’s more because of the lack of properties to buy rather than demand. 8,092 residential properties sold in December. It was 8,241 in 2010. 

Demand.

There are 18,221 properties under contract with contingencies and 9,086 are pending. Buyers are having to deal with multiple offers on most good properties and even cash buyers don’t have much of an upper hand because so many buyers right now are cash buyers.  

This insatiable demand has brought the market pleading for more inventory.

The supply is down to only 3.2 months. That is below a balanced market. And there is no hope for a flood of homes. We’ll surely see more homes for sale in Spring, but we’re not going to see any deluge of bank owned homes. Don’t expect it and don’t count on it. The banks don’t have it.

Many of the other indicators have followed the same path set by the high demand and low supply. That is, the active listings price per square foot is up to 3.13 over all previous periods, including last year, Pending price per square foot is up and even the sold price per square foot seems to have stabilized.

Part of this is simply the lack of inexpensive homes. Low numbers of low priced sales, mean the median prices get dragged up, thus the rather meaningless average price is up, the median annualized price is stabilized an the monthly median is up to 7,000, over 4,000 last quarter and 0,250 last year. 

There is no doubt that the market is improving. We may not have, real price appreciation, but that only happens once the sentiment toward the market changes and it is changing toward that direction.  Like I say, it’s not the moment that counts, but the trends. It’s easy to get intangled in small fluctuation, to flicker pebbles of a mountain, but it takes time and a lot of power to move a mountain and the market is a mountain, crumbling and changing, but still a mountain.

Lender Owned and Short Sale Segment

Bank owned properties continued their slide down and lower influence on the market. You can see why there are many fewer REO properties on the market on this new trustee sales graph just added to this site. It’s only for the city of Phoenix, but it represents a common theme seen with all cities in Greater Phoenix – that is, there are far fewer foreclosures and many of the trustee sales are now sold to third parties, thus avoiding going into the hands of banks and on to the market as, often, devastated properties.  

Not to devalue the influence of these things. They still make up a greater share of the active properties then they should, at 9% and 27% of sold properties, but clearly it’s not as insane as 20% of actives and 51% of solds as it was this time in 2010.

Short sales, too have declined. Active short sales have declined to 36% of actives from 38% last year, but sales have increased from 19% last year to 33% this year. Unlike for REO’s this is good, in the context of the current situation. It means that many properties sell before going into foreclosure and the system is somewhat working to muddle its way through the situation. Better short sales then foreclosures, despite the short comings of the short sale process.

Expect this trend to continue. That is, harder to get bank owned homes and just as many or slightly fewer short sale properties.

What’s Next

This market is better for sellers, many of them, but not all. It allows some of sell, and quite a few to sell and move up. That’s important.  There are actually a lot of people doing this.

Going into spring expect the market to really tighten up. It’s going to be even more difficult to find good homes for sale. Even though inventory increases in the spring, so does buyer activity. We have buyers from more sources now then just local. Buyers are coming from countries like China, Canada in addition other states in the USA: both for second homes and for investment properties. It’s going to be an interesting and frustrating year. 

Hopefully the many organizations and institutions, both in the public and private sector can get with the game and contribute to a recovery. Don’t count on it, especially in an election year. Then again every year seems like an election year. 

It’s going to take a lot for the economy to truly recover. It will take a mindset of common good. Currently we’re in a long term spiral down to lower wages, a lower standard of life for many and most importantly, less access to tools that allow a strong middle class. Maybe the Occupy movement will get some more traction and keep the conversation going. 

A hint of warning: this is the market as I see it. I have no bias either way: up or down. I write is as I see it. Sure I want the market to get better, but it’s not going to get that way by my saying so. Please do your own due-diligence, before making a decision, just be careful which data you use and how it is interpreted – there is a lot of bad, un-scrubbed data out there, and many biased opinions. Yeah, people, politicians, businesses and organizations have agendas.

Notices of trustee sale and the subsequent trustee deeds continue to decline. The graph below is a clear illustration of the decline and increased interest from third parties. Below the this image is a link to the interactive graph. Expect this trend to continue in 2012, making is more difficult to purchase bank owned homes.

Check out the live interactive graph of trustee deeds in Phoenix.

When the days are like they are in early Winter in Phoenix with weather perfect for wearing shorts and playing golf, basking in the sun, taking a hike or simply sitting on the patio and listening to the birds, it’s not surprising to learn that more Canadians have purchased real estate then in the past, especially with the high value of the Canadian dollar and the low prices of Phoenix real estate. It’s a perfect combination for both second home buyers and investor.

“In 2003 Canadians accounted for only 0.4% of real estate purchases in Greater Phoenix. Since 2008 they have been buying far more and now are buyers in about 4% of residential transactions.” → Cromford Report

Below is a map fo where Canadians are buying real estate in Greater Phoenix. There is a heavy concentration in Scottsdale, Cave Creek and Carefree, but also Anthem and pretty much everywhere that real estate was hit hard, and yes, even North Scottsdale was hit hard.

Look below the map for a link to a full sized interactive map.

We have a live interactive map in the Housing Section of the website, where you can dig in and even see individual property details. See the live map of where Canadians buy in Greater Phoenix.