The Buzz: Scottsdale Real Estate

I’m getting all sorts of requests for information about the ever changing real estate market in Scottsdale and the Greater Phoenix Metro Area.

It is easy to find statistics and opinions everywhere.  In general, here are the issues and forecasts as presented by some reliable economists (see below).  Although the real estate market in Scottsdale and Phoenix is sluggish, the long term forecast for Phoenix area is good.  In the meantime, the recovery is still at bay, for possibly 3 to 5 years. 

Today’s Local Market Facts

• Existing inventory of resale homes about 25,000 too many
• Excess builders inventory
• Foreclosures growing
• Median sales price for single family homes (Phoenix Metro) have declined 7.8% since the 4th quarter of 2006
• Lenders have much stricter requirements
• Many would be buyers need to sell a home first
• Economy is still stable  
• Economic Stimulus Package will make home loans more affordable

Predictions for 2008

• Prices will decline by another 10 – 15% ( this varies throughout the valley)
• More homes will sell towards the end of 2008
• Home building will decline

Indicators of a Recovery

• Inventory falls below a six month supply
• Most homes in foreclosure are resold
• Days on the market falls below 180 days
• Prices begin to climb

What Should You Do Now?

In a commentary dated February 14, 2008, NAR economist, Lawrence Yun references Warren Buffet’s investment philosophy that states “when everyone is greedy, be scared and when everyone is scared, be brave”.   Yun goes on to say: “Now, I am not an investment counselor and I do not encourage people to buy simply based on this logic. Rather, if people have the financial capacity and are looking for a home for the long haul, the fear factor should be put aside. Current situations in many local markets present a golden opportunity in attaining the American Dream with historically low interest rates.”  Personally, I think there is a great amount of truth in what he says.  I believe that the increased ceiling for Freddie Mac and Fannie Mae backed loans is good news for current homebuyers and that there are some great homes to buy in this market.

These observations are based on the following reliable economists comments. 

• Lawrence Yun, Chief Economist for NAR (National Association of Realtors)  is generally optimistic saying that “we will skirt a recession” due to job gains and housing affordability. Mr. Yun writes commentaries several times a week that you can check out here
• Dr. Jay Butler, a highly respected economist with Realty Studies at ASU gives very sound advice backed by local numbers.
• Elliot Pollack, a Phoenix economist,  spoke on the Phoenix Real Estate market at the Urban land Institute conference in January 2008.

I know that there are lots of real estate videos on You Tube but it’s Saturday morning and time for a diversion. 

I have a friend who always sends me the funniest photos and videos.  II don’t have time to read them as I can get as many as 8 per week so I set up a rule and they get filed automatically into my “Funny” folder.    This morning is one of those mornings I needed a diversion from all things real estate so into the Funny folder I went and have been laughing ever since.  

Here are the top two of the day:  Enjoy.

Frozen in Central Station

The Kissing Test

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Temporary Conventional Loan Limit Increase for Fannie Mae and Freddie Mac

HR 5140, the Economic Stimulus Act of 2008, has passed through the House and the Senate and is awaiting the President’s approval.  This bill could have some very positive effects for home buyers and sellers.

What does this mean to the home buyer?  Loans that conform to Fannie Mae and Freddie Mac loan limits have significantly better interest rates.  The increased loan limit could definitely inspire more home buyers to take action as it will make home ownership in the higher price ranges more affordable. Let’s hope it works.

I’ve heard the phrase "getting the market unstuck" and that seems appropriate.  Policy makers believe that the increase in the conforming loan limit will open up the market to more homebuyers and I certainly hope they are right as the average home price in Scottsdale is significantly higher than the current limit of $417,000. (See table below for current home prices in Scottsdale) 

HR 5140 itself doesn’t determine the new limits however it does state that these limits are temporary.  The window of opportunity will end December 31, 2008 according to this bill.  I believe the new limits will be set by the Secretary of Housing and Urban Development and I have heard that the limits will be as high as $635,000 to $730,000.

This is a huge increase by normal standards.  The annual increases are historically minimal.  In 2002, the limit was $300,700, and the increases through 2005 were between $10,000 and $25,000 annually.  The last increase in 2006 of $57,350 brings us to the current limit of $417,000.  An increased limit of $730,000 is $313,000 or 75% higher than the current limit. 

Prices of Scottsdale Single Family Homes for Sale

Just getting ready to go to a Super Bowl party (like probably 80% of the adults in the U.S.) but decided to first get this new blog up and active.  I’ve had a blog with Myst for the last year but had not been utilizing it fully so I cancelled it.  This is simple so we’ll see how it goes. 

One year, I actually did an Open House on Superbowl Sunday.  Wow! Was that a boring afternoon.  So today, I join the rest of the population for the great American tradition.  Go Patriots!  Anyone who has an unbeatable season deserves to win.