<?xml version="1.0" encoding="UTF-8" ?>
<rss version="2.0" xmlns:atom="http://www.w3.org/2005/Atom">
    <channel>
        <atom:link href="http://www.phoenixmarkettrends.com/blog/rss/" rel="self" type="application/rss+xml" />
        <title>Trends</title>
        <link>http://www.phoenixmarkettrends.com/blog/</link>
        <description>Over 1,500 posts and articles about living in Phoenix, Phoenix real estate market trends and the process and business or real estate. </description>
        <item>
            <guid>http://www.phoenixmarkettrends.com/blog/monthly-median-sales-update.html</guid>
            <link>http://www.phoenixmarkettrends.com/blog/monthly-median-sales-update.html</link>
            <author>artur@inphoenix.com (Artur Ciesielski)</author>
            <title>Monthly Median Sales Update</title>
            <description> <![CDATA[ 
If you're in the market at all lately, you've probably noticed a lack of homes to buy and higher prices. Your notice would be correct. Inventory is painfully low.


As of now the median price, measured monthly is $140,000 compared to $119,000 in January and $114,000 last year: a jump from $114,000 to $140,000 is huge and much of it as a result of low inventory.





But, there is a but. Much of the low priced inventory has been depleated. As a result of fewer low priced sales the median price will be up, so part of that jump is due to more expensie, in general, homes selling, but only a portion of that rise - the rest is demand and low inventory and of course changing sentiment about the current financial situation and the future. 
 ]]> </description>
            <pubDate>Wed, 16 May 2012 21:27:00 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.phoenixmarkettrends.com/blog/the-april-phoenix-real-estate-market-in-extreme.html</guid>
            <link>http://www.phoenixmarkettrends.com/blog/the-april-phoenix-real-estate-market-in-extreme.html</link>
            <author>artur@inphoenix.com (Artur Ciesielski)</author>
            <title>The April Phoenix Real Estate Market In The Extreme</title>
            <description> <![CDATA[ 
Sales are down from both 2011 and 2010. Only 8,480 properties sold compared to 9,452 for the same period last year and 9,129 two years ago. The same thing for pending properties: 11,996 currently while last year it was 13,326 and 14,406 two years ago. 


If you only looked at those numbers the trend would look depressing and dismal, but the reality is so much different, it's almost as extreme and surreal as it was in 2005 and 2008.





All those numbers are down from the previous periods only and only because there is a lack of inventory, or demand has driven down inventory to levels that have forced a significant change in the market trend. Lack of inventory, lots of cash out there, a volatile stock market, low interest payments in the banks and low interest rates for loans all add fuel to what is now a clear seller's market, but too much of a seller's market, an unbalanced market making it hard on everyone, especially buyers.  


Seller's who have to deal with a dozen or more offers on a property have a problem too, but being on both sides of the transaction I know it's so much easier to deal with multiple offers as a seller then having to look at dozens of homes, put in many more offers in and wait for answers, most often hearing that someone's else offer has been accepted or not hearing back at all.


Even less desirable properties, those that usually site around for a long time: home on busy streets or homes with bad floorplans, ugly updates are not starting to move - a sign that people are willing to give up a bit on demands to get a home rather then waiting.


At time of writing there are 20,781 residential properties for sale compared to 34,594 last year and double current numbers in 2010. 7,664 properties are under contract so the actual accessible number properties to buy is 13,117 compared to 32,986 last two years ago. That is an obscene change.


So we've got a 2.4 months supply.


All indicators are up. $157.00 per square foot for active homes, up from $148.52 last year. Sold properties are up to $84.68 from $82.19 lat year, but down from $89.41 two years ago. 


Year over year monthly appreciation is 24.4% which is extreme considering much of the U.S is still flat or falling. Annualized appreciation is still negative, but nearing 0% - this is a slower moving indicator and one I like better because it's shows more of a trend rather then a shorter term blip and we are in a somewhat short term blip hyped by what I mentioned before and the high season we're in right now and which will last until late summer.


If after that we still have low inventory and good demand the prices will continue to go up - and I don't have any reason to think it will be otherwise especially since there really is not any deluge of inventory that can change this: yes, there is very little shadow inventory - forget about it.





 


Distressed Market





What distressed market? I wish it gone, but it's not over yet. While REO properties are on the decline and the funnel supplying them is also running dry the market is still made up of 6.7% distressed properties and 18% of sales are bank owned. Still high, but down from 28.7% last year and 42.1% two years ago.


Short sales have become more popular, but I've noted that in the past many times. 37.6% of the active properties are short sales, up from 35.9%, but down from 39.7% two years ago. 


Sales of short sales are up over two years ago from 20% to 26.9%, but below last year's 29.3%. Most everyone prefers short sales now to bank owned homes. There are a lot of benefits, but this can come to an end at the end of this year if we don't get some extensions.





 


A recovery takes from 7 to 10 years and some say we won't reach full or near full employment until 2019 or 2020. We're only half way into a recovery and a very long way to near full employment, much can happen in that time.


 


And how it's time to enjoy the weather before it heats up: more.


 





 


 


 



 ]]> </description>
            <pubDate>Wed, 02 May 2012 11:24:00 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.phoenixmarkettrends.com/blog/investors-invade-phoenix.html</guid>
            <link>http://www.phoenixmarkettrends.com/blog/investors-invade-phoenix.html</link>
            <author>artur@inphoenix.com (Artur Ciesielski)</author>
            <title>Investors Invade Phoenix</title>
            <description> <![CDATA[ 
Investors are a huge segment of the current buying group gobbling up inventory as if their hunger were insatiable. Every few months I post a graph showing what percentage of the market is investor buyers.  Last time this information was posted it was high: near 22%. Since then that number has increased to as high as 29% as it's at 265 at last count, earlier this month. 


Also over 40% of sales are cash and i'm sure investors make up a greater than 50% of cash sales. Most of our investor clients are cash or combination of cash and loans when they are purchasing multiple homes.


The buyers who are not investors have some resentment toward investors when they learn about these numbers, often comparing this trend to the trend that brought down the market in 2007/2008, but it's completely different for many reasons. One of which is that most of the investors are cash this time and they are often more seasoned investors, not barely qualified for a loan buyers who are ill equipped to be buying let along landlords.


It was inevitable that this was going to happen. Such a crash as this Great Recession is a rarity and such a dip in prices especially in a market with such low interest rates and high rental demand is simply helping fueling the demand.





Interestingly and maybe not surprisingly nearly 37% of condos are sold to investors compared to 25% of single family homes. Much of that probably has to do with the lower prices of condos, some near $10,000-$20,000 (don't call us about those) and the thought that a condo is easier to own, which can be true, though condos have their own issues. 





Expect investor demand to continue and to be part of the demand that is driving prices up and forget about shadow inventory, it's not coming because it's not there so let this dead horse lie.


 



 ]]> </description>
            <pubDate>Mon, 30 Apr 2012 11:03:00 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.phoenixmarkettrends.com/blog/urban-bike-penny-farthing-race.html</guid>
            <link>http://www.phoenixmarkettrends.com/blog/urban-bike-penny-farthing-race.html</link>
            <author>artur@inphoenix.com (Artur Ciesielski)</author>
            <title>Urban Bike: Penny Farthing Race</title>
            <description> <![CDATA[ 
Bike Month continues.


I've always had a soft spot for the Penny Farthing bike, but never though to it as a race bike, until I saw this rather exciting video of such a race. The race starts at about 1:15.




 



 ]]> </description>
            <pubDate>Mon, 16 Apr 2012 13:04:00 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.phoenixmarkettrends.com/blog/phoenix-real-estate-prices-on-the-rise.html</guid>
            <link>http://www.phoenixmarkettrends.com/blog/phoenix-real-estate-prices-on-the-rise.html</link>
            <author>artur@inphoenix.com (Artur Ciesielski)</author>
            <title>Phoenix Real Estate Prices On The Rise</title>
            <description> <![CDATA[ 
The news is all over now: prices for real estate are up and often significantly up over last year. The lack of supply and a healthy demand has forced prices to increase: simple economics. Demand is high from regular home owners to investors, all trying to take advantage of still low prices and even lower interest rates, though - 40% of sales are cash.


There's a lot of talk about missing the boat on this recovery. Not so fast. Even though prices have increased, they are still at long time lows. With the price of building materials on the rise and really with no reason for a slow down in demand for the materials due to global demand, it is unlikely you will be able to build homes at the price you can buy them now. Replacement cost is a huge factor and often home prices are below replacement cost. Add to that a recovering economy which may drive labor cost up and a potential for inflation down the road.


The first chart shows average annual appreciation (based on monthly average sales per square foot) since 2001. At right end we've got the numbers up to March 2012. That earlier blip upwards is 2010 and a result of the artificially created demand by the incentive. 





The graph below breaks down the annual appreciation of real estate by dwelling type: from April 2011 to April 2012. Single family homes up 13.6% - wow and condos up 20.2% - bigger wow. Condos were hit really bad, more so than houses, so now that inventory is low the rebound is stronger? 





I'm liking what I see. Hopefully it does not go crazy.


 


 



 ]]> </description>
            <pubDate>Sun, 15 Apr 2012 16:53:00 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.phoenixmarkettrends.com/blog/why-real-estate-investing-is-awesome.html</guid>
            <link>http://www.phoenixmarkettrends.com/blog/why-real-estate-investing-is-awesome.html</link>
            <author>artur@inphoenix.com (Artur Ciesielski)</author>
            <title>Why Real Estate Investing Is Awesome</title>
            <description> <![CDATA[ 
I've been a real estate investor for a while, over a decade now, that's how I got into the real estate industry then into being Realtor full time. Going in I knew it could be a rocky industry and it has been. I also knew there were many ways to generate income as an investor: both passive and active. I'll skip the active here because what that really is is a job in itself, not investing and I want to concentrate on investing and one particular example of how well it can work, especially now.  


The example below is based on an actual property that I personally purchased in the last 6 months. I'm using it because I know all the numbers, inside and out, but I won't disclose the property address and I don't keep real estate in my name either. 


The subject property is a triplex in Phoenix. It's three units: one two bedroom and two one bedroom units each with one bath, plus a shared coin operated laundry.


Purchase price: $145,000 - 20% down - 5.5% private, interest only loan for 5 years - I'll  also provide an example of the results with a more typical 20% down - 4.5% 30 year fixed and fully amortized loan.


All Income: (monthly)




Rents: $2,000 


Laundry Income: $90.00




Total: $2,090.00


All Expenses: (monthly)




Mortgage payment: $532.00


Electricity: $45.00 (common area + laundry)


Water: $150.00


Taxes: $1,230.00/12 = $102.5


Insurance: $750.00/12 = $62.5


Landscaping $100.00


Repairs $85.00 (average over the last 6 months)




Total: $1,077.00






Monthly cash flow: $1,013


Annual cash flow: $12,156


Cash on cash:  42%






What if it was a more typical investor loan?




Mortgage: $575.00 + (taxes) + (insurance)


Monthly cash flow: $970.00


Annual cash flow: $11,640




With a more traditional loan the investment is even better. 1. The cash flow is equally good, but because of the lower interest rate less goes toward interest payments. In addition a large portion of the monthly payment goes toward principal: the 1st year $1,871 goes toward principal, in year 3, $2,141 in principal pay-down and year 5, $2,342.


At the same time annual rents tend to trend up, if not every year you should see an increase at least 1-3 times over 5 years, but there are many factors here.


I did not include deferred maintenance. I did not have any, but depending  on your finances it may be prudent to set aside or calculate in a monthly per unit amount for deferred maintenance and capital expenditures. This is stuff like replacement of air conditioning units, roof and so on.


Also how are you going to manage it? Management cost money? If you hire a management company it can be 10% of your gross income plus leasing feed. If you self manage there is still opportunity cost involved: there is always a cost, even if it's not monetary. I left it off, because it's different for me then you.


Vacancy is another cost not included here: this property has been leased and full for over 4 years, but you may want to add a 3-10% vacancy rate - maybe higher if you have a management company involved since it takes longer to lease that way.


Cash flow on a multifamily property needs to be higher then a single family home. It's the nature of the beast. In a triplex, for instance, you have three of everything: three, kitchen, 3 heat-pumps, 3 water heaters and so on, in addition to, greater turnover. The higher cash flow makes up for that, theoretically.


It also comes down to how you manage your business, where it's located etc. 


As you can see the results are pretty good here. Once you have a few of them plus they have some age, in addition to other sources of income then you are more in control of your finances rather then your boss.


Another thing I want to mention. That is about the value of the property. In this case it was purchased at regular market price, but what if in 5 or 10 years the market is bad? For one, I don't have to sell it! The value can be the same - that is the price may go up at all. I don't care: look at the cash flow. Even if I sell at the same price with the loss of my selling costs at 7% I still did very well, especially if I had the traditional loan and not the private loan.


 


 



 ]]> </description>
            <pubDate>Tue, 10 Apr 2012 12:26:00 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.phoenixmarkettrends.com/blog/surprise-az-real-estate-market-trends-for-spring-2012.html</guid>
            <link>http://www.phoenixmarkettrends.com/blog/surprise-az-real-estate-market-trends-for-spring-2012.html</link>
            <author>artur@inphoenix.com (Artur Ciesielski)</author>
            <title>Surprise AZ Real Estate Market Trends For Spring 2012</title>
            <description> <![CDATA[ 
Surprise like many suburbs were hit hard, but these are also the areas in the midst of a hot real estate grab. Inventory is at a long time low of 800 homes and months of inventory is down to 2.7 months, which is very low even compared to a low 3.9 months last year.


It means increasing prices. The average price is up to $153,271 from $143,926 last year and the more meaningful Median price up to $135,000 which is a significant rise in one year from $123,550 last year. 





 (Graph - Cromford Report)



 ]]> </description>
            <pubDate>Sun, 08 Apr 2012 12:33:00 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.phoenixmarkettrends.com/blog/april-2012-phoenix-housing-market-report.html</guid>
            <link>http://www.phoenixmarkettrends.com/blog/april-2012-phoenix-housing-market-report.html</link>
            <author>artur@inphoenix.com (Artur Ciesielski)</author>
            <title>April 2012 Phoenix Housing Market Report - Last Call</title>
            <description> <![CDATA[ 
It's nice to have a balanced market, but in real estate it's rare to have one; though the imbalance is not, usually, skewed too much: that's an okay situation, but are we getting too much of a good thing now? Too fast of an improvement, is it really an improvement when it's skewed so much? The market is not balanced.


Personally I don't like it, this imbalance it makes everyone's job more difficult and there is alot of aggrevation, animosity and bad feelings out there. Even something simple as working in your client's best interest can earn you new nick names or have someone question your integrity. There can be only one buyer for any particular home and when many people want it - and there are few other choices - the results are not always good. 


It would seem good for the sellers, but how do you choose from 5,10,32 offers. It's too much of a good thing. 


The Numbers


At the start of April there are only 14,175 residential properties on the market. If you remove the ones that fail to be 'in the market', then that number is even smaller.


As a result of this lack of supply many properties which have sat on the market for a year or longer are finally being sold. An example is a condo complex in Central Phoenix where 4 units have been for sale from 300-600 days all of which went under contract within the last 2 months, bringing the total for sale in that community to zero.


I'm seeing properties that tend to not sell well go under contract: properties next to commercial buildings or homes near large busy roads: these don't sell as quickly if people have other choices and now they don't so they choose less desirable properties instead: thus the current 79% success rate in sales versus a success rate of 67% last year.


Sales of Real Estate Are Down From 2011


Real Estate Falters As Pending Numbers Dip Below 2011


These could easily be the headlines in many papers who often fail to define a reason behind what is going on, that's why I like to listen to NPR where they have more time to explain what is going on. 


So what is going on?


Pending properties and sales are down. There is no disputing that. In March 2012 8,767 properties sold while in March 2011 9,952 properties sold. For the same periods 11,964 properties are pending and 12,923 were pending last year.


Despite lower sales, prices are on the rise for active properties, pending and sold properties: all have registered an increase over the previous quarter and last year. 


This simply means it's not a lack of demand, it's a lack of inventory that's driven both the pending and sold number down. 2.7 months of inventory is very low: too low.


Active listings price per square foot is now $155.31 compared to $132.53 last year. Pending price per square foot is nearly $10.00 higher than last year and monthly sales are over $10.00 higher from $82.13 last year to $92.99 this year. Amazing!





Distressed Properties Segment Continues To Decline


Bank owned properties make up only 6.7% of active inventory compared to 17% last year. That means only a few hundred are on the market. Better yet, sales of REO properties make up 21% of the market compared to 47% last year. 


Short sales are holding steady between 35-40%, though sales are down to 26% compared to 30% last quarter, but they are up from 19% last year.  It does look like they may have peaked as a percentage of both active and sold segments, but it's too early to see that as a trend.


At this point the distressed market makes up less then 50% of all sold properties: 47%. It's still high, but compare it to 66% last year and 59% last quarter.





Spring is a hot season for real estate activity each year, but this year much more so. This will continue for a few more months and taper off mid summer, in theory: that's the traditional trend, but we'll have to see how this year pans out.


It's certainly a good time to sell if you need or want to. If that is where you're headed get an estimated value of your home from one of our partner agents.



 ]]> </description>
            <pubDate>Mon, 02 Apr 2012 09:59:00 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.phoenixmarkettrends.com/blog/wall-murals-on-mcdowell.html</guid>
            <link>http://www.phoenixmarkettrends.com/blog/wall-murals-on-mcdowell.html</link>
            <author>artur@inphoenix.com (Artur Ciesielski)</author>
            <title>Wall Murals On McDowell</title>
            <description> <![CDATA[ 

 


I took a bunch of photos of murals on Roosevelt Row about a week ago on that urban bike tour.


 


These murals below I took an a short bike ride a few days ago. These murals are just West of Central on McDowell Rd.


 


There are a few more then this, but these are the more interesting one. 


 


 


Murals On McDowell





 





 





 




During April, which is Bike Month, and before it gets too warm I'm going to get a lot of riding in, much of which will include taking photos.




 


 



 ]]> </description>
            <pubDate>Sun, 01 Apr 2012 17:31:00 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.phoenixmarkettrends.com/blog/mid-century-modern-triplex-update.html</guid>
            <link>http://www.phoenixmarkettrends.com/blog/mid-century-modern-triplex-update.html</link>
            <author>artur@inphoenix.com (Artur Ciesielski)</author>
            <title>Mid-Century Modern Triplex Update</title>
            <description> <![CDATA[ 
A few weeks ago I wrote about the progress of a remodel we're doing on Central Phoenix mid-century modern. Check out the before picture.


That remodel has been completed except for a few items. Below are three photos of the kitchen and living space. This is a one bedroom apartment so there is a limit of how many relevent photos I can take, but these will give you a good idea of what is there.


The change is rather dramatic. I like the skylight: I'm big on natural light and the expense and effort were worth it to me, despite what my handy man said.





The kitchen cabinets and fixtures are from Ikea. The stove is one thing we splurged on. A 5 burner gas stove which is awesome and visually striking.





The floor is a laminate from Ikea which I've been using in many of the apartments we have. I highly recommend this durable floor as it has withstood the test of time and action in many situations, even being soaked in water for over a day.





What do you think?


 


 


 



 ]]> </description>
            <pubDate>Sat, 31 Mar 2012 00:01:50 -0500</pubDate>
                    </item>
    </channel>
</rss>
