Graph: The Cromford Report - modified by PMT

About a week ago I made a rather bold statements, maybe into the thin air, but ones without any doubt, one based not on a fluke but on a trend with very strong leading indicators, ones that actually precede price increases and not simply monthly measures, but long term slow moving data. 

The real estate market is like a big oil tanker in the sea, maybe even bigger - as Mike Orr - alluded to it.  It's very difficult to steer such a massive object and especially to turn directions, but once the ship is on a new course it will head that way until there, again, are massive and I mean massive forces and time to turn it.

It was plain that Phoenix real estate will be hot come the spring and especially in the summer, but it all started earlier and the January sales numbers show it.

Usually from December to January sales drop and they dropped this time too, but look at the numbers compared to 2009 and 2008.  Sales are up 22% over 2009 and 100% over 2008. 

More striking is the number of pending homes: 10,647 residential properties have found buyers and are awaiting closing: that number is 45% over 2009, which a very strong indicator of what's to come.

The slide in prices is over, for the most part, as demand for homes is strong and many times even mid priced and higher priced homes receive multiple offers.

Just yesterday I scoured 1,600 properties in Central Phoenix for exceptionally good deals.  I found none:  I found lost of decent deals, but much of it all is simply priced for the market.

The market is weaker in the condo sector, certainly more, then in single family homes.  That has always been the case and will remain so.

51.5% of all listings are distressed.  That's about the same as in 2009.  The difference is that this year 14.9% were lender owned vs 25.6% last year and short sale made up 37% vs. 22.6% last year. 

63.9% of all sales were distressed in January 2010, a number that is 14% lower then the 77.8% last year.  REO sales made up 45.4% of sales vs. 68.7% in 2009.  An improvement in deed.

Looking at the last numbers kind of puts a stop to too much excitement.  When 64% of the property that is selling is distressed then the market is not normal, but it does not mean, it's not dynamic and fast moving. 

Property is changing hands, that's what matters.  We don't have a simply standstill like we did, where inventory keeps increasing and everyone is on the fence about buyer.  It's quite the opposite now. 

Many buyers are having a hard time finding homes or competing with so many buyers.  The demand is truly international.  It's not only the many renter who are now looking for homes, it's second homes buyers from Canada and even investors from as far away as Poland, China, Germany and Australia that see this city as a bargain, especially compared to other U.S cities and especially when population trends are factored in. 

Get ready for a very busy year in real estate.  As a buyer, be prepared for competition, do all you can to be a stronger buyers. 

Some words of caution.  Real estate in Greater Phoenix is still heavily stressed, people continue to lose home either by default or by choice, so by all means it's not a normal market, but prices are not going down, inventory is holding steady and properties priced for the market are selling.  There are a few side effects that will keep prices in check for a while. 

Some owners will see the opportunity of the improving market and put their home on the market many after waiting years to do so.  Of course, some of them are move up and move down buyers so the inventory they put on the market they will remove.  Overall Phoenix is growing in population and that is the best way to get rid of excess inventory.