Good News for Phoenix Housing Market

Interesting numbers reported by AZ Republic July 8:

Metro Phoenix – June 2011

  • Median Price up to $118,950 from $115,000 which it was at since about January 2011
  • Almost 9500 homes sold – Largest number since December 2006
  • Over 1,300 foreclosure homes sold in June at trustee-sale auctions (not included in above home sales number
  • 2,000 fewer active foreclosure filings in June than May
  • Number of homes for sale was down nearly 10 percent from May
  • On June 30 2,216 homes sold which was more than any other single day in history.
  • On July 1, there were 28,827 active listings which was down 8 percent from one month ago and down 30 percent from one year ago
  • The number of active listings in the valley continues to drop and is around 28,000

Furthermore……..

The feeding frenzy amongst investors seems to be continuing unabated with roughly 64% of homes purchased in the Phoenix Metro area going to someone who planned to rent or resell them.

There are a few factors that may continue to cause grief and prolong the slump. First of all, some still believe there exists a substantial “shadow inventory” which are homes not yet being foreclosed on but that are on the verge. Nobody really knows what these numbers are and for every optimist there seems to be someone that believes we will be saddled by these looming foreclosures as lenders gradually take them back over the next few years and put them on the market slowly. This could prolong the slow, painful recovery and continue the downward pressure on prices.

Another reason is that credit is still very tight and underwriters are loathe to write loans for anyone with less than stellar credit and higher, stable income. Until the credit markets loosen up would-be home buyers will continue to have to rent or stay in the home they currently own. Who knows when this will be. Banks are sitting on a fortune right now. It is time they start loaning money to qualified buyers already. With over 40% of homes being purchased with cash and another 35% percent FHA we are left with only 25% being done the conventional way. This has gotta change!!

And that brings me to jobs and the overall economy. We generated a meager 18,000 jobs in June and a higher but less than expected 54,000 in May with apparently McDonalds being responsible for generating 30,000 of these jobs to make matters worse. Unemployment still stands above 9%. You ain’t got a job, you can’t afford a house. Pretty simple. We also have the underemployed and downward pressure on wages for those lucky to have a job. New jobs being created aren’t necessarily on par with the ones that have vanished the last few years as Ronald McDonald can attest to. I’ve personally heard of a civil engineer taking a job rolling burritos to support his family. From what I understand if we created 208,000 jobs a month going forward it would still take another 10 years or so to reach the pre-recession employment levels.

Although it appears a few months back that we may have started to recover from all this ugliness there has been conflicting data since then. Last month’s numbers do though support the notion that we may be slowly moving in the right direction. I’d like to see a few more consecutive months of this type of upbeat data before I start sipping any Kool-Aid.

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