Arizona offers a unique real estate opportunity

Manhattan real estate diva Barbara Corcoran recently had this to say:
“We have a regular real estate miracle happening right now. We not only have record low prices, but we also have cheap money.”

Here in Arizona we further see the convergence of 4 factors--sales volume, 'low prices', # of month supply and that 'cheap money':

Sales:
10 years ago in February of 2001 there were 4609 home sales in ARMLS.
In February of 2011 there were 7157 homes sales in ARMLS.
That’s over 35% more sales today than 10 years ago.
Only one other year exceeded 7,000 sales in the month of February and that was 2005 with 7781.

And maybe this graph showing the relationship between sales volume and prices over the past 10 years:

Prices (Average):
10 years ago in February of 2001 the average price for a home in ARMLS was 169,700.
In February of 2011 the average price for a home in ARMLS was 155,605.
Average prices today are the lowest in 10 years (actually 8% lower than 10 years ago)!

In Sum:
Sales are rivaling the highest in 10 years even as prices are the lowest 10 years.

# of month supply: Add to this that inventory is dropping to a current < 5-month supply:

Today there is a 4.9 month supply; last month it was 5.7; last quarter 6.3; last year 5.9; 2-years ago 8; note the trend!
The green button with the trend arrow pointing down indicates this is a good leading indicator for sellers.

What does all this tell you (high demand, shrinking supply)?

Now add the lowest rates in history to the mix (4.5% for a 30-year fixed rate).

The buy signal is now overwhelming.

The source for the above stats is here. I would carry this around in my pocket or purse or better, a quick link in my SmartPhone or iPad.

Home Buying today versus back in the day ..... the evolving pursuit of the American DReam

March 1st, 2011

In 1995 Realtor.com went live, posting multiple listing information (MLS) from around the country in one database with public access. Before that, MLS information was proprietary. You couldn’t ‘see’ all the inventory of available homes without an agent / member of the MLS. Would-be buyers would drive neighborhoods looking for ‘for sale’ signs, or circle ads in the Sunday paper at the local coffee shop. But when they wanted more information on a home with that ‘for sale’ sign in front of it, or that ad in the paper, they had to call the phone number on the sign or ad. The real estate agent was the gate keeper.

Today you can see that same for sale sign, but now it may have a bar code-like ‘tag’ on it. Focus on the tag with the tag reader app on your smart phone and the next thing you know you’re looking at the home online, complete with a virtual tour of all the rooms. And if you don’t like what you see, another GPS powered phone app can immediately identify any other listed property in the area. In fact, by 2012, 20% of home searches will be done on a mobile device. The gatekeeper is nowhere in sight.

Things have changed a bit…but not the fundamentals.

For example, the common denominator in the above scenarios is that buyers typically initiate the home-buying process on their own. They rarely contact a real estate agent as their first step. What was true back in the day is still true today–buyers quite frequently find their agent through what we might call ‘the back door’ of agent inventory. However, now they can do it with a great deal of precision.

One reason for the delay in talking with a professional is the temporal factor. That is, from inception of the idea of making a move (‘honey, we’re pregnant’) until the actual move into the larger home (with at least one more bedroom for little Johnny) is statistically a 6-month to 2-year process.

This also explains why the classified ad in the paper or magazine typically doesn’t sell the house (only about 1% of the time). Similarly, the odds are against the ‘sign call’ turning into a purchase (about 12% of the time).

The common denominator that explains the low correspondence between marketing and advertising venues and selling the house is that when buyers are looking at the ad or the sign they tend to be early in that 6-month to 2-year process…they are not ready.

Rather than drive through neighborhoods, today’s buyers surf the web. 90%+ of today’s homebuyers will do at least some of their home searching online.

But the stunning statistic today comes from a large survey by the National Association of Realtors of homebuyers and sellers released 6 months ago. When buyers were asked where they first learned about the home they ended up purchasing, 38% report they saw it first online! This percentage has grown dramatically over the past decade and will likely continue…and why not. Purchasers like being empowered with both information and anonymity.