Analyst RL Brown is reporting in his latest Phoenix Housing Market Letter that sales of new homes in the Phoenix area are 40% below where they were in July 2007.
I haven’t verified Brown’s numbers, but he’s a well regarded local housing economist and analyst, and has been accurate in the past. And I drive by, around and through multiple new-home subdivisions on a daily basis where it is abundantly clear that sales are off.
If you are so inclined, you can purchase a six-month subscription to his Sales and Permit Report for $1,050. I think I’ll pass.
According to the East Valley Tribune’s account of the report, Brown also reports that new housing permits are off as well, from 2,560 in July 2007 to 1,493 in July 2008.
Existing home sales however, were up nearly 17% from 5,072 to 5,928. This factoid, of course, gets buried in the main-stream media reports. As Brown states, “If you think about the marketplace, it’s a long way from where we were in 1989-1991 in the savings-and-loan crisis. If we compare it to overall historical activity in Phoenix, this is still not a bad housing market.
Now isn’t the best time to sell. There are however, clearly buying opportunities available.
That doesn’t mean it’s all sunshine and roses. Far from it.
I am inclined to agree with Brown when he says, “If you’re a seller, this is not the time to sell. If you have to sell … then be realistic about the price of your property and your property will sell.” He nails it again with this: “The key thing that we need to understand is that this housing market is not going to change dramatically in the near term and be much different than it is now.”
“Realistic” is the key word there, and it is very difficult for many home sellers to come to terms with reality. That is understandable as it is hard to separate emotion from fact. Selling your home is a very emotional experience, but it is critical to look at it as the business transaction that it is. I realize and understand that it is hard to get past the, “but if I sold it two years ago. . .” thoughts and feelings. Get past it you must. This is not the market of two years ago. Homes can be (and are) sold every single day. They need to be in pristine condition, and priced and marketed appropriately. If you need to sell, it can certainly be done.
There are signs of life in the Phoenix real estate market, but the road to recovery may be long and winding.
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A agent 08.25.08 at 10:22 pm
I dont understand why you would say this is not a good time to sell a home!! You sell homes for a living!! The media is out to get us and now other agents (YOU) are to!! How do you think this makes agents look!! STUPID!! Why do you do this?
Jay - The Phoenix Real Estate Guy 08.26.08 at 6:57 am
***sigh***
“A agent” -
Why do I say it’s not a good time to sell a home? Because it isn’t. Would you prefer me to lie?
I don’t think the media is out to get us. I think the media is out to sell subscriptions and generate ad revenue and sensationalistic news does both. I’m not a fan of the main stream media (for the most part). But I don’t think they sit in their cubicles and say “let’s get the real estate agents”. And certainly *I* am not out to get other agents. I try to help other agents all the time. I do often get frustrated with agents as the things they say and do frequently make no sense (this very moment in time is a perfect example of such frustration…).
I’m not sure if you are saying what I wrote makes agents look stupid or that I am stupid. Either way, oh well. To be brutally honest, I don’t really care how other agents look on this blog or if you feel I am stupid for telling the truth.
Why do I do this?
Because I’m not going to sugar-coat the truth. The market is what it is and people need to hear and understand it. I see unrealistic sellers (and buyers) every single day. I think a big part of my job as an agent is to help educate them. Your opinion is apparently different, you’re entitled to it, an good luck with it!
Charleston Real Estate Blog 08.26.08 at 7:16 am
Jay, while real estate is local, this is great advice for sellers in most markets today. And being a straight shooter is certainly better than sugar coating or worse any day of the week.
And better for the profession
Tucson Michael 08.26.08 at 9:33 am
Jay I also agree I just recommended the same thing in my recent Tucson market report, it is NOT a good time to sell unless you HAVE to…Agents like “A Agent” are what give us a bad name. Imagine you went to your doctor and you didn’t “need” a certain medicine yet you were prescribed it because the doctor made extra money………I wouldn’t feel good about that and the public doesn’t expect us to tell them lies just to make a sale. It’s just bad business and few agents (obviously you do) understand its not all about pumping out as many sales as possible, but rather building a great name and a reputation as looking out for clients and giving unbiased opinions and advice. Anyway I could go on but I’m glad there are honest agents like us in the real estate world hopefully we can change other agent’s minds and help the public’s perception of real estate professionals.
The Harriman Team 08.26.08 at 12:15 pm
Pay no attention to the hysterical ramblings of “A Agent”. This person is probably one of those who will tell anyone anything just to get a listing/sale. To be honest (and we are being honest here, right?), once I saw the “A Agent” part, I sort of dismissed the rest…after I stopped laughing. Thanks for telling it like it is, Jay.
Jason Stevens 08.26.08 at 10:11 pm
Hey Real Estate Guy…Nice site, and great comments!!
Not sure why anyone would get upset about an opinion that is in line with people avoiding taking a bigger loss than they need to! I agree, not a great time to be selling, but clearly, a phenomenal time to be buying. We are back to prices of 2004? even earlier in some areas of the valley.
Anyone who is critical of pointing out that selling their home in this market is swimning up stream is either blind, or unethical.
Good luck in all you do!!
Jason Stevens
Own Your Own Home
http://www.oyohaz.com
stephanie 08.27.08 at 1:18 am
This article will give the property investment beginners a lot of information about the investments in property or the real estate business, It’s nice idea to introduce a 40% discount offer on existing homes which will help the beginners in the property investments to buy.
Jaco 08.27.08 at 7:44 am
I also give the same advice to my clients in South Africa.
Unless they are buying something in the same market.
This downward market should then not affect them.
I believe you only lose the money if you sell and don’t buy.
Edge 08.27.08 at 1:11 pm
I wonder how many new home “timebombs” we’ll see as these get picked up. If investors are buying (which no longer seems likely for new construction in this climate), you can expect the basic rehabbing to be done like taking care of the weeds, some pest spray, and minor touchups.
But for those who are going in because they can FINALLY afford prices, which means they’ll already be stretched to the point where they can barely afford the HOA fee in addition to the mortgage payment, I’m curious how many repairs we’re going to see creep up.
A/C units on houses that have sat in a new construction lot for the past year (East of Val Vista and North of Queen Creek Rd or around the Power+Ray area) which haven’t been maintained, if run at all. Pest problems and possible termite infestations as a result of water runoff that was never noticed during a monsoon storm, etc.
Those things are invisible for the most part, even with a quality home/termite inspection. Things may be in running order for the moment, but like a car who’s engine hasn’t been cranked in a year, some things are bound to fail.
Jay, do you know if the General warranty on most new homes start from the construction date or the closing date? I’m curious if we’re going to see a wave of new buyers who are angry at the builder for not extending them the coverage others may have received?
On the plus side, I suppose most buyers are having a hard enough time procuring financing if they’re not equipped with any liquid cash or assets for a down payment. It’ll be interesting to see how things fare as the summer selling season slows a bit.
Jay - The Phoenix Real Estate Guy 08.27.08 at 4:28 pm
@edge “Jay, do you know if the General warranty on most new homes start from the construction date or the closing date?”
Always been the closing date in my experience…
Good point about unoccupied homes. Homes don’t like to sit empty. And they also don’t like baking in the 110 degree heat with no A/C….
Edge - The Credit Crunch 08.27.08 at 4:44 pm
I used to work at a company that did everything from home warranties, to real estate posts, to inspections/appraisals, and when the guys we contracted with would go out to inspect a house or go on a service call, they’d come back and vent or dish. I learned a LOT more about home maintenance from those guys than I did actually being a homeowner!
One of the easiest ways to get out of any repair by a warranty company is the dreaded “pre-existing condition”. Usually the first place warranty companies run to when something dies before it’s standard life cycle is over (a/c compressor, etc.). So you’re right there - the heat will exacerbate those things.
As you probably know, there are a ton of “half-sold” neighborhoods that didn’t build’n'flip in time before things went south. I wonder if we’ll see new neighborhoods pop up again, or if those builders instead focus on their current neighborhoods and try to get them sold off to investors or desperate buyers who don’t have time on their side.
Last I stepped into a new construction office, the prices were still way above the comps. I wonder if the new sales comps from investors picking foreclosures at cheap prices will further bring those new home prices down or if they’ll instead try to do the tried-and-true and keep the sales price static while throwing in a ton of incentives instead.
Interesting times
Brisbane Real Estate 08.27.08 at 10:17 pm
Informative article and comments and will help to beginner. worth reading.
http://www.investorrules.com/ 10.30.08 at 5:39 am
I think its not the time to sell its the time to buy