Experts Agree that the Trend is Positive

In our last “Market Watch” we shared our opinion that there's a significantly positive shift going on in the local real estate market. However, we did it with some trepidation because there were few, if any, other voices echoing our sentiments and being out there in front can be uncomfortable – even when you think you’re right.

The good news is that several of the more respected providers of real estate statistics and analysis are beginning to express similar thoughts. Granted, they are generally a bit more reserved than we are in our evaluation of the situation but, then again, their comments are directed at the valley-wide marketplace and  our energies are focused primarily  on the Northeast Valley and specifically on McDowell Mountain Ranch.  

As Catherine Reagor, reporter for the Arizona Republic, indicated in a recent column several key housing indices are now showing that the market could be poised to start a slow rebound.

In addition, Mike Orr, the wizard who produces the Cromford Report and one of the most reliable sources of real estate data in the valley, says that “most of the key indicators that were negative at the end of last year's second quarter are now showing positive signs”. He specifically cited the supply of homes for sale which has been falling since late November.

He‘s also encouraged by the dramatic increase in the number of pending listings. This is a precursor to closed sales and the primary indicator of growing buyer interest. His enthusiasmertainly seems justified. There are almost 13,000 pending right now and there were only 8,695 at the beginning of January.

Sadly, the only market gauge that he says hasn’t turned positive yet is the sales prices. However, even there he did say that there are indications that housing prices could start to climb during the next six to nine months.

Tom Ruff of Information Market, another Phoenix real-estate data firm, shares Mike's opinion. He says that "The numbers that made us pessimistic last July are the same numbers that are now making me optimistic,"

By the way, what you may find particularly interesting was Mike Orr’s response when I asked him if he had any idea why we seemed to be out performing the rest of the valley. His answer was that  “Each day that goes by suggests we are going to have a significant recovery this year and I believe the $400K to $600K price range is well placed [to profit from those improvements].

McDowell Mountain Ranch Sees A Change For The Better!

Let me begin by stating the obvious, nothing in life is ever guaranteed. In fact, given the economically volatile and politically uncertain times we’re are living in, something could happen to radically alter the financial landscape in less time than it takes to consume a gallon of very expensive oil.  However, despite those concerns, I’ve got to say that it feels like the market has shifted in a positive direction, at least in our local market area. 

The first 75 days of this year have produced the best sustained performance in our local market area since the first quarter of 2007 — and that was the last gasp of the late lamented bull market in housing. In fact, thus far this quarter, we’ve booked almost twice the business we did during the same time period in any of the last three years. There’s been a threefold increase in the number of people viewing the properties we’re marketing. We’ve had to contend with multiple offers in roughly one out of every four transactions we’ve negotiated and we’re beginning to see activity pick up among the higher priced properties. All of those factors suggest that something more profound than a simple burst of spring exuberance is underway. 

In fact, there really seems to have been a shift in consumer psychology. I’m not sure whether it’s rooted in growing confidence that the worst of the recession may be over, recognition that mortgage rates may never be at this level again or some virtually incalculable combination of factors that we’ve yet to fathom. Regardless, the buyers we’re seeing this year appear more determined to find a new home than to get a great bargain.

About the only thing we can say with certainty about all market corrections is that they’re neither orderly nor readily explained. They tend to start slowly and often give the appearance of incremental improvement in their early stages. However, the trigger that puts them into overdrive frequently catches everyone by surprise. Let’s face it, if change was easy to predict, we’d all be rich. Unfortunately, you need only look back to the dot.com bubble of 1995-2000 and the real estate bubble of 2007-2010 to realize how easy it is for even the smartest people to miss the beginnings and endings of cycles. 

I grant that my analysis is primarily the product of instinct. The numbers I have to support it, while good, are admittedly very thin. However, my instincts have been developed over the last 25+ years and have helped me thrive during a period when more than a third of my compatriots have left the business and another third are just gamely hanging on — hoping for a providential change in fortunes.

Actually, I imagine that most people have little capacity left for either emotional or financial risk at this point (and I’d certainly understand that given the last four years) and waiting for more substantive proof from other more authoritative sources is certainly a safer course of action than acting on my observations. However, as comforting as that approach might be, authoritative and respected sources like the Case-Shiller index are, for the most part, generally more adept at explaining what has occurred than they are at predicting or recognizing a market shift as it happens. 

That being said, the only folks that I might encourage to act with some urgency are those who’d like to “move up”. There are still marvelous buys available in the higher price ranges, the interest rates continue to be exciting and now that it’s getting easier to sell more modestly priced homes, you’ve got an almost perfect storm of opportunity.

Call me to check out the market!