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					Phoenix, Arizona

                               Created by: Brent Saxon
                   Appraisal Management Services, Inc.
                                         October 2008
       Greater Phoenix Real Estate Trends
   In 2000, the median sale price (SFR) continued a 10+ year increase which
    continued through 2005
   In 2005 the median sale price increased nearly 40% from the previous
   Home sales grew slightly through 2003 and dramatically increased in
    2004 and 2005 before sharply falling in 2006-2007
   The decrease in the number of home sales can be attributed to a high rate
    of foreclosures and a downturn in the market
           Phoenix Market Trends
   A closer look at the city of Phoenix shows a similar pattern
   Home sales varied throughout the 2000’s, but still show a
    decrease in activity beginning in mid 2005
                 Phoenix Market Trends
   The average list
    price and average
    sale price both fell
    approximately 45%
    in Phoenix

   From October 2007
    through October
    2008, sales began
    increasing, however,
    the price per square
    foot began to drop
          Greater Phoenix Market Trends
   In Mesa, the average
    sales and list prices
    approximately 28%
    from October 2007
    to October 2008

   The average price
    per square foot
    decreased from $152
    to $108, or 28.95% in
    the same period
          Greater Phoenix Market Trends
   Scottsdale saw similar
    declines in list and
    sale prices,
    approximately 29%

   While the days on
    market held fairly
    steady, the price per
    square foot dropped
            Factors Affecting the Market
     In the larger neighborhoods, builders continued to add more homes, at
      reduced prices while investors are trying to sell and lenders are seeking
      buyers for foreclosures

     This led to declining property values throughout Phoenix, but some of the
      more established neighborhoods (built and bought before the boom in 2005)
      held steady and the owners had not over extended themselves

                          % Change
                                                Total Building Perm its Applications
                          Previous          60,000
               Units        Year
    2000       34,256          3.70%
    2001       34,912          1.88%
    2002       40,002        12.72%         30,000
    2003       47,240        15.32%         20,000
    2004       56,896        16.97%         10,000
    2005       54,446         -4.50%
    2006       35,753       -52.28%
    2007       26,508       -34.88%





    2008*      38,472        31.10%

                   Investor Speculation
   Out of state investors, mainly
    from California and Nevada,
    played a lead role in the rapid
    price appreciation and shortage of
    available homes                             Median Sale   % Change From
                                                   Price       Previous Year
                                         2000    $136,793          5.66%
   Investors and speculators began      2001    $142,623          4.26%
    buying one or more properties in     2002    $149,410          4.76%
    2005 when prices were getting
                                         2003    $160,235          7.25%
    higher in Nevada and California
                                         2004    $179,191         11.83%
                                         2005    $243,014         35.62%
   Record low interest rates in 2005    2006    $278,325         14.53%
    led to people buying multiple        2007    $263,501         -5.33%
    homes for investment

   This led to an unprecedented
    increase in prices in 2005, 35.62%
    as reported by ASU Realty
                             Mortgage Fraud

   Overall, Phoenix was hit
    the hardest by the rapid
    appreciation followed by
    record setting foreclosures

   The worst areas have been
    western Phoenix

   Arizona was a mortgage
    fraud “hotspot” according
    to RealtyTrac, Inc, Fannie
    Mae, and other industry
                         Mortgage Fraud

   Arizona ranked 6th in Subprime mortgage fraud in 2006 (MARI:9th Periodic Report to
    MBA, April 2007)
              Downtown Phoenix Hit Hard

*Arizona State University, Dept of Realty Studies
Foreclosures Affecting the Market
                     Arizona documented the third
                     highest state total in the third
                     quarter, with 40,419 properties
                     receiving a foreclosure filing -- a
                     9 percent increase from the
                     previous quarter and a 189
                     percent increase from the third
                     quarter of 2007.

                     Phoenix documented the sixth
                     highest metro foreclosure rate,
                     with 2.11 percent of its housing
                     units receiving a foreclosure
                     filing during the third quarter.

                     In 2007 the difference in the
                     median home price b/w
                     foreclosures and traditional
                     sales was 17.5% ($222,073 –
    Foreclosures Affecting the Market
   Arizona ranked 4th in the nation in foreclosures with 1 house in every 201
    having filed for foreclosure
   In one Phoenix neighborhood, only five homes were foreclosed on in 2005
   In 2006, 15 were foreclosed on, most in the last two months of the year
   In 2007, 75 homes were claimed by the banks
      Foreclosures Affecting the Market
   This chart further illustrates the trend of increased sales in 2005 with
    a substantial decline after, this chart represents the sales of SFR and

   Notice in 2008 that new home sales remained on a decline while re-
    sales were beginning to increase

   This is due to the increase availability of re-sales, from foreclosures,
    that have been offered at lower prices
         Foreclosures Affecting the Market
    The break down of single
     family and condo units
     give more insight to how
     this trend has affected each
    Single family homes have
     experienced the largest
     decline in property values
     but are seeing increased
     sales activity
    New construction has
     taken the largest hit in
     number of sales

    According to Arizona State University Realty Studies, the high rate of
    foreclosure sales is pushing down home values across the Phoenix area. For
    the traditional sales market, the median price of resale homes in Maricopa
    County was $175,000 in October, while foreclosed properties had a median
    price of $159,775. One year ago, the median prices were $250,000 and $218,225,
        Foreclosures Affecting the Market
   The chart below shows the percent of the normal, short sale, and REO
    properties representing both active and sold properties
   In Phoenix, REO and short sale properties make up the majority of the
    listings and sales since 2007
Condominium Market
             In Las Vegas, Phoenix, San
              Diego, Washington, D.C., and
              much of Florida, an estimated
              25% to 40% of condos under
              development or apartments
              that were converted into
              condos for sale will be put
              back on the market as rentals,
              says Marcus & Millichap, an
              investment brokerage firm.

             During the real estate frenzy,
              thousands of apartment
              renters were forced out by
              landlords who converted
              their units into condos for
              sale. Last year, about 200,000
              apartments were sold for
              conversion to condominiums,
              on top of 135,000 new condos.
              (USA Today 7/14/2006)
                 Condominium Market
   The condo market followed the same path as single family homes
    through 2008
   The abundance of available units and the lack of potential buyers
    caused an over supply and rapidly decreasing values
   Many are being converted into apartments
Due to the wave of foreclosures and the decrease in sale prices back
to the 2003 and 2004 levels, speculators once again have an eye on
Investors are encouraging people to invest in real estate in the
Phoenix market for the long term outcome potential
Prior to the rapid appreciation real estate appreciated 5%-6% per year
for a long, relatively stable period
Although the decline may not be over in the short term, it is hopeful
to return to a stable or increasing market over the next decade
This presentation was for informational purposes only.
All information was gathered from third party studies
and is believed to be accurate but is not warranted. We
hope this presentation will aid you in lending or review
decisions in your market area. For additional information
please contact Jeff Bass at (678) 354-8363 ext. 116 or for additional information. You can
also visit are website at

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