ALL PHOENIX REAL ESTATE

In light of last week’s talk about turning the page, I thought it was time to make a symbolic change and switch the photograph up top. What you’re now looking at is the skyline, such that it is, of Tempe Arizona as seen from the parking garage next to the ASU Foundation.

Why make the change? Well, for starters, the old banner photo has been there just about since I started this web site back in 2007 and, truth be told, the Phoenix skyline doesn’t look like that anymore. The Sheraton is now open, the Summit at Copper Square looms just to the right of Chase Field and even Chase Field was Bank One Ballpark when the old photo was taken.

But probably more importantly, it was time for a change. Every now and then we need to try something different and alter our own surroundings if only for our sanity.

When I was a teenager and a young adult living in my first apartment, I would accomplish this by moving my bed from one side of the room to the other. Once I purchased my own home, I would find myself painting this or tiling that because I’m one of these folks who absolutely hates the impermanent feel of blank white walls.

Many people satisfy this need for change by moving from one home to another - real estate’s so-called five-year itch, which hasn’t been scratched nearly as often as it once was. For some, moving is all but impossible because they’re upside down in their current home. For others, personal economics may be the cause.

Yet there still are people, even in the Valley, who have equity in their homes. Selling isn’t an impossibility, certainly not like it was 18 months ago when almost nothing - bank owned or otherwise was selling - but it does takes a healthy dose of reality.

Buyers are there if you look for them.

Sometimes, it might be worth a peek to see if only for the sake of change.

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Oh to wake up and go to the office knowing all the while there’s going to be someone waiting there whose primary purpose is tospend the day telling you how great you are.

“You the champ, Champ!”

Muhammad Ali had this in the form on Bundini Brown. Many people have this in the form of their spouses or their family or their friends.

Some even have this kind of constant, sycophantic reassurance from their real estate agents.

“Hold your ground, Mr. Seller! You know what your house is worth. No one else knows what it’s worth like you do, Champ!”

The thing is, as a seller, the last thing you need is a Bundini Brown-like listing agent in your corner telling you what you want to hear no matter what’s happening. You need a dose of reality, no matter how unpleasant it might be.

Case in point, adjusting the numbers to protect the innocent. One of my buyers recently found a patio home listed at what we’ll say was $175,000. Only one listing had sold at that level in the last 12 months (and it was larger), the next closest sales were $160,000 and the most recent sales were at $145,000.

Taking into account the handful of upgrades to the property and my buyers’ own desire, we decided to offer $160,000 and take our chances on an appraisal. The offer was declined outright because the seller doesn’t need to sell and isn’t going to give their house away.

As the agent told me, there are cash buyers out there - cash being code for “no appraisal needed” - and that’s who the seller wants to attract. Never mind the fact that most cash buyers are more likely to try and drive the price down than a financed offer in the belief (sometimes right, sometimes wrong) that they have more leverage.

It’s cool if the seller doesn’t really care if they sell or not … my question, though, is why even have the home on the market if only an offer more than 20% above the last sale of the identical model is going to be accepted? What agent in their right mind would write that offer for a client after viewing the comps?

Sadly, there’s a chance one will be found. Just as there are agents who will put a sign in the yard at any price there are some agents who’ll write an offer at any price. Most who do are more interested in their own commission check than the best interest of their client but that’s another story.

Look, Bundini Brown was damn good at what he did. He served Ali well and Sugar Ray Robinson before him. Boxers need the encouragement before they go get their heads pounded in by another person. Sellers may feel similarly bruised but the reality is it’s better to have someone willing to throw in the towel and concede reality than allow a hopeless fight to continue.

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“Gee, cousin Billy. Thanks for listing our house for us. We really appreciate it.”

“What’s family for? Besides, I finished real estate school two weeks ago. What else do I have to do right now?”

“Sell our house, of course! So when does the photographer get here?”

“Oh, I can’t hire a photographer since I’m charging you almost nothing, Jim. But don’t worry. I’ll take care of everything.”

“No problem. Did you bring your digital camera?”

“Digital? Ahhhh, those things are overrated. But I did bring my camera. Just move away from the table so I can get a picture.”

“Ummmm … okay.”

*** snap, flash ***

“How’d it turn out, Cousin Billy?”

“Can’t quite tell yet … keep shaking it and it should come around.”

(Actual photograph from an actual listing in the Arizona Regional MLS.)

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Let’s make some waves, or at least take a look at a few. Below is a chart showing the different category of sales in the Phoenix real estate market since the start of 2007:

As far as interest in the market went, as measured by activity, we reached the depths of apathetic hell back in December 2007 and January 2008 when barely 2,000 single family homes sold in Maricopa County. Before there were bank owned homes to blame, good old fashioned supply and demand already was making a dent.

As foreclosures - pictured here in maroon - started to enter the market at increasingly lower prices, they became the dominant feature of the market; in January of this year, 2,503 of the 3,652 sales were bank owned homes and only 836 were so-called traditional “non bank owned, non short sale” sales.

Back on April 14 we wrote about all boats being lifted here in the Phoenix real estate market because of the interest in foreclosures and you can see on the chart that’s when sales started to soar. If you take the chart back to 2005, which I aspire to do at some point when the schedule allows, you’ll see we were at 3-year highs in total sales.

The assumption was only bank owned homes were selling but the chart clearly shows that isn’t the case. Investor fix and flips - foreclosed homes purchased by investors for the sole purpose of rehabbing the properties and selling for a profit, be it significant or minuscule - have worked their way into the cream-colored “traditional” sector but they’re clearly not the whole cause.

The relative dearth of bank owned listings hasn’t diminished interest in the market; if anything, it seems to have moved many buyers off the fence in search of reasonably priced properties whatever the nature of their ownership.

And non-bank owned, non-short sale homes are selling. (We pause now for today’s blatant plug for my $325,000 listing in Arrowhead Ranch which sold at market value in a mere 23 days.)

So what’s the next big thing? By all indications it’s going to be short sale, assuming lenders improve their processing and agents avail themselves of training such as the Short Sale and Foreclosure Resource training being made available through NAR rather than trying to stumble blindly through the market’s most complex, detailed type of transaction.

(The lack of blue on the left side of the chart is due to two factors - very few short sales being attempted and different categorical tracking in the Arizona Regional MLS. In truth, there ought to be a bit more blue back there but it’s virtually impossible to go find it now given the way these were documented then.)

Still, even as the distressed property market slowly shifts toward short sales from REOs (and assuming the lenders don’t suddenly flood the market rather than continuing the current policy of slowly adding homes to the inventory) there does remain a decent market for traditional sales assuming their well priced and well marketed.

Selling is not an improbability. At least not nearly as improbable as it was in the fall of 2007 when no one at all was interested in the Phoenix real estate market.

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It was considerable amazement that I was able to bond with my 12-year-old stepson the other evening. My father and I tend to talk best - that is to say, we can hold a conversation - when discussing World War II or football. (Given he and my mother watch Fox News 24/7, I avoid politics like the plague.)

I’m now finding myself having the same discussions with my son, albeit filtered through the near-ADHD prism of a 12-year-old boy. I had taped a History International show on Sherman’s march to the sea and asked if he’d like to watch it, knowing he was studying the civil war in school. Surprisingly, he said yes. Then I asked what he was studying and the answer came back “Little Top.” There was more … “you know, the bayonet charge” he said, adding most unhelpfully “they went up the hill, then down, then right.”

It took a minute or two before I realized he was describing Pickett’s Charge during the Battle of Gettysburg. That he retained anything, much less more than I remember having learned about the Civil War way back when, impressed me. And it made me realize that as much as we as parents can lay the groundwork, at some point our kids have to take the reins and do the rest.

Real estate marketing tends to go the same way. Most examples of what sellers might call “aggressive marketing” are very high in action and very low in results.  My favorite still is the prospective seller who talked about an agent who held a house open every weekend for several months until the home sold, never once asking why such an “aggressive” sales technique failed weekend after weekend for months on end.

So why do agents continue to do this? Because of the expectations they build for their sellers in an effort to secure a listing. No one wants to hear that a home is going to be put in the MLS and then nothing else will be done. Yet more often than not, it is just that - an MLS listing combined with an effective price - that causes a home to sell.

All the marketing in the world can’t make up for too high of a price, but a properly priced home can sell in days if a low enough price is attached to the property.

There’s only so much we as listing agents can do to lay the groundwork. At some point, it’s up to the property and the price to sell themselves. Activity for the sake of activity is two steps past useless but it’s also a hallmark of the real estate industry.

And it’s also the primary reason we’re seeing an effort made to extend and widen the $8,000 tax credit for first-time homebuyers. No one can point to the credit and say it is the specific reason why sales have improved this year; I would argue lower prices and low interest rates have had far more to do with the increase.

There definitely have been some buyers attracted by the first-time credit, but from what I have seen the impact has been minimal and the end of the credit will not have much of a detrimental effect on the market. So why continue it? Because it creates the appearance that our elected officials are being proactive in helping the housing market, even if the help is incidental at best and coincidental at worst.

At the end of the day, people will buy when they’re tired of renting and when it financially no longer makes sense to pay rent to a landlord when they can own their own home. One of my recent clients purchased a home for $75,000 and will have a mortgage payment that is lower than the monthly payment on my Town and Country. And their home’s just a bit bigger than a mini van.

When it’s cheaper to own than rent, people will own. End of story.

The rest, much like those ever-present open houses, is just so much fluff.

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