I wanted to update everyone on the true picture regarding foreclosures in the Phoenix/Scottsdale Housing Market.
The Sibbach Team works with buyer’s everyday to find North Scottsdale Foreclosure and North Scottsdale Homes for Sale. This morning I have made a revelation that I would like to share. The overwhelming majority of people we visit with BELIEVE what the media is writing about in regards to foreclosures and the housing market as it pertain to the Phoenix/Scottsdale housing market. This is scary and wrong. They believe that things are bad and they are going to get worse! They then apply this to the housing market because it has been so bad for so long that it will continue. Why would they believe otherwise?
I wanted to put together of some factual data points that the media chooses not to print that would point to a very strong Scottsdale/Phoenix housing market and why, if you want to get a great deal on a house you should be buying right now.
1) Experts, economists and talking heads predicted our Inventory (Scottsdale homes for sale) and our Shadow Inventory would swell during the first half of the year. The reality our Inventory and Shadow Inventory are off 50% during the time of their predictions. Recap: they predicted an increase of up to double the inventory in some cases, so they were off by 100%. So why are we still giving them credibility?
2) In classical economic theory, the relation between supply and demand determines the price of a commodity. This relationship is thought to be the driving force in a free market. As demand for an item increases, prices rise. Plain and simple, when there is low inventory, prices rise, coincidently that is what our real estate market looks like today yet everyone is predicting gloom and doom.
Phoenix/Scottsdale Inventory is at 2.22 months supply, below normal levels – Doomsday theorists have argued for the past 18 months that inventory would grow and see what has actually happened. Why does one believe someone if they have been wrong for past 18 months? The last time inventory was this low our market prices went up 22% the next year.
3) North Scottsdale Foreclosures – Everyone wants to talk about shadow Inventory and how it is going to hinder the housing market. The total amount including all shadow inventory is 33,000 homeowners late at least one payment on their mortgage (this number peaked over 80,000) and the banks have foreclosed on 14,480 (30% below the peak 12 months ago) that they have on their books. Currently, almost 15,000 of the late homeowners are listed with a realtor, so there are only 18,000 or 2 months of Pending Foreclosures. Half of the bank owned homes are listed with a realtor. There are a percentage of those unlisted homes that are leases as well. That means there is 3 months of shadow inventory which ones once suspected to be 10-18 months. Note: A normal market has one month of shadow inventory. This also means the Phoenix Scottsdale market is in the 8th inning of the downturn and the lights at the end of the tunnel now look like High Beams!
4) Demand remains strong; we sold 8700 homes in August. We only have 19,333 homes available for sale. Even if banks could puke the entire shadow inventory at once, we would only have 5 months of homes on the market. See graph demonstrating what I just explained.