The nature of the seller in Phoenix’s market has changed tremendously over the past 10 years. Of the 10,000 homes sold in June 2001, nearly all of the homes sold were either resale from seller to buyer or new-home sales. Auction homes were unheard of and Fannie Mae homes sold about once a month.
If we take a look at the home sales numbers 10 years later, it tells quite a different story. In June 2011, real estate data reported the following:
— 3,684 were resales from seller to buyer
— 540 were new-home purchases
— 1,350 were sold at the Maricopa County courhouse steps
— 1,255 were sold by lenders after foreclosure
— 2,183 were sold by Fannie Mae or Freddie Mac
— 1,822 were short sales
— 401 were sold by VA and HUD
Defining the new market
As a buyer, it’s best to understand the dynamics of the new market so you can invest your money wisely. So, what exactly do these different categories mean in today’s market?
Traditional resales: Foreclosures and short sales are cheaper than traditional resales, so this market has slowed tremendously. However, the number of foreclosed home sales has declined in recent months, so we may see a revival of resale homes.
New-home sales: 5 and even 10 years ago, it seemed there wasn’t a neighborhood in town that didn’t wake to the sounds of hammers and backhoes. But, now construction has nearly come to a full stop. Many homes sit unfinished, and contractors who are suriving likely dove head first into the rehab and resell market. Just like resale homes, home builders can’t compete with the foreclosure market. Add in the cost of construction materials and fuel, and it’s nearly impossible to get the job done.
Fannie Mae and Freddie Mac: The metro area is teeming with homes owned by these government entities. A savvy buyer would think these homes were the way to go, but these agencies are constantly changing their policies, making it too much of a hassle to close on these deals. Realtors and buyers usually want to steer clear of these homes to avoid the headache.
Short sales: 10 years ago, short sale wasn’t a regular part of the real estate vocabulary. Banks didn’t agree with them early on in the market crash, but now they are easier to work with. Since short sales aren’t foreclosed on yet, the values of these homes tend to be all over the place.
Foreclosure auctions: The Phoenix auctions sell a considerable amount of these homes every month, and home auctions have become quite popular. But, just like everything else that grows in popularity, auction homes aren’t as valuable as they were a couple of years ago. Everyone wants in on a great deal, which means more bidders show up for the same house. And because of the increased demand, bankers are often opening bids at market value.
So, where exactly is the marketing going? As auctions and short sales die out, we hope to see a revival of the traditional home. The high end homes may be the next hot market, and sellers will likely help come up with creative financing to help move their homes off the market.
We will keep a close watch on the changes and let you know what’s happening. This graph, put together by Maggie Clark with Equity Title in Scottsdale, shows the changes in the residential foreclosure market this past month.