Last month we examined the overall improving market in some detail as we believe a primary function of our “job†is to keep both ourselves and our clients informed on market trends and shifts. Trends are rarely formed in a month and so monthly news can often be repetitive more than informative. With that risk acknowledged, we still feel duty bound to report the latest in the market. Here are the latest trends:
Normal sales gained market share in January, moving from 40.9% to 41.40% of sales, while REOs were the big losers moving from 30.3% to 26.8%. Short sales and pre-foreclosures advanced once again moving from 28.9% to 31.8%. Any improving growth in normal sales is a positive recovery sign – although a cautiously optimistic one as a significant portion of these normal sales are investors doing flips.
Despite a severe imbalance between supply and demand, current pricing is fairly stable and slightly trending upward. However, a more significant upward price movement seems likely in 2012 or early 2013.Â
September 15, 2011 marked the bottom of price per square foot (the most reliable indicator of short term price movement) – coming in at an average of $78.81. The average price per square foot for all pending listings currently has moved to above $83 for the first time in over 11 months signaling stronger sales pricing for February.
Re-sale listings are coming on to the market at a very low rate. In the last month, 8,269 have come on the market which is 22% below the same period for 2011. This supports the tightening supply of homes for sale, which is the force behind the upward pressure on pricing. In fact, there are fewer single family homes listed for sale in Phoenix than in any year except 2006. However, in Anthem there are fewer single family homes listed for sale than in any time in the last 10 years!
HUD foreclosures are down 91% from this time last year. Trustee notices of foreclosures are down 61% from this time last year.
In short, all news continues to support the early stage of recovery is continuing.
Which brings us to another subject, if short sales now compose 31.8% of the sales and “normal†sales are up to 41.40% – the home seller (rather than the institutions) is once again the majority and retains control of the agent selection process handling their home sale. With that in mind, we believe it is time to revisit issues surrounding that important selection.
An alarming fact of any distressed market is that opportunists arise who seek to exploit the homeseller. One of the most obvious examples of this is “up-front feesâ€. We have seen numerous agents and attorneys alike charge large, non-refundable up-front fees for loan modifications, short sales, and consultations. In one case, a client of ours explained that a company charged $1,500 for a modification while stating to the client “this is illegal for me to charge thisâ€. Then this†consultant†sued the owner for the balance of the payment due and won a judgment in small claims court, despite the illegality. Go figure! So, with that in mind, run, don’t walk from any agent or firm demanding up-front (or back end for that matter) fees to process a modification or short sale. Modifications belong in the realm of a free HUD counselor, and any legitimate short sale agent won’t require fees from the homeowner but will accept payment from the short sale bank. In our entire career, distressed market or otherwise, we have never charged sellers up-front fees. We don’t believe others should either.
Additionally, as foreclosed home sales continue to drop, another trend is emerging – the former REO agent now trying to become a short sale specialist. Of all the sales we handle yearly, the short sale is the most difficult and demanding of our skills. The mass migration of REO agents over to the short sale causes us much concern. We have been handling short sales since 2007 (well to completely date ourselves, we first handled them in the late ‘80s). Frankly, it has taken us years of developing systems to handle the complexities associated with these files and to make sure that our clients are protected from pursuit by their lenders. The sale of a foreclosed home is so vastly different from handling a short sale that we worry about the service and protection level that the average homeowner is receiving from these newly minted short sale agents.Â
In short, if you are facing tough choices about the sale of your home – whether “normal†or a short sale, we stand ready to serve you. In the meanwhile we will continue to report on the trends that cheer us as well as any that we believe should concern you.
Russell & Wendy