They say what goes up must come down. This was true for the Phoenix housing market through much of 2009-2011. It seemed like anytime we got any traction with upward pricing some external market force (i.e. expiration of the federal housing tax credit, robo-signing scandal) would push values right back down again.
With the worst of the foreclosure crisis behind us (trustee’s deeds for last month were the lowest since Q3 of 2007 – see chart below) many housing experts believe Phoenix is on the slow road to recovery.
Further proof is in median pricing. According to Mike Orr’s Cromford Report graph below, it bottomed in May, 2011 at $108,000 and has been on the rise ever since. As we sit today median pricing is at $135,500.
This is great news for home sellers. However, as a fix and flipper rapidly rising values make me cringe. According to Mike Orr’s mid-April summary:
“The current price level is now 14.3% higher than last year on April 15. We reiterate our forecast that positive annual appreciation will be recorded throughout 2012 is likely to exceed 25% by September 2012.”
When prices start going up like this everyone starts speculating; owner-occupants, buy and holders and fix and flippers. I’d prefer a more stable rise in values.
But because of the lack of inventory (there are less than 9,000 active single-family homes for sale on the Arizona Regional Multiple Listing Service in the greater-Phoenix area as of today) a feeding frenzy has ensued at almost every price point. We’re selling almost 9,000 houses a month, leaving us with about a one-month supply.
Which is why I find the “there’s another wave of foreclosures coming” story widely reported by the media to be so hysterical. This market could handle a tsunami of 15,000 – 20,000 foreclosures. They’d be devoured in 3 months.