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April 6 – 19, 2013
Community
www.SanTanSun.com
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be based on specific locations, but the Southeast Valley is definitely the most desirable sub-market.”
Seller’s market
These new numbers reveal a major transition in local real estate over the past year. The oncesaturated housing market, where homes sat for months without selling or drew only low-ball Mark Stapp, director of the Master of Real offers, has given way to a thriving Estate Development marketplace of stiff competition (MRED) program at for a smaller pool of available the W. P. Carey School properties. of Business at Arizona “This combination of increased State University. pricing, shorter days on market Submitted photo and multiple offers does indicate the East Valley has shifted from a buyer’s market to a seller’s market,” Royse reports. “The market is strong in all price ranges, especially in the starter prices and the move up buyer price range of $300,000 to $450,000 where multiple offers are the norm. The luxury market is coming back, and well-priced homes are selling in three to four months with list price to sales price ratios in the 98% range.” The number of homes currently listed for sale is down significantly, compared to past figures, fueling the bidding wars and indicating the SanTan Sun area may be ready for a fresh wave of new home construction. “Inventory is still very low relative to demand and this causes prices to rise,” explains Stapp. “New homebuilding will help add needed inventory and push toward a more balanced supply and demand, but we can’t yet build enough homes to create an absolute balance.”
Fewer short sales, foreclosures, investor buys
In the years immediately following the housing bust, a large percentage of area sales were distressed properties purchased as investments. Foreclosures,
short sales and bank owned homes flooded the market and caused housing values to plummet. Investors were able to snap up homes for a fraction of their former list price in all-cash deals to desperate sellers. But that trend, too, is beginning to turn around as the local market stabilizes. “Investors drug us off the bottom,” says Stapp. “They are still a big but diminishing market force.” Realtors are seeing the same shift back toward traditional sales in the SanTan Sun area. “Outside investors are not as prevalent in the East Valley as they are in Phoenix and the West Valley,” Royse notes. “Short sales are not in play as much as they were six months ago. Fewer homeowners are underwater today, and those who can will wait until they have equity to sell. Of course, we are still seeing ‘flip’ houses in the East Valley, but they are at market value, completely remodeled and this is a bonus for the market.”
Some lingering concerns
Despite the encouraging indicators, there are still some residual problems within the system that continue to plague the area’s housing market. Sales prices are up but too often the appraisals are coming in lower than the contract amount, causing problems for buyers seeking mortgage loans. “The issue of rising prices is tempered with appraisers who are looking back at historical data – homes that have closed in the last six months – instead of looking at current data and pending sales,” says Royse. “In my opinion, this is keeping the market artificially low. Buyers are certainly willing to offer list price from homes, their Realtors are doing comparables and seeing the market trend moving upward, but appraisers are appraising at a lower-than-offer price, even in cases with multiple offers.” Another hindrance is what real estate analysts call “lender comfort.” Banks are still very reluctant to issue mortgage loans after being burned by the recent deluge of defaults, squeezing buyers who don’t have deep
TRADITIONAL: Real estate agents are seeing more traditional sales in the market, such as this Cooper Commons home, and fewer investor and distressed property transactions. STSN photo by Ron Lang
pockets or stellar credit ratings. “Cash is still king and a much larger percentage of sales have been all cash,” Stapp explains. “This makes it tough for buyers who need a mortgage in order to buy. Because of the paperwork and verification, if you don’t have near perfect credit it’s almost impossible but loans are being made.” Even with these lingering hurdles, area experts are optimistic that local real estate is poised for a strong and sustained recovery over the next few years. “I think we are still 18 to 24 months from a fully recovered market – assuming no national or global economic problems and no big regulatory changes to the industry and the Fed stays the current course,” says Stapp. “People need to heal financially. People need cash to buy. People need reliable jobs with sufficient wages and benefits to afford homes. We are moving in the right direction but are not there yet.” Miriam Van Scott is a former Kerby Estates resident who can be reached at Miriam@SanTanSun.com.