Kevin Hanley's monthly commentary regarding the real estate market in Scottsdale Chandler Ahwatukee Paradise Valley Fountain Hills Tempe Mesa Gilbert Queen Creek and Sun Lakes

MONTHLY COMMENTARY REGARDING THE PHOENIX AREA
REAL ESTATE MARKET - JUST MY HUMBLE OPINION....

JULY 2007

The summer months never fail to be hot in the Phoenix area, but the real estate market has failed to follow suit. It's time for a reality check, and the reality is that the real estate market in the Phoenix metro area does not appear to be recovering as we all hoped and expected. I'm not being pessimistic here, but rather I am being realistic. There are signs and statistics that show that we have probably hit bottom, but instead of climbing up from the bottom, I now think we will be dragging along the bottom - with minor peaks and dips - for as much as a year before we start seeing a steady drive upwards to another crest. It is a fantastic time to be a buyer, and I think in a year or two, many of us will look back at the summer of 2007 and say "man, if only I would have had the money to buy a few homes during that summer". I know several investors that are poised to do just that, because they too recognize the potential. But investors are doing what everyone else is doing, and that is waiting to see how things pan out with the mortgage problems that have surfaced. It's my opinion that the explosion of foreclosures, and the upward trend of mortgage rates, are the primary factors in slowing what should have been a normal recovery from a "boom" like we had in 2005 through mid 2006. As a result, we will likely see the Federal Government and the mortgage industry scrambling to try to "clean up" the mess. And there is no simple fix to a complex problem. Personally, I am hoping that the upcoming election year (2008) will be the recovery year. Time will tell...let's hope I'm right.

July 2007 Commentary - just my humble opinion...
--Kevin Hanley

For specific real estate statistics showing a comparison of Active and Sold homes in the Chandler Arizona and Sun Lakes Arizona real estate markets, please click here:
Chandler Homes or Sun Lakes Homes

JUNE 2007

ANOTHER NEW WEBSITE LAUNCHED THIS MONTH!
www.SunLakesAZrealestate.com

Another month has passed with little or no change. Perhaps a slight improvement in some areas of the Phoenix market, which is encouraging, but the changes are subtle. This brings up a point that is worth noting. It's important to realize that real estate trends are very localized. Allow me to explain my point. We see articles on a National level that are starting to say that the worst is over and the market is improving. Looking at the overall
national level, statistics show that this is a true statement. But like the weather on any given day across the United States, it's great in some areas, and not so great in others. Let's use the weather analogy on a more local level. In the Phoenix metro area during the monsoon season, you can have a regular day in some parts of the Valley of the Sun, and thunderstorms in another area! It's very localized! The real estate market is similar in the
sense that one part of the metro area can be experiencing true signs of "recovery", and in other areas there are true signs that the going is still
pretty rough.

I happen to love statistics, but when you see them you have to understand that while the numbers are valuable, they can be too general. And as a result, they can paint an incomplete and inaccurate picture. In my opinion, there is one local statistic that really does that - and unfortunately we see this statistic published and quoted frequently, and it's not painting an accurate picture. The figure I am referring to is the Total Number of Active
Listings in the Phoenix metro area. To get an accurate picture, not only does this need to be broken down by REGIONS in the metro area, but it needs to be broken down by DWELLING TYPE.

Let's talk about breaking things down by regions first. I haven't taken the time to confirm this with statistics, but from my own personal experience as a local Realtor, I have found that different regions of the Valley of the Sun are experiencing a far greater increase in new active listings than others. I'd be willing to bet that if this were broken down by region, and these statistics compared on a continuous monthly basis, the statistics would support my theory. This information would be beneficial to both the public, and the real estate professional.

Now let's talk about breaking things down by dwelling type. I've been a real estate professional in the Phoenix metro area for a long time. And it's my opinion that condos and townhouses are a fairly new dwelling type to hit the local metro area. Don't get me wrong, I have nothing against this type of dwelling, and in fact expected this dwelling type to increase and start flooding the market as our average home prices began to rise dramatically in 2005. I saw the same thing happen when I lived back East in the 1970's and 1980's. So here's my point. I haven't taken the time to confirm this with statistics, but I'd be willing to bet that if we took the total listings of the Phoenix metro area in May 2006, we'd find that 95% of that total would consist of single family detached homes, and 5% would be condos, townhouses, and other non single family detached homes. But if you check that same scenario in May 2007, you will find that 17% are condos, townhouses, and other non single family detached homes. Condos and townhouses have flooded the market, and their numbers are skewing the Total Number of Active Listings in the Phoenix metro area. If I am right, then the single family detached home inventory has actually dropped over the past year! Personally I think this is important information to both the public and the real
estate professional.

As I said above, I love statistics and the numbers are valuable, but they can be too general. And as a result, then can paint an incomplete and inaccurate picture. Just my humble opinion...

June 2007 Commentary - just my humble opinion...
--KevinHanley

MAY 2007

The sub-prime mess continues to have an impact on the real estate market on both a national level as well as a local level. This impact will delay the housing recovery from a national perspective, but it's important to understand that the dynamics of our local real estate market are uniquely different then the rest of the nation. I still feel confident that my January/February projections of a healthier more stable real estate market by the fourth quarter, will still hold true. If you haven't guessed already, I'm an optimist. I believe that life is 10% circumstance...and 90% attitude!

Three big reasons why I still feel optimistic is 1) Phoenix continues to be the nations third top producer of new jobs, with the latest 12 month figures showing 89,000 net new jobs in the marketplace. And that's taking into consideration the weak construction employment over the same period! 2) Arizona continues to statistically rank in the top three regarding new people moving in from another state. A large number of these newcomers are of an older generation in the form of new retirees seeking the region's sunny weather. 3) The Phoenix metropolitan real estate market may be struggling right now, but we're still considered one of the country's most competitive markets, and there's a growing number of new builders "setting up shop" in anticipation of a continuation of future growth.

My last comment this month is about the past thirty days. We are still in a very strong Buyers market, and Buyers still seem to be focusing on pursuing the "smokin' deals" rather than pursuing the home that captures them emotionally. The ARMLS figures say that listings in the Phoenix metropolitan area increased from March to April, but SOLDS and PENDINGS are up too. So in my opinion it's a wash. Especially when you consider that a lot of the new listings to enter the market recently are of the high density condo/townhouse variety - not single family homes. New build spec homes dropped in April as well. In summary, I don't think we gained any ground, or lost any ground in the past thirty days. It's my opinion that the current health of our local real estate market is pretty much the same as it was in my last months commentary. I don't know about you, but I think it will be exciting to see how the upcoming month of May evolves.

May 2007 Commentary - just my humble opinion...
--Kevin Hanley

APRIL 2007

Resale sales were up slightly in the past 30 days - especially in the East Valley. The overall metro Phoenix supply of homes on the market remained level from the previous month, and as expected, the new homes spec count dropped slightly. This is a move in the right direction, but Supply is still high, and we are still in a strong Buyers market. I've said it before, getting back to a healthy Supply/Demand scenario is going to take a while folks. Optimistically speaking, there are a lot of bright spots to be found in our local real estate market, but the reality is there are dark spots too. And the dark spots are like accidents on the freeway, and we can't help but rubberneck. Just a human thing I guess. The smart people just glance and take note, and remain focused on the road ahead.

Are there Buyers out there? You bet! The local Commercial real estate market is healthy, and many existing businesses are "stepping up" to bigger and better facilities, and many new businesses are moving into the Valley. This typically means more jobs are on the way, which brings in more people, which means more Buyers. Did you know that Maricopa County had the largest population increase out of all the counties nationwide from 2000 and 2006, according to statistics released by the U.S. Census Bureau? It's true! The county had a gain of nearly 696,000 residents. Maricopa is now the fourth-largest county in the nation with 3.8 million residents, making it larger than all but 15 U.S. cities, according to the report. Yes folks, there are Buyers out there and there are more on the way. But the trend continues that existing Buyers are still holding out for the "smokin' deals". And this will continue to affect the local real estate market for at least a few more months.

One last comment. Recent mortgage trends of tightening underwriting guidelines are going to have an effect on the real estate market. It's too early to tell what the impact will be.... You can rest assured I will keep my finger on the pulse, and report more on this developing issue next month.

April 2007 Commentary - just my humble opinion...
--Kevin Hanley

MARCH 2007

2 NEW WEBSITES LAUNCHED THIS MONTH!
www.HomesForSaleInSunLakes.com
www.LuxuryHomesChandler.com

Sales for the past six weeks show that resale's were down just a little bit, but it's important to stay focused on the big picture. As mentioned in my February Commentary, the little ripples will be present and I believe that recent figures are a representation of that. There is no doubt that we are still in an abnormal market and I expect it will take some months to show a visible recovery. The big mistake many make, is in comparing numbers with the investor/speculator craze of 2004 and 2005, which in my humble opinion is not a fair indication of the overall health of our real estate market.

Homes are still on the market for an abnormal amount of time. A typical phenomenon as the real estate market works its way out of the bottom of the "big wave" (see February Commentary below) is that Buyers still have the upper hand and have the luxury of being very picky due to the plentiful supply. We are seeing Buyers only pursuing those properties that they can get a "smokin' deal" on, and this will effect the real estate market for at least a few more months.

The good news is that the supply and demand numbers continue to show that we are moving in a positive direction. The supply is slowly declining, and the demand remains as strong as ever. The other good news is that interest rates still remain very favorable, which I believe is the absolute key to the real estate market recovering from this low point! I believe we will see interest rates remain at this favorable level because the Fed recognizes the profound impact that the real estate market has on the economic health of our country.

I have decided to leave the February Commentary on this webpage for the purpose of reference. I wish I would have thought to hang on to my January Commentary for the same purpose, but I'm afraid it's gone. As 2007 evolves, I plan to leave the previous three months commentary posted. I think it will be interesting to look back at a Commentary from previous months, if only to see if I really do have my finger of the pulse of the real estate market! Time will tell....

March 2007 Commentary - just my humble opinion...
--Kevin Hanley

FEBRUARY 2007

What can we expect regarding Real Estate in the upcoming year? I guess that depends on who you talk to and whether that person is an optimist or a pessimist. It also depends on whether a person chooses to focus their opinion based on the "small picture" or the "big picture". Personally I choose to look at the big picture, and therefore have an optimistic gut feeling for 2007. I've been in the business long enough to observe the cycles of Real Estate in big waves instead of the small ripples that ride along with the big waves.

The highs and the lows of the big waves are historically rounded and gradual. Having said that, it's my opinion that we have hit the lowest point of the rounded and gradual "low", and we are gradually heading towards the crest of the next "high". Using this wave analogy, I do not think the next high will be anything like the monster high wave that we experienced in 2005. Ten years from now, I think we will look at 2005 as a rare and non-typical rogue wave.

What does all of this mean? In a nutshell, it means that now is an excellent time to buy. It's my opinion that the first quarter of 2007 will be heavily in favor of the Buyer. The second quarter will continue to show evidence of a balance in the supply and demand factor - still slightly in favor of the Buyer. I believe that as we approach the third and fourth quarter of 2007, we will see a balance of supply and demand similar to 2003 and early 2004. That time period was what I consider to be a healthy Real Estate market, good for both Buyer and Seller. Let's first hope that I'm right, and second that the crest of this predicted wave will be well rounded and gradual...and last a long time!

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Here are some facts to digest. Pending home sales for December 2006 rose 4.9% to an index of of 112.2 from a November index of 107.2, which had risen from October figures. Decembers monthly gain was the biggest increase since March 2004 when the index rose 6.9%. To me this suggests an increase in Buyer confidence and Buyer awareness that a stabilization is occurring. Buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out. I think everyone would agree that a moderate rise in existing-home contracts is a welcome relief!

The upturn in Pending home sales is nationwide, with all regions showing an increase.
1) In the Northeast, the index jumped 8.1 percent in December to 89.9 but was 4.8 percent below a year ago.
2) In the West, the index rose 5.3 percent to 112.2 but was 4.9 percent below December 2005.
3) In the South, the index increased 4.3 percent to 129.8 but was 4.2 percent lower than a year earlier.
4) In the Midwest, the index was up 3.2 percent in December to 103.2 but was 4.3 percent below December 2005.

This is what the index means...
The index is a leading "big picture" indicator for the regional housing markets, and is based on pending sales of existing homes. A sale is entered as Pending into the MLS database when a contract has been signed, and the transaction has not yet closed. Usually the sale is finalized within one or two months of contract signing. An index of 100 is equal to the average level of contract activity during 2001 (the first year to be examined), and the first of five consecutive record years for existing-home sales. This is a bigger picture view, because there is a closer relationship between annual changes in the index and actual market performance, than with month-to-month comparisons.

February 2007 Commentary - just my humble opinion...
--Kevin Hanley

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Considering a Real Estate purchase? At some point in your plans it will be time to choose a Realtor. When that time comes, please consider the wisdom of choosing an experienced Buyers Agent. I sincerely hope you will consider contacting me for an informal no obligation interview. The interview can be done by phone, by email, or in person (my preference). Let's find out if we will work well together! Contact me today, and we can get the ball rolling!!

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Kevin A. Hanley - Coldwell Banker Chandler Arizona
Associate Broker at Coldwell Banker Residential Brokerage
1045 W. Queen Creek Rd., Chandler, AZ 85248

The information presented on this Web site is intended for the purpose of providing information and resources regarding the multi-faceted real estate market in the Phoenix Metropolitan Area, and is not intended for any other purposes. To that extent, by continued use of this site, the user affirms the understanding of its purpose, understands the importance of verifying pertinent information, and releases KEVIN A. HANLEY, REALTOR® from any claims arising out of his/her use. Kevin A. Hanley is a member of the NATIONAL ASSOCIATION OF REALTORS®. Coldwell Banker Residential Brokerage is owned and operated by NRT Incorporated.

PLEASE VISIT MY NEWEST WEBSITES!
HomesForSaleInSunLakes.com
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