When a real estate consultant declares a residential real estate meltdown over, you might be inclined to chalk his enthusiasm up to optimism. But when a professor from Arizona State University weighs in, you may start to allow yourself some hope – not because the real estate consultant does not know what he’s talking about, but because in general the academic predictions on the real estate front have just been plain dreadful. When the two agree, it’s definitely time to sit up and take notice. (Unfortunately for them, there’s a much better way to analyze markets than either of them are using… more in a minute.)
In Phoenix, Arizona, the real estate market is starting to stir, reports Karl Guntermann, the Fred E. Taylor professor of real estate at Arizona State University’s W.P. Carey School of Business, and R.L. Brown, publisher of the Phoenix Housing Letter and professional real estate consultant. What makes these two experts’ opinions even more interesting is that they derived their conclusions using totally different data and analysis methods. Guntermann predicts that median home sales in the area will be up nearly $15,000 from May 2009 (when the market is generally agreed to have hit bottom in the area) when Septembers numbers from in. Brown notes that the $8,000 first-time homebuyer credit actually boosted construction in the area as builders realized that they had only a limited amount of time to meet demand with new houses. Brown predicts this trend will continue, along with the gradual climb in sales and values, if the government extends the credit or creates a comparable tax break.
Interestingly, this good news for the residential arena does not mean good news for the townhouse/condo markets. In fact, Guntermann predicts 36 percent annual drop in prices by July 2010. However, this does not prevent either expert from expressing some guarded but significant optimism. In fact, Brown goes all the way to stating that the local “competitive market is alive… [and] reawakening.”
I personally enjoy this news not just because it is a ray of sunshine in a storm of dark and gloomy reporting, but also because of the diversity of the two experts. They are coming at the problem from completely different perspectives, and I imagine if we talked to each of them they would have very different ideas about how to best handle the housing “crisis” and their local area’s apparent growth and initial recovery. This gives me hope not just because the news looks good, but because two people with very different viewpoints are able to see the light at the end of the tunnel.
However… there’s really only one market analysis tool that I trust for determining the relative strength or weakness of a real estate market. I consider this tool a secret weapon and is virtually unknown in the real estate investing community. This is the type of tool that professional investors use, and I simply have no idea why individual investors haven’t been smart enough to take advantage of it yet.
I don’t have time to write more about it right now, but will string together a few thoughts for you about it later this week. Better yet – if you’re interested in learning about this heavyweight market analysis & prediction tool, leave me a comment below.
Thank you for reading http://realestate.BryanEllis.com – comments welcomed below.
I’d love to know more about legitimate market analysis & prediction tools. Please, do tell!
Absolutely!
Many thanks!!
I am interested in hearing more about the market prediction and anaylsis tools, please enlighten me!
Please do tell. Waiting in anticipation!
With all due respect for both “experts” I believe they are looking at a spike that if it was on a electrocardiogram screen would resemble serious left ventricular fibrillation. I am a full time investor in several Phoenix zip codes, and based in Phoenix. I can tell you that the data, although diverse approaches may have been utilized by these folks likely showed an upward trend for first time homebuyers due to the 8k tax credit for those who qualify. In addition there are a good number of foreign (Canadian, British and other European investors buying up houses like they were at Costco or Sam’s Club—all of them have stronger currencies with which they are dealing, so they are getting into these deals at even further discounts).
It is true that fringe areas outside Phoenix city limits are tending to bottom out, but just as many, if not more are still heading downward. I believe there is a good 3 yo 5 year period before the word “recovery” can even become a thought.
Who wouldn’t want to know what market analysis tool you use???
A market prediction tool would be good for the numbers being tossed around for my area, Phoenix’s improvements are just a figment of that professor’s imagination.
The RMLS is falsifying numbers down here on sale prices, I have several examples of them overstating the selling price. I think they are doing this to make the market look better in the Phoenix area than it really is. The job market numbers here are only looking better because of the number of people being dropped off the roles. The real estimate of joblessness is closer to 20% locally and Janet Brewer is trying very hard to get some huge tax hikes through that will really flatten out what is left down here in the way of recovery.
The very latest numbers for this area has the values nearly flat, and the number of sales is dropping again. Also days on market are starting to creep back up as sales are once again slowing down.
One in five people here are just trying to figure out away of buying food, let alone a house. The food banks are all in trouble and some have recently closed because of lack of donations.
We have a huge unlisted foreclosure list the banks are holding back. The guess being they are waiting for more bail out money. Also foreclosures are still going up in numbers not down in the Phoenix area.
While you can buy very cheaply here, it is very hard to even rent something out, let alone sell it.
So a system that can peel away some of this crap they are pulling here back and show better ways to buy and sell would be very good.
I am interested in finding out about the tool that will do heavyweight market analysis & prediction
I am interested in hearing more about the market prediction and anaylsis tools. Please send me more info!
Thanks,
Thomas Solomon
I agree fully with the comment above by Chris. His numbers appear to be right on as does his reference to what our Governor seems to planning to implement.
As far as valuation tools–I would very much like to see what you are referring to. As investors we have to deal with a dichotomy in the use of the word “market” . First that is what our business really is about–marketING and second to succeed we absolutely need to be able to read a “market’ s” position and do so ahead of the curve.
Yes Bryan! Please tell about your indicator
Barry, Thanks for the back up! I just hope that Janet can be short circuited some way. When you call her office the people there think she walks on water and get kind of snippy when I tell them it is really quicksand!! I do not think she or most government people really get it yet.
I’d like to know more about your market forecasting tool myself.
Market indicators are very useful in determining market sentiment. There is a saying that the “trend is your friend” and while the institutional investors have alogrithms to show where their money should go, we (small investors) are left out.
If you are in possesion of a way to level the playing field, how ever slight, by all means share.
“This is the type of tool that professional investors use…and is virtually unknown in the real estate investing community.”
Hard to imagine this kind of tool being unknow even to astute investors, so I am definitely open and anxious to learn more. Many thanks!
I am very curious to learn about your market forecasting tool.
OK, give me the skinny on your market forecasting methodology / technique. I’m a professional real estate consultant, broker, investor, developer, appraiser and have seen just about everything. Let me know what you’ve got…
Yes ,absolutely would help in markets Iam working but do not live near.
Itwould be a great tool to help in those areas.
Thanks for your time
Mark
You bet I’m interested in your valuation tools! As for Phoenix, I seriously
doubt if a bottom is even in sight. What about all those Alt-A and option
ARM loans due to reset soon? And how about all the shadow reos
banks are keeping off multiple listing so as not to flood the market
while hoping for prices to start rising?
Do tell Bryan, Do tell.
Gabrielle
Please Let me know…thanks..Stay Rich & Famous!
Absolutely would like your secret tool!
Thank you for sharing info about the emerging market. I would love to know about this wonderful tool. Many thanks, Carol
Yes!!! Do tell. Thanks for all the insight.
Well the market fell like a stone today when the “experts” predicted an increase in new home sales and instead they fell like a stone too.
We are not even close to out of this recession and when the Dems admit this we will be lucky to have anything left to talk about.
I received listing for Michigan today on auction bids starting at $1,000.00, that does not sound like a bottom or a recovery.
So much for the two talking heads mentioned. Like I said that professor here ASU is an idiot and the only way he will get something right is the same as a broken clock.
Anybody who thinks we’ve seen the bottom is drinking Kool-Aid.
The Phoenix market is currently receiving 300+ notices of default a day since the beginning of 2008. A zillion Alt-A and Option Arms are on the horizon, Obama’s modification program, is what it is…a pitiful scam for the benefit of the banks. And unemployment is going thru the roof!
To make matters worse, the data we’re receiving is skewed. Banks aren’t finishing foreclosures they start. We’re at LEAST three years from the bottom. If things continue on their present course, by the end of 2013 over 25 percent of all the homes in the Phoenix metropolitan area will have been foreclosed on.
Just because the media continues saying it’s getting better doesn’t make it so.
Lotzahomes, you are so right! Found out yesterday about how they are getting the improving home sale numbers. It is a total scam because they are including the number of pendings as sales. Less than 20% of pendings are closing it turns out and when you adjust the number and take out just the 80% that are not going to close because of the banks turning people down. It shows a downward trend that is truly terrifying. That is not even including the open foreclosures the banks are waiting to get money for from the government.
In the Phoenix area I learned there is a 70 month supply of homes over $379,000. That does not sound too good, like you said no bottom in sight any time soon.
We’ll know when we’ve hit the bottom, when banks start carrying their own paper and the government admits they’ve nationalized the banks.
$8,000 home buyer tax credit? Give me a break! Next year they’ll be giving out 15K to bribe you to buy a home. The only problem is you’ll lose 20k in equity by the following year.
What’s the secret tool you use to look at the markets? Thank Brian for telling it the way it should be told.
Please do tell what the secret tool is. And, thanks.