James Chilton called last week to discuss the Bullhead City, Fort Mohave and Mohave Valley Arizona single family home real estate sales market. Hats off to James as I think this is the most detailed and informative written article. He was able to convey our real estate housing trend in an easy to understand format.
HOUSING MARKET: For sale signs are still familiar sights in the Tri-state, but numbers suggest that there are some good signs for the local housing market. BILL McMILLEN/The Daily News
Realtor sees some encouraging signs
By JAMES CHILTON/The Daily News
Published: Monday, May 23, 2011 2:03 AM MDT
BULLHEAD CITY — It’s been a long, hard journey for the Bullhead City real estate market, from the boom years of the mid-2000s to the bust of 2007, to the present glut of foreclosures and declining home values. But as the housing market presses into the second quarter of 2011, local Realtor Petra Fahey has seen some positive indicators, even though the market may never again reach the heights of the prior decade.
Fahey specializes in residential home sales, particularly single-family residences that are “traditional” sales, that is, homes that aren’t either foreclosures or under the threat of foreclosure. Each quarter, Fahey collects and aggregates home sales data from across the region, including Bullhead City, Fort Mohave and Mohave Valley. And so far this year, she said, she’s seen some good news.
The first positive sign she seen has been the fact that month-to-month sales have remained strong, despite the expiration last year of various tax credits that were meant to encourage more first-time homebuying. From January through April this year, she said, Realtors sold 330 homes, an average of 83 per month. That’s only one fewer than the 84 homes sold per month throughout 2010 and two higher than the same figure in 2009, when first time homebuyer tax credits were fueling large numbers of home purchases in Arizona and across the country.
“I find it interesting and encouraging that we’ve come through this year as strong as we have, because last year everyone was riding those tax credits,” Fahey said. “We’ve been cruising right along, staying pretty steady, which I’m happy about. Since May 1 to the 12th, I myself sold 12 houses into escrow. That’s just crazy.”
Another encouraging sign, she said, is the fact that foreclosures, while still the dominant force in the local market, have been steadily losing their share to short sales — a sign that lenders are finally getting their act in gear and working to speed up the short sale process, which allows distressed homeowners to sell their homes without taking the same hit to their credit they would have faced with a foreclosure.
“This year, the foreclosure percentage of the market share is down to 54 percent, which is a great improvement from last year’s average,” Fahey said. “Last year’s was 61 percent of the market and short sales were 8 percent. Now, short sales are 12 percent.”
Fahey said she credited large banks, such as Bank of America, with the increase in short sale percentage, noting that such banks have created online resources, such as www.equator.com, that make short sales much easier to process than before.
“You’ve got the major banks getting online, and that just expedites it for the bank, the agent, the buyer and the seller,” Fahey said. “The agents can upload all the documents that are needed, then the seller can also go in and upload their financials. When you do a short sale, the seller has to show two years of tax returns, all their financials, it’s kind of like getting a loan again.”
Before, she said, sellers would have to fax their documents over, which could be tedious and time-consuming, given that some short sale packages were upwards of 120 pages in length.
“It came on so fast and so quick, I think that’s part of the reason we were having trouble doing the short sales before,” Fahey said.
A third positive sign, she said, has been a sharp decline in the number of new homes coming onto the market. From January to April this year, Fahey said, only 331 new SFR listings have been filed, an average of 83 per month. That’s down from 131 new listings per month in 2010, and well below the 249 new listings per month at the peak of the market in 2006.
While fewer new listings could feasibly make pricing more competitive, that hasn’t been something Fahey has observed, at least not yet. So far this year, average sales prices are up only slightly from last year, $132,662 versus $128,271, and that was bolstered in part by several expensive riverfront properties selling early in the first quarter of this year.
In fact, Fahey said she doesn’t expect prices to rise much at all throughout the remainder of this year, given that foreclosures are still having a downward impact on pricing overall. She added that foreclosures also seem to be having an impact on home appraisals, which is making it even harder for traditional home-sellers to get a decent price for their houses.
“My last three appraisals done this month, two of them were exactly $5,000 below the contract price — that’s the number you need to hit to get your loan with the bank,” Fahey said. “So the seller would have to drop the price to make up the difference.”
With more than half of the market still comprised of foreclosures, many of them in less-than-ideal condition, Fahey said it’s understandable that appraisal values would be dropping since appraisers have little choice but to use foreclosures as “comparable” properties to non-foreclosure properties. Even so, she said, she still wishes appraisers would put greater emphasis on the foreclosure status of a home when determining its value.
“If appraisals don’t start meeting price, then we’re going to have a hard time bringing pricing back,” she said.
Another big concern is that the current decline in inventory could be artificial — that many foreclosed properties may have been deliberately pulled from the market by the banks in order to create scarcity to avoid depressing prices even further. Fahey noted that, of the 13,403 new listings posted since Jan. 2005, only 6,524 of those listings resulted in a sale, meaning a little more than half of all listings since 2005 did not sell. While it’s possible many of those “new” listings are simply repeats — forecosures, she noted, are often bounced from one agent to another every few months or so — it could also be evidence that many homes are simply being pulled from the market and either sat on or put up for rent instead.
“I don’t know if the banks are holding back,” she said. “I want to tell myself that the people who needed to sell have done so, and that everyone else is just holding out for a better price, or maybe just don’t need to sell their home. But I think the fantasy is gone that this recession is going to go away and these housing prices are going to come back. I think people have come to the realization that we may be at kind of a flat sales price for a while, and it shows right here in the numbers.”