Real Estate Statistics Archives - The Phoenix Real Estate Guy

Even the big boys get it wrong. Associated Press misquotes ARMLS. Shocking!

February 24, 2011 By Jay Thompson

If you’ve read Phoenix Real Estate Guy for any length of time, you will know I’m not exactly a “mainstream media” fanboy. The MSM’s tendency to write sensationalistic headlines and copy is annoying at best, and down right false and/or misleading at worst.

Yesterday was no different.

Two Associated Press writers, Derek Kravitz and Janna Herron, blew it in their article Home prices plummet in most big US cities (that particular link is to the Wall Street Journal copy of the AP article. You can also find it reprinted in the Washington Post, San Francisco Examiner, BusinessWeek, The Miami Herald and approximately 38,400 news sources according to Google).

In an email to their subscribers today (and in a blog post) the Arizona Regional Multiple Listing Service (ARMLS) communicated that they had been misquoted in the AP article. The quote as published by the AP was:

In Phoenix, about 70 percent of all homes with a mortgage were at risk of foreclosure in January, according to the Arizona Regional Multiple Listing Service.

According to ARMLS, the 70 percent number was gleaned from their February issue of STAT ”“ the monthly Phoenix metro area statistics report that ARMLS publishes. In the February STAT, ARMLS said:

Of the 6,541 total sales in January, 70.2% (4,591) were distressed.

A “distressed sale” is a sale that involves either a short sale (the seller, with lender approval, selling the home for less than what they owe) or a lender-owned property (a home that has been foreclosed on and has reverted back to the lender).

Granted, that is a depressing statistic, but it is a FAR cry from “about 70 percent of all (Phoenix area) homes with a mortgage were at risk of foreclosure in January.” The number of closed distressed sales in a given month has nothing to do with the number of homes across the metro area that are at risk of foreclosure.

The AP blew it.

Maybe you’ll see a half-column inch retraction/correction buried 12 pages deep three days from now in some of the 38,000+ publications that printed the story.

Or maybe not.

What we have here is living evidence of several things:

Humans make mistakes. And reporters are human (at least as best we can tell).
Real estate statistics can be easy to goof up and misinterpret. Particularly if you are not used to reading, analyzing and interpreting them on a regular basis. Sometimes our odd vernacular is confusing ”“ to everyone.
You can’t believe everything you read in the mainstream media (or anywhere else for that matter).

Some folks tend to dismiss “blogs” and “citizen journalism” as being inaccurate, biased and not worth the phosphors on the monitor you are reading. Many people place blind faith and trust into publishers like the Wall Street Journal, the Washington Post and the Associated Press. Their writers and editors are after all, trained professionals.

Both of these groups of people ”“ the blog haters and the undying believers of the mainstream press ”“ are on the far ends of the spectrum. The bottom line is, you shouldn’t place blind trust in any news medium. Read with a critical eye, question everything, and look at multiple sources when something seems suspect.

Oh, and cancel that subscription to the Wall Street Journal. You can get new Phoenix Real Estate guy posts by email, for free”¦

Crime Statistics — Scottsdale and Tempe (and others)

February 3, 2011 By Jay Thompson

Back in June of 2009, I wrote CrimeReports.com: Cool Site of the Week ”“ an article about a site that graphically represented crime statistics. At that time, the only Phoenix Metro area that was covered was Gilbert. In the ensuing 1.5 years since that posting, the site (which is still in beta BTW) has added Mesa and ASU to its coverage areas. In addition, it looks like it now lists registered sex offenders across the greater Phoenix area.

Despite the lack of coverage, it’s still a wicked cool site, and worth a look if you are interested in crime statistics in Gilbert, Mesa or the ASU campus.

Today I was turned on to another graphic, map-based crime statistics site ”“ RAIDSonline.com (apparently RAIDS = Regional Analysis & Information Data Sharing).

RAIDSonline has coverage for Scottsdale and Tempe in the Phoenix metro area, and a smattering of other cities across the U.S.

Both sites allow you to register for crime alerts ”“ you’ll get an email if there is a crime reported within the radius you select of a specific address. Both sites also allow you to pick and choose which types of criminal activity you want to view (or get an email alert for) as well as set date ranges to investigate.

RAIDSonline has a nifty “density map” that graphically displays crime hot spots. Here is the density map for Tempe:

And here is the map with individual icons for each reported crime. On the site you can click on an icon for details, and pan and zoom on the map:

Why am I telling you this?

We get a lot, I mean a LOT, of questions about crime rates. And this makes perfect sense. If you are looking for a home, you should be investigating crime rates in the area. Sadly, no area is crime-free and if you think you can buy a home where crime doesn’t exist, you are mistaken.

But you can use tools like CrimeReports.com and RAIDSonline.com to investigate crime in areas you may be interested in.

Some other handy sites for researching crime rates:

Crime Reports by Zip Code (Phoenix Metro)

Arizona Department of Public Safety Annual Crime Reports

Arizona Sex Offender Information

FBI Uniform Crime Reports (national)

One of the best sources for information on crime is the local police department. Call the non-emergency number (not 9-1-1!) and ask for the Public Information Officer. They should be happy to speak to you and direct you to sources for researching criminal activity in whatever neighborhood you are investigating.

New Features on Phoenix Real Estate Guy

December 20, 2010 By Jay Thompson

OK, so “new” should be in quotes in the title”¦

Fact is, putting real estate market statistics and mortgage / financial calculators on your real estate blog is hardly innovative, mind-bending stuff. But add them we did”¦

Market Statistics

There are countless articles here on Phoenix real estate market stats. LOTS of people want to see real estate market statistics. Understandable. Stats on things like price trends, listing inventory, sales, etc is a good way to get an understanding of what is happening in the market.

Problem is I find it horrifically boring to write about market statistics. And let’s face it, what I write today will be out of date and useless in a few days/weeks/months. Such is the nature of the beast ”“ the real estate market is ever changing.

So what people really need is real time market statistics. Or at least as close to real time as we can get.

Enter The Cromford Report. Mike Orr is a freaking genius, and has put together a real estate statistics package for the Phoenix market that is second to none. I can assure you that agents across the country would love to have something like Orr’s reports available to them. I am way late to the party in finding out Cromford / MLS feature, but I’m now able to incorporate directly into the blog Cromford charts ”“ with user selectable choices in city and/or zip code ”“ that automatically update and stay current. (Hat tip to Phil Sexton and Dru Bloomfield for brining me up to speed).

Just hover over the “Market Statistics” tab in the navigation bar under the header and select market stats by city or zip code.

Mortgage / Finance Calculators

I’ve looked at roughly half a jillion mortgage and finance type of calculators for web sites and never found any I was particularly enamored with. Freddie Mac makes some great ones ”“ they allow input of many variables, and nicely chart and tabulate the results. Problem is, up until a few days ago the Freddie calculators provided no way to enter in a negative number for changes in home value. Yes, shock of all shock, home values do not always go up. Freddie realized the glaring error of their ways and just fixed their calculators. So now we’ve included them here on TPREG. Hover over “calculator” in the aforementioned nav bar and you’ll see calculator options for:

Renting vs. Buying
Tax Savings
How much can you borrow
15 vs. 30 year mortgages
Fixed vs. adjustable rate mortgages

As with any financial calculator, these tools provide estimates. Please don’t go basing life-altering financial decisions on a calculator you find here, or any other web site.

Give them a whirl, let me know what you think”¦

Phoenix Foreclosure Listings on a Google Map. Scary stuff.

December 18, 2010 By Jay Thompson

I’ve often said that one day Google is going to own the planet, or at least the display of and access to the world’s data”¦

From Jonathan Miller, a New York real estate appraiser, analyst and blogger (and one of the smartest and nicest guys I’ve ever met) comes this little gem ”“ Google Maps of foreclosure listings (via ChartPorn).

Apparently buried in the bazillion pages, products and services that Google has is a feature that displays foreclosure listings on a Google Map. Here is an example of (most of) the Phoenix metro area:

<< Click on map to expand and interact >>

Every one of those red dots represents a foreclosed home that is listed for sale. Click on the image above and you can pan and zoom in and out ”“ and you’ll see that a lot of those dots at the above zoom level lie on top of each other.

I emphasize “foreclosures listed for sale” because it is important to understand these maps do not include: 1) ~~homes that are in the foreclosure process but not yet formally foreclosed on~~ (see update below); 2) homes that have been foreclosed on but not yet listed for sale; 3) homes listed as short sales; or 4) homes in eminent danger of entering the foreclosure process. Add homes in these categories onto the map and it’s more likely to look like this”¦

Yes, I made that up. Maybe it’s an exaggeration”¦

The point is these Google Maps, ugly as they may be, don’t show the entire foreclosure story,

Another issue with the maps, as Jonathan points out, is they provide no historical perspective. They are merely snapshots in a moment of time. We can’t tell from the map if there were more (or less) red dots of death six days, six months or six years ago nor can we hypothesize what they may look like in the future.

But they are kind of cool, and they do provide a visual way to see the number of bank owned homes listed for sale across the country. Check your area out and see how you compare to other cities across the country. It may be enlightening. Or frightening. (Go to http://maps.google.com/. Click “Show search options”. Select “real estate” from the drop down menu. Enter a city in the search bar then select “Foreclosures” for the Listing Type).

And if you’re not reading Jonathan Miller’s blog Matrix, you are missing a real gem in the real estate blog world. Here is a fantastic podcast Jonathan did with Rick Sharga, Senior Vice President, RealtyTrac ”“ one of (if not the) leading sources for foreclosure data and analysis. In the podcast they cover the Google foreclosure maps, foreclosure shadow inventory, robo-signing, the affect of the homebuyer tax credit, short sales, loan modification programs, and a load of frightening statistics.

Enjoy:

UPDATE: Tiffany Cloud pointed out in the comments that she found some properties mapped that were not listed for sale but had received a Notice of Trustee Sale (the first real step in the foreclosure process in Arizona). So there are at least some (no way to know what percentage without physically counting dots) homes in the foreclosure process shown on the map. I know they aren’t all there as my old neighbor got his Notice of Trustee Sale back in April and it’s been extended multiple times and it is not on the map. Carmen Brodeur also mentioned in the comments that some properties that are listed as bank owned aren’t mapping. The data set is far from perfect. Google is pulling from multiple sources and there isn’t one definitive source for all this info. There are many examples of properties being listed twice. Here’s a screen shot of a property that is under Notice of Sale but not listed for sale. Of note, not all properties that receive a Notice of Sale will actually go into foreclosure.

Ask the Broker: How fast can you sell my home?

October 20, 2010 By Jay Thompson

This question just came into the Ask the Broker in-box. We get it all the time”¦

How fast can you sell my house? Are we in a buyers or sellers market?

Well, it depends.

Depends on what?

A myriad of things. . .

Where is the home located?
Will this be a short sale, or a “traditional” sale? (Short sale meaning you owe more than the home can be sold for. Traditional meaning you have enough equity release costs to satisfy the loan, and your closing costs).
What is the condition of the home?
How aggressive are you willing to price it?
What are comparable homes selling for?
Are you willing to provide any buyer concessions (paying their closing costs, finding out what the home warranty cost is and buying a warranty, pre-paying HOA dues ”“ there are many things a seller can do to “sweeten” the deal and appeal to more buyers).
And more. . .

There is no single answer to how fast a home can sell, or whether we are in a buyers or sellers market. One good market statistic to examine when you are looking at (roughly) how long it may take to sell your home is absorption rate ”“ which will tell you how long it takes on average to sell a home.

The formula that Building broker in Perth use is pretty simple:

Find the number of homes currently listed for sale and divide that by the number of homes sold last month. The result is the number of months it would take to reduce that inventory to zero.

For example: Let’s say there were 100 homes listed for sale, and 25 homes were sold last month. The absorption rate in this example is 4 months (100 divided by 25 = 4). Assuming no other homes were listed, and sales rate stays flat) it would take 4 months to sell 100 homes.

The astute reader may be saying, “but more homes will be listed and the sales rate probably isn’t flat across all that time.”

True statements. But the calculation does give a basic idea of how many months of inventory is on the market at any given time.

Right now the Phoenix real estate market absorption rate is basically trifurcated (isn’t that a cool word?). There are three distinct absorption rates that can be seen when you look at different price ranges. And you should look at price ranges ”“ don’t just lump the entire Phoenix metro area together. Here’s a nifty chart showing absorption rate by price range for the Phoenix real estate market:

Where’s the aforementioned trifurcation?

Generally speaking, about six months of inventory is considered a “neutral market”, less than six months a seller’s market and greater than six months is a buyer’s market.

Gaze longingly at the chart above and you’ll see that homes listed for less than $50K are selling quickly. Very quickly. That makes it a seller’s market. Homes priced between $50K and $500K are in the six month neutral market range, and homes priced above $500K have anywhere from a one year to six year absorption rate.

Keep in mind these price ranges all have hundreds to thousands of homes in them and just because you may be selling a home in the $175 – $200K price range it doesn’t necessarily mean it will take six months to sell your home. Some homes in that price range sell in days, some may never sell. On average though, you’re looking at around six months. Selling a higher end home? Expect it to take significantly longer.

As always, take real estate market stats with a grain of salt. The mainstream media likes to hype up the bad numbers (and ignore the good) and a metro area the size of Phoenix shouldn’t ever be all lumped in under one number. You’ve got to consider real estate stats in smaller chunks. As seen above, the “months supply of inventory” varies wildly by price range. I can assure you that other metrics also vary wildly across the Phoenix metro area as well.