michael orr director center for real estate theory and practice august 20, 2014
DESCRIPTION
Greater Phoenix Housing Market. Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014. The Market Cycle. Euphoria. Unease. Exhilaration. Denial. Enthusiasm. Enthusiasm. Pessimism. Optimism. Optimism. Panic. Relief. Hope. Capitulation. Skepticism. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/1.jpg)
Michael OrrDirector
Center for Real Estate Theory and PracticeAugust 20, 2014
Greater Phoenix Housing Market
![Page 2: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/2.jpg)
Euphoria
Denial
Despair
HopeSkepticism
Optimism
EnthusiasmExhilaration
Unease
Pessimism
Panic
Capitulation
Relief
Optimism
Enthusiasm
The Market Cycle
![Page 3: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/3.jpg)
![Page 4: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/4.jpg)
Sep 2004 Jul 2008
Another +50% to reach the peak!
+60%
![Page 5: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/5.jpg)
Most Home Prices Are No Longer RisingSome Are Falling, but Not Much
![Page 6: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/6.jpg)
![Page 7: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/7.jpg)
Normal Listings Only
![Page 8: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/8.jpg)
Southeast Valley Cities + Ahwatukee
![Page 9: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/9.jpg)
Southeast Valley Cities + Ahwatukee Normal Sales Only
![Page 10: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/10.jpg)
Prediction Is Very Difficult, Especially About the Future
- Neils Bohr (1885-1962)
![Page 11: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/11.jpg)
Normal = 100 for all gauges
![Page 12: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/12.jpg)
12 Months Ago
![Page 13: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/13.jpg)
Balanced Market
Buyer’s Advantage
![Page 14: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/14.jpg)
![Page 15: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/15.jpg)
![Page 16: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/16.jpg)
Where Are the Boomers?
• Sun City West (median age 75.8)• Sun City (73.2)• Sun Lakes (70.9)• Gold Canyon (61.8)• Fountain Hills (52.9)• Cave Creek (50.6)• Paradise Valley (50.4)• Apache Junction (47.3)• Litchfield Park (46.4)• Scottsdale (45.1)
These markets are relatively robust
![Page 17: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/17.jpg)
Where Are All the Buyers?
• 232,767 have been foreclosed since 2008– 19% of the home owners in Maricopa County
• 83,849 have completed a short sale since 2008– 7% of the home owners in Maricopa County
• So 26% of former owners have a credit issue• Most are locked out from loans for 7 years• Peak foreclosures were 2008-2011• Peak eligibility to buy again is 2015-2018
Some of this demand will emerge more strongly next year
![Page 18: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/18.jpg)
The Penalty BoxShare Max Foreclosure
WaitDown
PaymentShort Sale Wait Down
PaymentFannie Mae
43% $417,000 7 yearsmaybe 3 if
special case
10% 2 years4 years
20%10%
Freddie Mac
13% $417,000 7 yearsmaybe 3 if
special case
10% 4 years 10%
VA 6% $1,000,000 2 years 0% 0 years 0%
FHA 28% $271,060 3 years 3.5% 1 year 3.5%
Other Loans
10% Variable Variable Variable Variable Variable
![Page 19: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/19.jpg)
![Page 20: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/20.jpg)
Millennial Impact on Housing Market
• Starting families later than earlier generations• Lower birth rates• Many still living with parents• Higher preference for urban lifestyle• Tendency to share accommodation & transport • Not convinced home ownership is good for wealth• Expect to own a home…one day• Not a high priority for them in 2014• Mostly renting – creating demand for landlords
![Page 21: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/21.jpg)
![Page 22: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/22.jpg)
Where Are the Millennials?
• Tolleson (median age 26.7)• Avondale (28.1)• Tempe (28.1)• El Mirage (28.2)• San Tan Valley (28.2)• Queen Creek (28.9)• Buckeye (30.2)• Maricopa (32.1)• Gilbert (32.2)• Phoenix (32.2)
![Page 23: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/23.jpg)
Single Family Rentals
![Page 24: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/24.jpg)
Single Family Rentals
• Investors pulling back but tenants still coming• Only 3,048 SFR rental listings on ARMLS• In January there were 4,345• This is only 36 days of supply• Most of what is left is expensive (avg $1,760 pm)• Average in January was $1,449 pm• Condo rentals are now getting harder to find (63->48
days supply)
![Page 25: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/25.jpg)
Maricopa County – SFR / Condo Homes
Units2015
2015 Assessed Value
Units 2013
2013 Assessed
ValueTotal Number 1,233,164 $240 Billion 1,215,971 $168 Billion
Owner Occupied 901,656 $188 Billion 1,018,809 $152 Billion
Rentals & Second Homes 331,508 $52 Billion 197,162 $16 Billion
…including Institutions 13,553 $1 Billion
Increase in Assessed Value of Residential Inventory in Last 2 Years = 43%
![Page 26: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/26.jpg)
Supply of New Listings at a 14-Year Low
![Page 27: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/27.jpg)
![Page 28: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/28.jpg)
![Page 29: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/29.jpg)
Annual Sales Volume Unusually Low and Still Falling
![Page 30: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/30.jpg)
![Page 31: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/31.jpg)
Almost Everything Is Below Normal
![Page 32: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/32.jpg)
Situation Summary – August 2014
• Supply is below normal & falling (87% of normal) • Demand weak but stable (81% of normal) • AZ loan delinquency below normal at 4.5%• Foreclosures are below normal• Investor buys are below normal 40% -> 13% of sales• Cash transactions decreasing 42% -> 21%• Out-of-state buyers below normal 29% -> 17%• Expect a little price weakness in the rest of 2014• Expect market to improve for sellers during 2015
![Page 33: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/33.jpg)
![Page 34: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/34.jpg)
![Page 35: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/35.jpg)
![Page 36: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/36.jpg)
![Page 37: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/37.jpg)
![Page 38: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/38.jpg)
![Page 39: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/39.jpg)
New HomesStill a small part (10-12%)
of the market
![Page 40: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/40.jpg)
![Page 41: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/41.jpg)
![Page 42: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/42.jpg)
How Will Demand Return to Normal?
• Mortgage applications are at their lowest level since December 2000
• Lenders will start approving applications from people with lower quality credit history
• Rents will increase, driving more tenants towards ownership
• Millennials will eventually join the game• Supply will become an issue once again
![Page 43: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/43.jpg)
![Page 44: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/44.jpg)
![Page 45: Michael Orr Director Center for Real Estate Theory and Practice August 20, 2014](https://reader035.vdocuments.mx/reader035/viewer/2022062723/56813d71550346895da754d4/html5/thumbnails/45.jpg)
Michael OrrDirector
Center for Real Estate Theory and Practice