From “The Cromford Report” June 15 2010
Tom Ruff’s Housing Opinion
Tom Ruff of the Information Market provides his unique interpretation and commentary on the Phoenix housing market.
“Stability itself is nothing else than a more sluggish motion.”
Michel de Montaigne, a 16th century French philosopher is recognized as the father of Modern Skepticism, his catch phrase was, “Que sais-je?” “What do I know?” Wikipedia states he became famous for his effortless ability to merge serious intellectual speculation with casual anecdotes. I chose his quote simply because he used stability and sluggish in the same sentence. The fact that his portrait reveals a stiffly starched frilled collar of lace, the Ruff, was simply a bonus.
Phoenix Housing Undervalued
http://business.kdka.com/cbslocal.kdka/?GUID=13374806&Page=MediaViewer&Ticker=%24VIAKDKA
If you normally don’t read my links, you should read the link above by Michael Douville. A couple months ago I wrote a piece entitled “Blood in the Streets” as to why I thought Phoenix housing was undervalued. In a much more eloquent and detailed manner Douville drives my point home. His article is well written and well thought out, nonetheless, being the potato po-tah-toh guy I am, I must take exception with Mr. Douville’s statement, “The Housing Indexes of Case-Schiller and ECRI recognized a national bottom in April of 2009; locally in Phoenix, the Cromford Report confirmed the findings.” Personally, I think it was the other way around, on April 6, 2009 the Cromford Report, in a highly criticized report at the time called a pricing bottom in the Phoenix housing market, when Mike Orr made his call, Case-Schiller was forecasting a June 2010 bottom. Months later, Case-Schiller recognized the April 2009 bottom and confirmed Mr. Orr’s findings. Tomato, to-mah-toh, the experts agree.
Our esteemed Assessor
A couple of weeks ago I had the privilege of sitting on a panel for the Valley Citizen’s League with Keith Russell, our esteemed County Assessor. It was fun just having the opportunity to chat with Mr. Russell about his office and the process by which assessed values are determined. I must tell you that Mr. Russell and his staff are doing an exceptional job in a very challenging environment. In our conversation I learned valuations are based on an October through October cycle, and as I had assumed, the full cash value has a target of 80% of what the assessor believes the properties actual value to be. I don’t mean to oversimplify a very complex valuation model, but for this illustration, the median price home for the fiscal year ending October 2009 was $141,900 leaving 80% or $113,520 for the median assessed full cash value. The first eight months of data for the 2012 assessment show a median price of $140,000 with 80% being $112,000. I know in my February opinion piece I guaranteed an increase in home valuations with the 2012 preliminary, I had done my calculations on a January to January cycle. I would like to hedge my bet and say there will be little or no change in our 2012 full cash values as compared to our 2011 values, again, stability.
Most noticeable trend
It seems like a lifetime, but two years ago at this time I was talking about a number that I thought was a key in forecasting our housing recovery, the number of active foreclosure notices in Maricopa County. The number of active notices in Maricopa County reached its peak on December 31st 2009, and since that time has shown a consistent downward trend. I believe and always have believed that when this number began heading downward, it would be the best indicator the worse was behind us; but then, “Que sais-je?” (Side note: in 16th century France, that would have brought down the house.) In my opinion intervention on the part of the Federal government to stabilize the housing and mortgage markets pushed foreclosures back nearly a year allowing the number of active notices to swell to 51,466. Today, the total number of active notices of trustee’s sale sits at 44,526, a 13.5 % drop from the first of the year. As I review the foreclosure numbers each day I see a 50 to 100 property decline in the number of active notices.
May’s Numbers
New notices in May came in just below the 6500 we had forecast, actual notices filed were 6,471. Look for June numbers to be very similar as we’re seeing on average 300 notice of trustee sales filed each business day, 200 trustee’s deeds and 150 cancellation notices. There were 20 business days in May and there will be 22 in June. Short sales are having a noticeable impact on the foreclosures numbers as we’re seeing approximately 1735 short sales each month in Maricopa County with 1100 having an active notice at the time they sell. Articles and reports about rising numbers of bank owned properties just aren’t true, at least, not true in the Phoenix area. REO numbers have stayed steady at approximately 16,300. The number of bank held properties rises slowly each month as the month progresses, and then falls as the month end sales arrive. The month ending total of REO’s has remained constant the past three months, basically, 3,100 new bank foreclosures in the front door, 3,100 REO sales out the back door.
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Sarah Moran—Biltmore—sarahm@eta-az.com / 602.769.1438
Vicky Najarian—Mesa—vickyn@eta-az.com / 602.769.1058
Rob Cannon—Northwest—robertc@eta-az.com / 602.769.2100
Susan Cunnigham—Pinnacle Peak—scunningham@eta-az.com / 602.769.5562
Maggie Clark—Scottsdale—maggiec@eta-az.com / 602.769.5565
Kevin Newell—Tempe—kevinn@eta-az.com / 602.769.5561
