As 2008 comes to a close we'd like to offer our humble predictions for 2009. If we had a gleaming crystal ball of future events we could tell you what we are about to say is absolute... alas, we simply have our opinions.
Readers of our blog know we look at the affect of the foreclosure market on future price and sales trends. This factor was not one we used in years past, however, like a huge whale, it tips the scales of consideration with great importance these days.
For much of 2008 we saw trustee sales (what happens when a home is bought back or sold by the lender) in the 1200 to 1500 per week range. In the waning months of the year numbers began to fall suggesting the worst is over. This is good news for future pricing yet the numbers are still quite high and suggests prices will continue to fall in the first two quarters of 2009.
The good news is existing bank owned properties are selling well. According to ARMLS figures, over 4600 REO homes sold in November and December 2008. This figure is close to the number of new foreclosures entering the market during the same time period. Early summer figures for the same relationship show nearly twice as many REO homes entering the market as those sold. Thus, the patient seems to be bleeding a bit more slowly as we enter 2009 and probably still in a coma.
So, the 10 trillion dollar question is,"When will we see prices stabilize and the market start rebounding?" The graph below says a lot on that subject. Click on the picture to enlarge.)
The green line shows sales numbers for the past year. The numbers rose steadily until Fall and started waning a bit. This is a normal sales cycle with October through January numbers down from the Spring and Summer.
Black shows the evil price plunge. As you can see, the free-fall has been holding its track and perhaps flattening a bit in the final months of 2008.
Red represents the number of days it takes to find a buyer for a home. Clearly, this number has fallen considerably. The good news is that DOM (days on market) is an indication of buyer confidence and the public perception of prices verses perceived value. Obviously, people are feeling a bit more confident about making a purchase and a sense of parity is being found on prices.
So, here we go... a drum roll please. The great and powerful OZ, chief prognosticator at the Urban Team predicts home prices will continued to fall at a slow rate for the 1st and 2nd quarter of 2009. We expect the fall to be minimal as demand rises in March, April, May, June and July. We believe much of the Greater Phoenix market will have found its bottom by Summer with the exception of higher priced homes were inventory levels are very high and the ability to find credit is lower. We do not expect prices to begin rising in 2009 with the exception of the under $200,000 market where demand is the highest.
So boys and girls, hold on to your pants, tighten the belt and wait things out for a while. If you have money, early 2009 will be a great time to buy a home at a low price.
There you have it and we'll have fun reading this post at the end of 2009 to see just how accurate we were.
A most happy New Year to you and yours...
Gene Urban and Ron Urban
The Urban Team at Realty Executives
www.urbanteamaz.com