Sunday, October 7, 2012

Pre-election Uncertainty Creates Home Buyer – Seller Opportunity


A recent survey poll of current buyers by Harris Interactive finds 25% holding back from making their move until after the election. We see this partially reflected in pending sales off from recent months.

Looking at the glass as half-full, less timid buyers today and motivated sellers may find less competition in this pre-election season.

The other statistical trend of note is a gradual increase in inventory across most market segments.
One group of buyers who aren’t ‘timid’ is the institutional, big-money buyers, who continue to buy primarily distressed lower-end properties with a vengeance. In fact, the top ten spenders have acquired just under a quarter billion dollars in residential properties year-to-date.
In the mid-range arena, again, the word on the street is that with the market improving sellers are holding firm on prices. On average, mid-range prices are increasing. In Scottsdale, where the average price is about $500,000, closed sale prices are 9% higher year-over-year. While this is only about a third of the appreciation seen on the lower-end, it is both significant and welcome.

For a statistical view, based on average price per square foot of the mid-range market ($500K – $1M) over the past 2 years, see the chart below.

Again, distressed property sales have been the main driver for cash investors primarily under $300K. By contrast, in the mid and upper-ranges normal sales dominate.

In the luxury sector, year-over-year prices are beginning to stabilize, though luxury is a market with many submarkets. It really depends on where you look and at what specific price point.Generally speaking, prices are still at least 45% from the early 2006 peak.

It will be interesting to see if there is in fact a post-election surge in buyer activity, however mitigated by the traditional slow-down during the holiday season…meanwhile, if you’re not one of the timid ones, now may be a great opportunity to make your move.

Friday, October 5, 2012


Cromford Daily Observation - As we predicted, sales prices have been on the rise again and during the first few days of the fourth quarter sales volumes are very modest but prices are high. Our monthly average $/SF is up to $102.13 and the average for just October is $111.02. The annual appreciation rate is up to 27.2%. 

See the annual appreciate rate pointed out below that Mike Orr is referencing. You can 'chunk down' to the Scottsdale and see the respective appreciation rates.


Monday, October 1, 2012

Phoenix Scooped Up By Large Investors


If Large Cap Investors are buying........shouldn't you??
The names of the buyers at trustee sales reveal how much of this market is being captured by large players. If we examine trustee deeds issued in Maricopa and Pinal Counties since January 2012, we find the following top ten spenders:
  1. THR - 511 deeds - $54M
  2. AH4R - 305 deeds - $33M
  3. EZ Homes - 339 deeds - - $30M
  4. Castle - 58 deeds - $22M
  5. THPI - 191 deeds - $22M
  6. American Residential - 180 deeds - $21M
  7. Nancy Blue - 188 deeds - $19M
  8. Colfin (Colony Capital) - 172 deeds - $18M
  9. Skyline Vista - 88 deeds - $15M
  10. 2012-B Property Holdings - 100 deeds - $12M
THR is in the top spot and they only started to buy in May 2012! They are part of the Blackstone company which holds over $50 billion in real estate assets round the world. They have already bought more properties at the trustee sale in September than they did in the previous 3 months. They are the largest private equity real estate firm and currently have a strong appetite for Phoenix homes. Colfin also started in May but have not bought anything since July, apparently moving to other cities where prices have not moved upwards so quickly. AH4R started in April, when they were very active, but they have not bought anything since August. EZ Homes is a wholesaler who has been operating in Phoenix for many years currently averaging 30 to 40 homes purchased per month. Nancy Blue runs a large fix and flip operation that has been very active since 2008. American Residential is a locally run investment company that buys home to rent and has been active here for several years. Recently we have seen American Residential buy a large number of homes in bulk from other investors such as AH4R. THR have also purchased in bulk from other investors in June and August.
Of course many of these buyers are active in other types of transactions too (REOs, short sales, etc). The above is just based on what they acquire from the foreclosure auctions. Cromford Report Daily Observations
We know the market cannot truly be in full recovery mode until the distress segment is absorbed. Even so, clearly this drag on the market spells opportunity for cash investors (and of course, has for some time). However, for most of us, the most enjoyable transactions are with that 'normal' owner-occupant buyer who wants the best home (and best value all things considered). And yes, they'd like to think that their purchase might appreciate over time. Perhaps the above info helps in the sense that you now know and can give chapter and verse on who's who when it comes to big money players buying local residential real estate for cash flow and upside potential. 

In other words, the message is, if big money is buying, shouldn't you?