State of the West Side

Fidelity National Title and Bank of America were proud sponsors of "2011 west valley market trends and an in depth look at the west valley distressed market" held on March 15 at the Renaissance Hotel in Glendale. Speakers included Mike Orr from the Cromford Report and Brandi Johnson from Bank of America. Below are the key points form the presentation given by Mike Orr. To see video clips of the presentation visit our Facebook page.

POSITIVES:

· Economy/Jobs getting better
· DEC/JAN/FEB stronger performance than historical trend
· Lower prices growing strong demand
· Best purchase prices in 15 years
· Rental prices more likely to go up
· Supply drying up
· Great time to be a landlord
· Property over $300k: Hit bottom Nov 2010, price points gently climbing

NEGATIVES:

· Fewer buyers-more renters
· AZ population peaked in 2009
· Out-Migration started in 2007 (largest impact in South & West “Inner” Valleys

SUPPLY & DEMAND:

****Pricing tells what already happened*****

****Supply & Demand provide data to speculate what WILL happen****

Active Listings –

46k peak on Nov 21, 2010, now below 40k

Rentals – “Normal” inventory has been 8k-10k – TODAY: only 5k

-More hard hit are condo rental inventory, “normal” 3.5k-4k- TODAY: only 2k

Pending—

Last 2 years-steep upward trend (Tax Credit)

Glendale doing slightly better than last years pendings

ACTUAL CLOSINGS-

Very active market

2011 well ahead of past 2 years performance in the same time period

FORECLOSURES- (includes commercial properties, but 95% residential)

-# of notices on decline
-# of sales constant
-# of pre-foreclosures going down

· Currently 38k Pre-Foreclosures, used to be 52K – still a problem but a downward trend.
· Mike Orr uses 2003 as a representative of a ‘normal’ amount of pre-foreclosures = 8k

Mike speculates there is no shadow inventory and it would be impossible to measure, REO is on the decline, diversify your business.

SHORT TERM OUTLOOK

· Demand outpacing Supply—creates an active market and should show an improved real estate market pending other impacts don’t throw a curve ball. Regardless, may be bumps in the road.
· Don’t expect prices to show the trend right away – remember price indicates what’s already happened
· Investor Demand key, especially in low-end markets and price points
· $300k and up price points showing signs of recovery (these are usually primary residence purchase or 2nd home purchase

Other Data:
Canadians:

· Last 3 months: 1 in 20 homes purchased were by Canadian
· 6 years ago: 1 in 250 homes purchased were by Canadian
· Canadians are the substitute for the California buyer market we experienced some time ago.

OUT-MIGRATION & SCHOOLS

Important tool to see trends in Out-Migration and hardest hit areas, ANNUAL SCHOOL REPORTS. Google “Arizona schools in roman”, leads to government school data. Reports show registration #s, ethnicity, ages, demographics – Out-Migration areas will take the longest to recover

SHORT SALES

AWC difficult to measure due to the qualifying process on each “AWC”

SS success indicates 3X better than it was in 2008

52% increase from 2008

HUD

Mike’s stats for REO includes HUD homes

1000 active HUD listings right now, 1 in 7 listings is a HUD home

Notice of Defaults

1 million homes in Maricopa County, 1 in 4 have received a NOD/NTR

Speculation on where to FOCUS & MARKET….

· REO has peaked – will be on the decline as more lenders turn to Short Sale programs
· SS – longevity, will be around for many years to come. SS will never take a large amount of market share since they take so long to close, but as banks streamline SS standards and have less Foreclosure/REO it’s very real for SS market share of closings to grow
· $300k and over market