Last Friday, I wrote a print edition story about Arizona home builders seeing signs of a long hoped-for recovery in the midst of shrinking housing inventory and an uptick in buyer demand.

I talked to Phoenix real estate expert Michael Orr, director of the Real Estate Center at the W.P. Carey School of Business at Arizona State University    , about his latest March 2012 report on the Phoenix housing market.

Orr said the upward pricing trend that began in late September 2011 continued to gain strength in March 2012. Overall supply fell 64 percent compared with 12 months ago, and distressed supply fell by 82 percent.

Orr said the recovery could even be “too good, too soon” in terms of the balance between supply and demand.

“Arizona is a very volatile market,” he said, explaining that the violent swings make it difficult for home builders, buyers and banks to react quickly when the market shifts.

Homes on the lower end of the pricing spectrum have the least amount of inventory available — and buyers targeting homes above $700,000 have a broad range of choices, Orr said.

But he said it’s getting to be “a nightmare” for buyers who want to purchase existing homes in the midprice range. They often are caught off-guard when they get stuck in bidding wars.

In Arizona, I’ve talked to buyers who say they are often one of dozens of bidders on a single home. Most of these bidding wars are the result of tightening supply.

Because housing prices have fallen so much since 2006, most of the competitive bidding still hasn’t produced huge price increases or left sellers with hefty profits, but it’s yet another sign that the housing recovery has begun to take root.

Orr also said he thinks concerns about the “shadow inventory” are overblown in Phoenix. That’s because the state’s anti-deficiency statute and its status as a nonjudicial state meant Arizona “got on with foreclosures” earlier than other states — but that also may have enabled an earlier recovery here.

Despite signs of strength in Phoenix, there still are mixed signals across the country. The homeownership rate fell to the lowest level in 15 years during the first quarter as more Americans lost their homes to foreclosure.

The U.S. Census Bureau    said today that the homeownership rate fell to 65.4 percent at the end of March, the lowest level since early 1997.

via ASU real estate expert Michael Orr: Arizona a very volatile market – Phoenix Business Journal.

Home prices are surging in metro Phoenix, climbing 8 percent in March alone and 20 percent in the past 12 months.

The median price of a house in the region climbed to $134,900, according to a new report from the W. P. Carey School of Business at Arizona State University.

The trend is projected to continue throughout the year, although at a slower pace.

Homebuilding, metro Phoenix’s biggest industry before the housing crash, is on the rise again.

Unlike in the past, this burst in the region’s homebuilding isn’t being driven by buyers going farther and farther out to find a house they can afford or investors looking for bargains.

In some areas of metro Phoenix, including Chandler and Gilbert in the southeast and Peoria and Surprise in the northwest, short-sale home prices are climbing so high due to multiple offers that resale home prices are rivaling new-home costs.

Real estate report says Phoenix area improving

PHOENIX

A new report from Arizona State University says the Phoenix-area housing market is continuing to improve from last year, with a shrinking supply of available homes.

Researchers from the W. P. Carey School of Business say that, as of last month, the housing supply has decreased 42 percent from the same month last year in Maricopa and Pinal counties.

Their report also says that foreclosures have fallen by 52 percent since February 2011, and the median-price for a single family home in metropolitan Phoenix has increased from $115,000 to $124,500. That’s up more than 8 percent from last year.

The report’s author, Mike Orr, says foreclosures and short sales still make up about 20 percent of all sales in the market.

Real estate report says Phoenix area improving – BusinessWeek.

A look at the factors pushing metro’s median home price below $100K

By Steve Bergsman, Friday, April 6, 2012.

Inman News®

Earlier in the year, I had to be in Atlanta for a conference, and the venue was one of the grand hotels in the downtown area. Taking a break from all the talk, I took a walk toward the midtown area eventually stopping in front of Bank of America Plaza, which, at 55 stories, is the tallest building in Georgia.

“Nice building,” I thought to myself and then moved on. The next day, I scanned the news on the Internet and read that the tower had entered into default.

I don’t really follow the Atlanta market very much although I had read snippets of news about the tough economy there, and as far as the housing market was concerned, it always seemed to skip under the radar while almost all the focus was on the “sand states”: Florida, Arizona, Nevada and California.

Yet, the Bank of America folly was on the commercial side of real estate symptomatic of the general economy and the deflation of Atlanta’s housing market.

To get an understanding of what was happening in Atlanta, I first called Jeff Humphreys, director of economic forecasting at the University of Georgia’s Terry College of Business.

Normally, university-based economists try to be fairly upbeat about their state, but not Humphreys; he was very direct.

“If you are making a list of the markets most damaged by the bursting of the housing bubble, Georgia, and specifically Atlanta, belong in the top 10, if not the top five,” he said.

That evoked a “wow” from me, as I hadn’t really heard much about a bad housing market in Atlanta. That was because of an odd, economic fluke. They were building so many new homes in Atlanta before the bubble that the overwhelming new supply kept prices from inflating.

Or, as Humphreys said, “We didn’t enjoy the upside of the bubble.”

What that meant: When you read that housing prices collapsed horribly, for the most part, in the sand states, you think those places are the pit of the recession, but actually things are worse in Atlanta. In the sand states, prices may have dropped 40 or 50 percent, but that was from inflated bubble prices. In Atlanta, prices declined about 25 to 40 percent, but from noninflated levels before the recession.

“Home prices in Atlanta have been reset to where they were in the late 1990s, which is not true in Arizona or Florida, where prices have been reset to the start of the boom,” Humphreys said.

Steve Palm, president of SmartNumbers, a Marietta, Ga.-real estate information, analysis and forecasting company, puts it this way: “The median sale price for the greater Atlanta area is $97,000. Back in 1992 or 1993 the median was no lower than $107,000. The median price is so low, we don’t have records that go back far enough. That’s how devastated the market is.”

Again, some of this goes back to the vast amount of homebuilding before the recession.

“Historically, Atlanta was the No. 1 home market in the United States,” Palm said. “At peak, we were doing 57,000 new constructions a year. Last year, we did about 7,700, and a lot of that was prospective condo units that had been foreclosed.”

Atlanta might have survived the recession better if the economy had been stable. That wasn’t the case at all, and, indeed, Atlanta might have been experiencing a borderline recession years before the rest of the nation.

The first pummeling slipped by almost unnoticed, but it was important — and that was the bursting of the tech bubble around 2000-01. “Atlanta was really the hub of the tech sector in the Southeast,” Humphreys said. “So the bursting of the tech bubble did much damage to Atlanta’s economy. We were hit harder than the nation as a whole.”

Secondly, the bursting of the housing bubble put a double whammy on Georgia, as a lot of the state’s manufacturing sector (materials, mobile homes, carpet, lumber products) was geared toward housing. Humphreys guesses about 40 percent of the states’ manufacturing base has disappeared.

If all that wasn’t bad enough, Atlanta’s economy suffered one final blow. Atlanta had been a strong financial services city, and with the eviscerating of the country’s finance industry during the recession, the city got smacked hard. Atlanta lost about 17 percent of its finance jobs, Humphreys said, “and the nation only lost 9 percent, on average.”

In addition, Georgia has led the nation in bank failures.

Take high unemployment and a devastated housing market and what do you end up with? A lot of REOs (bank-owned properties), which, on an optimistic note, are finally being cleared out of the market. That’s because everything is so cheap.

“We had more sales under $100,000 last year than in all prior years,” said Mitch Kaminer, president of the Atlanta Board of Realtors and an associate broker with Re/Max Paramount Properties in Atlanta. “Obviously, most houses under $100,000 are foreclosures.”

In November 2011, the number of REOs sold reached 50 percent of total sales,” Kaminer said.

SmartNumbers’ data reflects a 23-county area, while the Atlanta Board of Realtors collects data from an 11-county area.

Whereas Palm reports that 1 in 4 homes in metro Atlanta sold at a price under $50,000, he’s including Clayton County, where, he said, the median home cost is around $37,000.

The Atlanta Board of Realtors’ intensive 11-county area includes most of the wealthier, close-in neighborhoods and suburbs, which have remained fairly strong. In the board’s data, the median home price rose from $115,000 in October 2011 to $122,000 in November and $123,750 in December.

With that momentum, Kaminer said, “We are going to see an uptick in the market over the next couple of months.”

Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, “Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis,” is now available for sale on Amazon.com.

NEW YORK (CNNMoney) — You find the home of your dreams. You’re pre-approved for a mortgage. You’ve scheduled the closing. Then … the appraisal comes in too low and the deal blows up.

Even as some mortgage standards have eased, hitting a needed appraisal value is proving a frustrating blocker for buyers and sellers and those looking to refinance.

If a buyer commits to a $200,000 home, but the appraisal comes in at just $180,000, the bank will finance only on the lower value — and the buyer must come up with the difference.

Leslie Sellers, a real estate broker in Clinton, Tenn., has a client who recently went to contract on a Norris, Tenn., home. The appraisal came in 10% short.

“I explained to the appraiser that houses in Norris are older and sell for higher prices than other parts of the county,” said Sellers, past president of the Appraisal Institute, a trade group. “[The appraiser] told me he was going with his value. We lost the sale.”

The banks are one reason appraisals are coming in low. If they have to repossess a home, they don’t want to get stuck with one worth far less than the mortgage.

“It’s not like the lenders say, ‘We want you to come in low,’” Sellers said. “It’s more like, ‘We want you to account for everything.’ Some appraisers hear that and overcompensate.”

Multi-million dollar foreclosures

It’s particularly tricky if the home is in a falling market. There’s even a box to check on standard appraisal forms saying “declining value,” according to Gloria Shulman, the founder of Centek Capital Group, a Beverly Hills mortgage broker. That indicates falling home prices and banks will slash another 5% off the loan.

Foreclosures complicate appraisals too. These homes sell for about 30% less than similar non-foreclosure homes but appraisers often use them for comps.

In Alabama, Stephanie Young recently went to buy a three-bedroom, two-bath in Chunchula, outside Mobile. She was approved for an FHA loan and the sale price was $180,000.

Her agent, Josh Tanner of Better Homes and Gardens Real Estate Generations, said the appraiser told him there were no good comps.

“The appraiser had used a foreclosure sale that was right on a busy road,” said Tanner. “That pulled the whole value down.”

Young was stuck, needing $10,000 to make up the shortfall. The sellers couldn’t come down. They were nearly underwater on their mortgage and lowering the price would push it into short sale territory. That requires bank approval, which could take months.

Young ultimately won an adjustment from the appraiser and the deal is scheduled to close this week.

Another path buyers can take after a bad appraisal is to renegotiate the home’s sale price. Katie and Dave Dowling found a townhouse in Roxbury, N.J. The pair, who are teachers, liked the place better than other units in the complex.

“It came with a lot of upgrades,” said Katie. “It was just nicer.”

Unfortunately, the appraiser didn’t take notice of better cabinets and appliances or other features. He appraised the home 3% lower than they needed.

Their solution was to ask the sellers to come down. They consented to a 2% haircut and the Dowlings came up with the other 1% themselves.

They expect they’ll get the house, but they might not have if they didn’t have extra cash to bring to the closing — and a willing seller. 

Low-ball appraisal: Mortgage denied – Mar. 30, 2012.

Over the past 6 months, Average $/sqft sale price increased by 16%.

Needless to say, its a great time to buy.

Ofir Levy

Most people would argue that the Phoenix economy is improving, but according to a new report from the Brookings Institution    , that growth can be traced back longer than the start of this year.

The institute today released its quarterly MetroMonitor report, which tracks the economic progress of the country’s 100 largest metro areas. The study shows that while things are improving, there is still a long, long way to go for the Valley to recover from the Great Recession.

For the fourth quarter of 2011, Phoenix’s economy ranked as one of the best in the West as well as in the Top 20 of all metro areas in the study, according to the report.

Phoenix was one of five cities in the West that closed out 2011 with four consecutive months of job growth, albeit the growth slowed toward the end of the year. The region still has about 10.3 percent fewer jobs than it had during its 2008 peak, and Phoenix currently sits at No. 93 nationally in terms of job losses.

Manufacturing also ticked up in Phoenix, as the region landed in the Top 40 in terms of production, and was gathering steam toward the end of the year, according to the report. Output, however, was weak, with growth of only 0.3 percent in Phoenix during the last quarter of 2011.

The report also highlights that Western cities such as Phoenix, Denver and Las Vegas all saw declines in their unemployment rates in 2011.

There also were price gains on homes, with Phoenix home prices rising 3.1 percent during the quarter, according to the report. Phoenix ranks No. 93 in terms of the overall drop in housing prices, which fell on average more than 54 percent since the fourth quarter of 2006. But the region ranked third in terms of price gains in the fourth quarter.

The report tied together accelerated jobs and hiring in Phoenix as a reason housing is starting to pick up.

For a complete look at the report, click here.

Phoenix economy among fastest-growing in U.S. – Phoenix Business Journal.

Standard & Poor’s reported Tuesday that it’s closely watched Case-Shiller index declined in January for the fifth straight month, with both the 10-city and 20-city composite readings slipping 0.8 percent from December.

But according to John Burns Real Estate Consulting (JBREC), that’s stale news and doesn’t reflect what’s actually happening in the market right now. In fact, the independent research company says home prices are rising.

JBREC conducted its own analysis of home prices in 97 markets and found that over the January-to-March period prices are up in 90 of them. The average price increase over the last three months is 1.1 percent, or a 4.5 percent annual rate, according to data issued by JBREC just before S&P’s Case-Shiller release.

The company also found that home prices have been trending up nationally since January, and even more markets have turned positive recently, with 93 of the 97 markets it analyzed showing appreciation over the last month.

So why are other industry indices still painting a picture of the doom and gloom of freefalling home prices? Wayne Yamano, VP and director of research for JBREC, says it’s because most price indices are on a three-month lag.

Yamano explains that after hundreds of hours of research vetting 23 data sources and running calculation after calculation, JBREC developed the Burns Home Value Index (BHVI), which calculates home values based on prices that are set at the time purchase contracts are negotiated and signed.

Nearly all other indices are based on when the purchase transaction closes, he says, which is typically two months after the purchase contracts were negotiated. Then, it takes one to two months for the closing price data to be compiled and reported, according to Yamano.

He contends that the BHVI is a better assessment of current changes in home prices and precedes median price data from the National Association of Realtors by three months and the S&P/Case-Shiller index by four to six months.

“It is current because it uses what is happening in MLS databases all over the country, as well as some leading indicators we have determined are reliable,” Yamano explained. “We call it a Home Value index because it is partially based on an ‘electronic appraisal’ of every home in the market, rather than just the small sample of homes that are actually transacting.”

JBREC has calculated BHVI index values for the United States and 97 major metro areas, with history going back to January 2000.

“The slow housing market recovery is underway, and it can accelerate or turn down quickly,” said Yamano. “The future is uncertain, and it is even more uncertain when you are using data that is three months old.”

via Home Prices Have Been Rising for Three Months: Report.