Arizona Republic reporter Catherine Reagor provides an update on the Valley’s real estate market.
Ted Simons: Sales among lower priced homes in the Valley are booming. But other parts of the market are not doing so hot. Here to talk about the mixed bag that is the real estate market in the valley is Catherine Reagor, real estate reporter for the "The Arizona Republic." Good to see you again. Thanks for joining us.
Catherine Reagor: Absolutely.
Ted Simons: Give us a general overview of the real estate market here in the evaluate right now.
Catherine Reagor: August was not a great months. Foreclosures kicked up a little and our median home price dipped down again. We had been doing well, it had been stable, things were looking good. No one's quite sure what happened in August. It wasn't a great month for the government nationally, locally. It was hot, it was a tough time. Now in September we are seeing some better signs. A little pickup in prices. The homes at the low pressure auction on the Maricopa County steps are just selling in seconds.
Ted Simons: And we had a jump in single-family homes foreclosure sales?
Catherine Reagor: Yes, yes, the sale auctions down there now, 1500 homes sold in August at those auctions on the courthouse steps, which is how they do foreclosures. That's a good thing. Then those homes aren't taken back by lenders and they don't sit vacant for six, nine months, and then resell for a cheaper price. And also, the buyers have to pay cash so that's a good side.
Ted Simons: Interesting. This is the first time we've seen an uptick like that all year, isn't it?
Catherine Reagor: That has been a trend that has been growing. The record hit in August. The investors are from all over the world. We know Canadians are buying but there are online services where you can watch it Realtime and do the bids. They are buying in from Australia, Germany, Saudi Arabia, and it's renters. They either want to rent them or they want long-term holds and they are confident in our growth coming back.
Ted Simons: Interesting. A lot of folks are concerned if you have too many investors buying too much property, we're wandering down some familiar territory we have seen in the past.
Catherine Reagor: Like the boom.
Ted Simons: Exactly.
Catherine Reagor: They are unfortunately getting loan they say shouldn't get, and Wall Street did a nice little number on those collateralized loans. This is different financing. When you pay cash, $100,000 for a house, are you going to walk away from it?
Ted Simons: Yeah, probably not. It looks like median price is down even from last year.
Catherine Reagor: It is down a little bit from last year. We were steady all year until August. And the median dropped by a couple thousand dollars. But on the other side, I'm hearing in September we may be coming back up. If we're just bouncing along, that's not too bad. We have to see some things happen. We have to see foreclosures slow and keep slowing as they were. The auctions on the White House steps are helping drive prices down a little bit because of bidding but the houses are less expensive. There's hope that the number of homes for sale is way down. And there are buyers out there. So there's hope our prices could go up by the end of the year.
Ted Simons: It seems from a distance if a house is for sale and it's under $100,000 you've got 14 people waiting in line to buy it. If it's above the FHA guaranteed loan limit crickets are chirping.
Catherine Reagor: And they are trying to lower those loan limits. Congress is discussing that now. It's tough to get financing now. It's 20% down in a lot of cases. So it's people with cash and in some cases first-time buyers, their parents have the cash and they are buying it outright. So the big concern and the lobbyists in Washington are trying to push to get lenders to open back up and do the loans and not have the 20% down, because that knocks a lot of people out of the market.
Ted Simons: Luxury condos, looks like a rebound there. That's amazing.
Catherine Reagor: Definitely seeing some sell or being rented. The tower in Tempe is full. Monroe downtown, the tallest residential high-rise in Arizona, they were trying to sell, didn't work out. They opened it to renters. I know five people who have already rented there. One lexington, which is old century bank building on Osborn is 90% sold out. The city council members live there. These are not great deals. They got it out of bankruptcy or foreclosure for much cheaper and the people buying condos are buying them for half the price they were advertised in 2006.
Ted Simons: Which is the market correcting itself.
Catherine Reagor: The market is correct and the right buyers. It's not the investors, it's the baby boomers who want an urban life, people who want to work downtown and midtown.
Ted Simons: Before we let you go, you wrote about a reality TV show dealing with foreclosures set in Phoenix?
Catherine Reagor: Yes.
Ted Simons: Good gracious.
Catherine Reagor: Filming to start in the next few weeks. It's supposed to go on the discovery channel. They have picked three specific people to follow and they are great, experts at what they do. They are great characters. They will be very interesting to watch. They don't want themselves for this to be a black eye on Phoenix's market. They don't. They don't want this to be one of those crazy reality shows. But it is very fun to watch those auctions. They are fast and furious.
Ted Simons: The guys are bidding against each other trying to win basically property?
Catherine Reagor: Clients have a phone, their iPad doing this, and they could be on the courthouse steps three auctions at once. Jumping the fence to hear the next one. A client in Saudi Arabia says, I'll go up $3,000 for this. It's more like a commodities floor in Chicago, it's changed. Hopefully the show will portray that and it'll be more a good thing. The trend is going to go away. We will run out of foreclosures.
Ted Simons: That brings up a last question. We keep hearing that banks are ready to dump, to flood the -- are banks ready to just throw a whole bunch of homes onto the market?
Catherine Reagor: They have been doing in that Phoenix since last fall. That's why we have all those foreclosure auctions. They loosened up here. It's that scary shadow inventory for people who are behind and banks holding. National studies show that Phoenix is in better shape than other cities with high foreclosure rates.
Ted Simons: They let the air out slowly?
Catherine Reagor: Yes. We only have I think 19,000 pending foreclosures out there. Which they are somewhere in the process. That's a third of what we were a couple of years ago. Part are of why we see all these auctions banks are lowering prices and selling them, getting them off their books.
Ted Simons: We'll watch the republic for your column thanks for joining us.