Catherine Reagor at the Arizona Republic does a fine job of reporting on the Arizona real estate market but now as the market is turning, she focuses on the confusion caused by the turn because not every indicator is positive.
When the market first started to turn south, I think she was overly-pessimistic. The long term outlook turned out to be terrible but in the short term she was more pessimistic than how the market actually played out.
Phoenix Real Estate Market in Transition
Her article, worth reading, fits my view that newspapers focus on the negative. Maybe negative news sells more newspapers or maybe being negative makes reporters feel superior or maybe being negative generates fewer complaints from readers than being positive. Whatever the reason, the tendency of reporters to be negative is super strong. (On second thought, now that I think about it, when Phoenix home prices were really tanking I thought Catherine was soft pedaling the bad news. I was more pessimistic than Catherine’s reports. Maybe it’s not that reporters are too pessimistic but that reporters are too cautious, too CYA. Okay, I have a new operating theory about reporters!)
Right now we are in a transition from a horrible oversupply of homes for sale to a more normal supply of homes.
Phoenix Supply of Homes for Sale Lower than Normal
This summer the supply of homes for sale in metro Phoenix as a whole has been LOWER than normal.
Of course we’re seeing mixed signals for the Phoenix real estate market because that’s exactly what you’d expect to see when the market is changing directions.
But Catherine’s point in her article seems to be that since the supply of homes for sale isn’t short in all areas, the market is “confusing” and so she misses the big story entirely because she doesn’t want to appear to be too positive. She tips her toe into the positive story, gets scared and then points out a negative or two for each positive.
I loved the data Catherine used from The Information Market. Hated the way it was presented – in text instead of as a table.
Just look at this data and you tell me what happens to home prices in Phoenix as the number of people who are behind on their mortgages declines and the number of foreclosures declines. As the incoming supply of homes going to Foreclosure Auctions, Fannie and Freddie repossessions, and Short Sales declines, what do you think will happen to Phoenix home prices?
Delinquencies and foreclosures are indeed declining but that’s a topic for another post.
Median Phoenix Home Price to Increase in 2012
My conclusion, unless the government does something really stupid (it is an election year after all and they are American politicians) or there is an external economic shock, I think next year we will see significant price increases for the median home price in metro Phoenix.
This does NOT necessarily mean that home prices will increase in YOUR neighborhood. In fact, the more expensive your neighborhood, the less likely prices will increase in your neighborhood. Prices could continue to fall in expensive neighborhoods while rising in the least expensive neighborhoods. Hey, during a change in market direction, we’re going to see mixed signals.
ADDED. As far as reporter bias goes, I’m working on a new theory to explain why reporters tend to be very negative but in 2007 and 2008 when things really hit the fan in Phoenix real estate market, reporters tended to go easy on the negative news instead of their usual catastrophizing of negative news. My new theory is that reporters have a default negative, world weary, skeptical tone and they don’t stray too far from that tone no matter whether the news is positive or negative. During those rare times when the actual news is more negative than their default negative tone, reporters may not seem negative. No matter what the facts of the story are, reporters have a default tone.