Prominently display the terms and dates of the rejected offers, verified by participating market professionals, in the MLS system, and you solve the demand side of the equation because you identify the “size of the market”.  Share that information with the banks and they’ll start trusting you.  Show it to the prospective buyers and they’ll throw their arms around you in joy.  The sellers will “get real” about the market, also.

What Brian describes here are NASDAQ Level II quotes which, incidentally, only a small percentage of the equity trading population has access to see. Here’s a screen shot of the Level II quotes (image courtesy of www.realfasttrader.com):

When you enter a stock symbol on Yahoo or elsewhere you see Level I - the current bid and ask (what someone’s willing to pay and what someone’s willing to sell for); only those who subscribe to a paid service, hold accounts through a brokerage offering the service or are themselves market makers see Level II with the full breadth of the market.

And they only can see the breadth of the market on NASDAQ stocks; unless the NYSE changed its rules in the handful of years since I held my Series 7 license, the specialists on the floor of the stock exchange did not have to disclose their book.

Such a premise raises several questions in my mine, prime among them … why?

Setting aside bank owned homes in today’s environment, it’s not common to see multiple offers on any given property. Some may argue that a lack of offers in itself indicates the “market” for any given home when the “market” for the home is next to irrelevant to any one particular buyers’ decision. Someone probably enjoyed the movie “Land of the Lost” and doesn’t care that the rest of America didn’t.

This premise is built upon a faulty foundation, one serving the needs only of real estate buyers while ignoring the needs of the sellers. (Just a thought … Does flipping history on its head and gutting representation for sellers in favor of buyer agency benefit the public as a whole?)

And does it make sense to place the onus for providing the additional data that buyers might want in theory on the real estate agents representing the sellers in the transaction? Does it behoove my sellers to have to report on every offer they receive and, if you agree that it does not, do not the sellers deserve representation?

What Brian considers to be control is in fact facilitation. The real estate industry facilitates the flow of information on properties where an individual seller has elected to hire an agent to market and sell their home - maybe the information is less than some may wish to see for whatever reason - but information’s still provided.

There is nothing - repeat, nothing - that prohibits a listing agent from sharing information on past offers on a home IF the seller gives the agent permission to share that information. Our fiduciary duties include confidentiality but the seller can dictate what we can and cannot disclose. The seller has the ability to tell his or her agent to advertise all past offers.

Why they would want to do so, though, is beyond me as is a reason why their right to confidentiality should be lessened.

Forget that bit of reality and we continue with the premise …

Take the real estate industry out of the equation, eliminate the MLS and where is the information going to come from? You can create a national clearinghouse for real estate sales data - the particulars of every home that is for sale, for instance - but you can’t compel individual homeowners not using an agent to participate.

Eliminate the MLS and you’ll have a far worse picture of the market because you won’t be able to see the current inventory which at least constitutes one side of the Level II quotes on a macro scale. Instead you’ll be counting on those color fliers you’ve taken out of your neighbors’ boxes, and the few print ads you see and the sometimes dated information or otherwise incomplete or incorrect information you see on line.

Let’s go further …

If you’re going to argue that this must be done for real estate, should we not require everyone who is attempting to sell something on craigslist to disclose every offer made on every dinette set, every coffee table, every 1980 Monte Carlo (if any are still running)? What makes housing so different that this personal asset ought to be treated differently and that an individual homeowner must be compelled to disclose additional information?

And the data that Brian suggests making public isn’t necessarily relevant. If you look at a Level II quote screen, it’s not uncommon to see unrealistic buyers wanting to purchase blue chip stocks for a penny and sellers wanting to sell $25 stocks for $1,000. Does the presence of such outliers have any real impact on the current market? Not at all.

Does the fact a buyer of mine offered $270,000 for a $300,000 home have any bearing on the house itself? Not really. What does have a bearing are the closed sales in the area that show $300,000 is a pipe dream … and this information is available to the public through the recorded sales data of whichever local taxing and recording authority handles such things (here it’s the Maricopa County Assessor and Recorder.)

Once upon a time the dominant question was “what did they pay for this house?” as if the fact someone paid $225,000 in 1989 changes the fact the house comps for $300,000 today. It’s a piece of data that has no bearing on the current value of a property. Wanting irrelevant data for the purpose of personal validation does not raise the value of that data to the level of public necessity.

Putting aside the particulars, though, the bigger issue as I see it leading to such patently absurd notions seems to be the need to find a scapegoat for whatever perceived wrong someone feels needs to be righted.

Buyers are having trouble purchasing homes in some fast-moving markets and so there’s a need to find someone to blame; some real estate agents are thoroughly incapable of making a living in this market and, rather than look in the mirror at their own flawed business concept, they point fingers at everyone from NAR to the government to the Twitter users for their own challenges.

History provides multiple examples of what happens when personal accountability is shunted aside in favor of a witch hunt. Maybe I’m a little more sensitive to this type of discussion than most given my background.

At the end of the day, though, it’s troubling to watch blame get shifted to combat what is promoted as a problem when, quite frankly, it’s not all that much of an issue at all.

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When you were selling a home, what would your reaction have been to an offer 20 percent below market value? Would you have rationally said, “well, this is a buyers’ market so this is natural” or would you have questioned the parentage of the buyers? If you’re like the vast majority of sellers, you’re in the latter category.

Conversely, when you were buying a home, would you automatically offer not just the list price but a few dollars more just because the home was that special or would you offer less to establish a negotiating position and try and uncover the seller’s real bottom line?

Purchasing real estate in Phoenix or elsewhere isn’t a complex dance. Everyone knows the rhythm and the steps. You bid here, we counter here, agreement comes there and all end up (relatively) happy at the end.

What complicates things is emotion but with a little empathy and a reach back into our memory we ought to be able to set some of that aside in the effort to attain the goal.

That’s the one rule that works, the only rule we and the Flint Tropics have. Everybody Love Everybody.

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This morning I was talking to a client about where the market was at the start of November when a particular property was purchased from a lender. Here are what the absorption rates looked like then:

Phoenix Real Estate Inventory: November 5

And this is where the market stands as of this past Tuesday:

Phoenix Real Estate Inventory: June 30

The obvious question is how could someone have seen this coming? And the somewhat self-serving answer is to watch the inventory updates here on All Phoenix Real Estate. If you had been following the weekly updates you would have seen the tide turn at the beginning of April. And the current market wouldn’t be a surprise.

The key to any decision is information … those who have it can make the most informed choices, those without or with only partial information are left to wonder.

Yesterday, buyers from Alaska closed on a second-home in Queen Creek. The notion of previewing each property before making an offer gave way to the reality of the speed with which homes were selling. Fire off the offers, then use the inspection period to see what kind of shape the home might be in.

On our 15th offer, we found success. Relatives in the area joined the home inspector for the walkthrough and these folks have a home which, with a little work, will be a terrific property in which they can escape the snow.

(Quick aside: I still recommend making a trip to the Valley before purchasing, just to get the lay of the land. These folks had done just that not so long ago.)

These folks read the signs, adjusted their strategy and got their property. Adjustments are necessary. It harkens back to Einstein’s definition of insanity, to do the same thing over and over again expecting different results.

Wishing we could go back to the higher inventory levels of November is pointless. That’s not where the market is. And, depending on who you listen to, it’s not where we’re going to be again anytime soon.

Such is the case of the Canadian dollar, which rallied past the 90-cent mark. There was speculation among some readers that the Canadian dollar would keep rising until it was back at par as it had been in 2007. Don’t settle for 91 cents went the message, hold out for the full dollar or more.

If you watch the currency markets you know how this worked out … the Canadian dollar has slid backward over the past couple of weeks. It’s still stronger than where it was only a few months ago but not as strong as it had been a few weeks back.

Adjust to the current market and you’ll succeed.

What’s the big thing to watch in the current market, at least for Tobey and me? Price movement or, more to the point, the lack of movement despite the decrease in inventory and increase in demand. The flattening of the price curve stands in defiance of everything we know about the law of supply and demand. And that’s because of a variable that’s been added to the equation.

If you remember my old analogy about the Phoenix real estate market being like a car stuck in the mud. The accelerator’s being pushed to the floor but the tires keep spinning, unable to gain any traction. Why? The lenders are standing to the side with a water hose making even more mud. How? By continuing to price homes below current market levels in order to initiate a quick sale.

Price new homes to the market at the level of the past sales and they’ll still move. Maybe it will take 10 days instead of five, but they’ll still sell. And then you’ll see prices move …

… assuming the assinine HVCC laws don’t continue to serve as a further anchor. (Note to the folks in charge - if most investments come with the required caveat “past performance is not an indicator of future results” then how is it that we’re now requiring appraisers to factor past declines into future values? Assume the market will remain down, hold the prices down accordingly and you have the self-fulfilling prophecy.

(Buyers do the same thing, or at least did back when there was room to maneuver on the price of bank owned properties.)

Banks tend to be fairly unintelligent when it comes to selling real estate so it might take them a bit longer to figure out proper pricing. And there’s a slight chance they just won’t.

If they do, though, and the prices start reacting to the laws of supply and demand as they should, are you prepared for the change?

If you’re reading this website, you’re well on your way.

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We have had 6,547 closed sales the past 30 days (not quite final June numbers since we won’t know what closed today until it appears in the system tomorrow) which is down about 500 from last week’s report. Inventory fell by just under 200 homes for an absorption rate of 3.17 months.

Bank owned sales over the past 30 days fell under the 4,000 mark to 3,904; inventory remains low at 3,188 but the drop in sales have given us a slight increase to .82 months of inventory.

For short sales, there are 5,249 active listings and 831 closed sales over the past 30 days for 6.32 months of inventory. And among non-bank owned, non-short sale homes, there are 12,304 active listings and 1,812 closed sales for 6.79 months of inventory.

As always, the particulars for the various cities and towns in the Phoenix real estate market are below. And also as always, all data is provided by the Arizona Regional MLS and is deemed reliable but not guaranteed.

Phoenix Real Estate Inventory: June 30

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