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Wednesday, May 14, 2014

Housing Market: Pockets Of Hot And Cooling

A home is seen for sale on February 25, 2014, in Miami, Florida. (Joe Raedle/Getty Images)

A Realtor in Arizona says Phoenix’s market has slowed to the point there’s a five-month backlog, while a north Texas Realtor says houses are being snapped up fast in some Dallas suburbs. (Joe Raedle/Getty Images)

This week the National Association of Realtors reported that the median price for a home is $191,600, up nearly 9 percent from last year, and a buyer purchasing a similarly-priced home with a 5 percent down payment would need an income of $44,200 to land a mortgage.

Here & Now’s Jeremy Hobson checks in with two Realtors: Randy Courtney in Arizona and Anthony Graham in north Texas.

Courtney says Phoenix’s hot market last year has slowed to the point where there is now a five-month backlog of homes for sale, and more people are deciding to rent because prices are so high.

Graham says the housing market is “the hottest we’ve ever seen,” with only a one-month supply of homes in some Dallas suburbs where Realtors “can’t keep things on the market” because they’re being snapped up so fast.


  • Randy Courtney, founder of Courtney Valleywide Properties in the metro Phoenix area, Arizona.
  • Anthony Graham, Realtor with Re/Max Town & Country in the Dallas-Fort Worth area.



It's HERE AND NOW. Federal regulators are on the verge of loosening standards for mortgages in a dramatic reversal of some of the standards that were put in place after the housing collapse. That could mean smaller down payments and easier lending. But critics say it could mean a return to a boom and bust housing cycle, and it comes just as the housing market is starting to show signs of trouble, mortgage lending at a 14-year low, for example.

We want to check in with retailers - realtors in two markets. Anthony Graham sells homes in the Dallas-Fort Worth area. Anthony, welcome.


HOBSON: And joining us from KJZZ in Phoenix is Randy Courtney, who sells home in the Phoenix area. Randy, nice to talk to you again.

RANDY COURTNEY: You bet, thanks.

HOBSON: Well, tell me first, Randy, how are things going in Phoenix because when I drove around the neighborhoods with you last year, it was very hot. The market was doing very well.

COURTNEY: It was. Yes, you know, we bottomed a year and a half ago, about a month supply of homes. We had multiple offers on everything. Inventory was very tight. Since then, you know, our market changes rapidly, and we're up to a little over five months' supply today.

HOBSON: And that's not a good thing, to have five months' supply?

COURTNEY: No, that means if nothing else was listed tomorrow and beyond, it would take five months for all the inventory to be depleted. A more balanced market is about a three and a half months' supply.

HOBSON: So what happened in Phoenix?

COURTNEY: Well, you know, we still have influx of people coming here. We've had some investors that have swooped in and gobbled up large numbers of properties. You know, back when we talked, half of our buyer profile was cash. That's gone down to about 20 percent. So a lot of the low-hanging fruit, you know, has been depleted. We have more people that are deciding to rent versus buy because the prices have, you know, risen quite a bit.

And coupled with the government, you know, guidelines for financing, now it's just becoming out of the reach of, you know, the average buyer.

HOBSON: Anthony Graham, what are you seeing in Dallas?

GRAHAM: You know, we're seeing a lot of this hot market, as well. It's the hottest that we've ever seen. It's really interesting to hear out in Phoenix that you guys got down to a month worth of inventory and then bounced back up to five. We've seen insanely low inventory, as well.

You know, some of our suburbs are even down right at 1.0 and 1.1 months of inventory. We can't keep things on the market. Last six or seven houses that we've put on the market have sold in under two days to multiple offers, over asking price. I haven't seen something under 200 grand go for asking price or less than asking price in I can't even tell you. It's been a year and a half.

HOBSON: Are these - are there investors, as Randy has been seeing, investors coming in and buying up a lot of the low-hanging fruit, or are these regular people going out and buying homes?

GRAHAM: Quite honestly it's regular people. We have a ton of people moving to the Dallas area. We've got a lot of new businesses that are moving their headquarters. Toyota just announced that they're planning on bringing 4,000 of their 5,300 employees over the next two years, and we've just got a lot of people moving to town and such low inventory that then everybody's fighting with each other.

And it's made for an interesting market. It's surely different than five years ago, that's for sure.

HOBSON: And what about rentals? Are you seeing, as they are in Phoenix and frankly as we are in many of the cities along the East Coast, that a lot of people are just having to go into the rental market because the prices to buy are so high?

GRAHAM: Yes, and believe it or not in our market the prices to rent are even higher than they are to buy. There was so little to buy, there was so little inventory, that we had all these people going, well, I'm so frustrated, I've lost the first four houses, let's just go find something to rent. We get into the rental market, and it's the same thing. We're having to bid $25, $50, $100 more a month just to be able to get our application considered over one of the others. It's been insane.

HOBSON: Randy, just last month, Inside Mortgage Finance reported that mortgage lending has fallen to a 14-year low, and in large part that's because of people stopping their refinancing as rates have creeped up a little bit. But is that concerning to you, that maybe people aren't able to get the loans that they want to get anymore?

COURTNEY: Well, I think there's some factors. We also have the, you know, Consumer Financial Protection Bureau and the new bureau that's set up by the government to regulate lenders, and it's another layer of bureaucracy that we have to deal with. Lenders have to deal with it. Title companies have to deal with it. And you'll - I think it's going to take a portion of the buyers out of the market.

HOBSON: Interesting because of course advocates of the Consumer Financial Protection Bureau and the rules that they are putting out there would say this is supposed to make the market safer, this is supposed to help the consumer.

COURTNEY: Correct, and I think that, you know, overall anytime you get another layer of bureaucracy, you're going to have people that are not able to get lending.

HOBSON: Anthony, as you look ahead to the rest of this year, are you concerned that what you're seeing right now in Dallas may not last, that you might start to see a downturn again that maybe investors have come in and swooped up all the houses that are out there, that people might not be able to get loans, any number of things could happen that would disrupt the boom that you're seeing in Dallas right now.

GRAHAM: Well, I definitely think so. I think at some point in the future, people look at it and just say hey, you know, this isn't worth it. And once we get to that, then we're in a bubble state, and eventually the bubble breaks. At this point I'm still seeing a steady rise, but the problem that we're seeing is just that the in-town movers, the guys that would have wanted to move this year, aren't able to find the next house.

And then when they, you know, look at what it's going to cost and how much it has appreciated in the last two years, then they say well, you know what, we're just really satisfied and happy with the home that we've got, let's see what's going to happen over the next few years, and that continue to keep our inventory so low that everybody continues to fight and raise those prices.

HOBSON: All right, before I let both of you go, we should point out that of course you guys are very happy when there is a lot of buying and selling going on. That benefits you.

GRAHAM: Of course.


HOBSON: So I want to ask you what your pitch is. If somebody is out there right now saying I don't know if I should buy this or not, I don't know if this is the right time to buy or not. Let's start with you, Randy Courtney. What do you tell people about why now is the time to buy.

COURTNEY: Well, I think it boils down to what your goals are. If you really need a house that you can improve, that you can modify, that you can make your home, a place that you can stay longer than shorter, I always tell my clients, you know, just plan on five to seven year timeframe, but it boils down to their motivation and what that home is going to do, you know, for them and the family.

If it puts them in the suburb that they want, in the school district, you know, life is good. You know, and people they stay in their house longer.

HOBSON: Anthony, what's your case that you make to people about why to buy now?

GRAHAM: You know, I completely agree with what Randy has said. The other thing that we're using is just a lot of the people that we talk to say that they thought about doing it last summer and that they ran into the same problem that they're going to run into this summer.

And when you compare the numbers of where we were last summer to where we are going to be this summer or even just, you know, right now here in May, the prices are wildly different. And it's - you know, if we would've crossed that hurdle, you know, six, nine, 12 months ago and done this then, look at all the built-in equity that we would've had.

I think we're going to see wild price increases again, and I think that, you know, these people that are thinking about buying and are on the fence are going to, you know, have built-in equity come September of 2014 after we get through this amazing busy season that we have in Dallas pretty much every single summer.

HOBSON: An optimistic view from two realtors: Randy Courtney in Phoenix; and Anthony Graham in Dallas. Thanks to both of you guys.

GRAHAM: Thank you.

COURTNEY: You bet.

HOBSON: And by the way, one of the things that's happening right now is you might see a price for a home that looks low. Sometimes that's by design, just to get more bidders into the process, get people into a bidding war, and they end up getting much more than the asking price for the house. Your thoughts, hereandnow.org. Transcript provided by NPR, Copyright NPR.

Please follow our community rules when engaging in comment discussion on this site.
  • Austin Seagrave

    I’m a Realtor in the Charlotte, NC market and am finding owner/occupant buyers are off the fence and buying. Our inventory is low and many properties are selling in three days or less. It is a welcome relief after years of submitting offers for investors and playing catch as catch can.

  • RealEstateCafe

    BRAVO, Jeremy. Thanks for introducing this story with your cautionary words about the return to a boom / bust housing cycle. Thankfully there are buyer agents / consumer advocates who are deeply troubled by bidding wars that are causing Dallas and other local markets to experience the “hottest market ever seen.” Why not learn from consumer protects in Toronto and other housing markets blinded by bidding wars to legislate consumer protections? For example, an Emergency Bidding War Transparency Act could use new technology to create a transparent bidding process so real estate hype, like words used shamelessly by your guests, don’t cause buyers to overpay; or worse, bid against themselves. Here’s an example of what’s happening in Greater Boston: http://bit.ly/FoolishBids

  • Mike Topjian

    Allowing conservative views to creep into your news reports is a discredit to NPR’s historical reputation of trust. I could hardly believe my ears when your guest went off on the new Consumer Protection Agency and his opinion that any regulation has a negative affect on commerce. Clearly, regulations need to be strengthened not weakened. Lack of effective regulations brought the world’s finances to crisis. Please do a better job of identifying “opinions” from facts on your broadcasts.

    • Cacimo

      The realtor was simply reporting the facts on the ground. More regulation reduces the flow of capital and how that was effecting his business. If you are gonna demand more regulation, you should be aware of the negative effects as well as the positive.

      • Mike Topjian

        He wasn’t “reporting facts.” He was speculating as to what was affecting his business and taking a swipe at regulations. Republican talking points need to be identified as such.

    • it_disqus

      Fannie and Freddie set the bar for financial lending. There is no more powerful “regulation” of the market than their lending/financial power. Somebody with a clipboard in a cube is nothing compared to the power that government agency has. Yes it is a government agency. Ignoring the federal elephant in the room that caused the housing bubble is just not correct.

      • Mike Topjian

        I’m not absolving anyone of poor regulations. It should be clear to everyone that regulations were being exploited and that gaming of those regulations is what caused the crisis. Poor representation in government should not be used as an indictment of government.

    • Rick

      You’re really that offended that NPR would allow a very rare “conservative” opinion to be aired??? Open your mind a little bit. Listen to some viewpoints you might not agree with. NPR is taking taxpayer dollars so they have an obligation to be unbiased.

      • Mike Topjian

        I have every right to be offended by whatever I might find offensive. NPR in fact does encourage all viewpoints to be aired and discussed. NPR is a national treasure and has paid great dividends for the paltry support it currently receives from taxpayers. All news outlets should feel obligated to offer unbiased journalism. NPR does an excellent service in illuminating differences of opinion.

    • jo

      NPR didn’t say that, their guest did. Truth always hurts a liberal.

  • Denver Newbies

    Jeremy mentioned the bidding wars at the end of this segment of the show. We are living through it in the Denver Metro market. About 6 weeks ago, we were bidding on a beautifully remolded small detached single family home under $200K (189k) along with 20 others. Our bid came in the 2nd. Last week we found out that house was sold over $200K and we were just $600 shy of winning. After that bid, we ran into the same situation just about every hosue under $200K we looked at. There were crowds waiting in line at these properties for showings. We soon gave up everything under $200K.

    For our second bid, we beat 9 others with an offer $10K above asking price. Came appraisal time, this house didn’t appraised to the asking pricing although both the listing realtor and our realtor were very confident this house was worth at least the asking price with their own market analysis. Our lender had told us that they’s seen some similar cases happening too. Since the market is moving so fast, the data the appraisers use couldn’t catch up with the reality. Fortunately the seller is willing to drop the selling price to the original asking price and we would pay for the difference, which we could manage. This experience makes us wonder if you don’t win the bidding war, you don’t even get a chance to work with the seller. At the same time you know the house won’t appraise. It’s such a catch 22.

Robin and Jeremy

Robin Young and Jeremy Hobson host Here & Now, a live two-hour production of NPR and WBUR Boston.

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