Our first graph (Whispering Ranch 5 Acre Prices) gives you an idea of what has happened to pricing over the past few years. The boom began in late 2004, asking prices were rising, and sales prices were keeping pace. Then, in the 3rd Quarter of 2005 the inventory of available parcels grew and the number of sales started to drop. Pent up demand and the belief that the market would continue kept the momentum going for a while but it was slowing noticeably. The Whispering Ranch market effectively came to a grinding halt in the 4th Quarter of 2006. Surely as "Bust" follows "Boom" the market headed downward.

This slowdown is a reflection of the Real Estate market in general, and should, as the market recovers from its current "adjustment", begin to move the other direction, resulting in increased activity and, once the current inventory is absorbed, rising sales prices. But with the current consumer uncertainty of our economic troubles I don't expect to see much change until the buying public sees a positive change in the job market and economy overall, and even then it will take some time to sell off the "excess inventory" currently on the market.

The numbers for the past few Quarters reinforced my feeling that if prices are not at the bottom of the market, then they are pretty close. If we look at just the 5-acre parcels on the market, the average listing price was $8,243 per acre or $41,219 for an average 5-acre parcel. When we look at the sale price of a 5-acre parcel (there were only two sales reported for the Quarter in the local MLS) one was a five acre parcel that sold at $8K, and one was for two side by side five acre parcels listed at $29,500 that sold at $26,500 or $13,250 for each five acre parcel, for an overall average price per acre of $2,300 or $11,500 for an average 5-acre parcel. So there is still a large spread between what Sellers are asking and what Buyers are paying. We will know that the market is improving once the sales prices are closer to the asking prices. These numbers don't reflect foreclosures or Lenders taking back parcels with a Deed in Lieu of Foreclosure, and there have been quite a few of those transactions. In January, two five acre parcels on the corner of 315th Avenue and Lone Mountain Road were auctioned as part of a Bankruptcy Trustee liquidiation, selling at $8,000 each. Occasionally these opportunities to buy will arise. I also brokered the sale of a vandalized double wide mobile home with a well and electric on five acres. The property had been foreclosed and the Lender put it back on the market at $8,900. A flurry of offers were submitted and the property finally sold at $15,000. Owners who are calling me right now are being told "If you don't have to sell, then don't sell. Minimize your holding expenses and wait out the market." Buyers who are coming to me are being advised to buy as much as they can afford - prices are at a six year low. You'll make a nice profit when the market comes back. And it will come back . . . it always does. Maybe not as dramatic as before, but it will be back.

Our next graph (Days on Market / # of Sales) gives an additional view on what is currently happening in the market. Starting in early 2005, the number of sales increased and time on the market shortened. Everything that was coming on the market was bought quickly despite rising prices. Parcels were selling at full price, and in some cases above the asking prices. This trend continued through the Spring and Summer of 2005, but the trend reversed in the 4th Quarter of 2005. Hurricane Katrina hit, gas prices rose to over $3.00 per gallon, economists became concerned about increasing delinquency and foreclosure rates, and gold prices were rising daily, causing "jitters" in the economy, slowing investment. The law of supply and demand set in, and as the number of properties rose and demand decreased, pricing did not rise. This was the time period when prices started to drop. Also notice that the average time on the market for a property has increased to more than 400 days. As time progresses, I am being contacted by more Sellers who sold properties during the "Land Rush of 2005", who are now getting these properties back in foreclosure actions. There will probably be about 80 to 100 of these properties going back on the market, and I am counseling these Lenders to wait until the market stabilizes before putting these properties back on the market. If more properties flood the market, it will only drive the property prices downward. When you check to see how many parcels are currently on the market it is down significantly from the "Post Boom" period when there were 150 or more properties available.

I'm adding this final chart (Price per Acre - Listed Properties) to demonstrate the two types of Sellers in this market. Some Sellers are just telling me to sell the property for what we can get for it. The others are not in a hurry, they have an established value for the property and they can wait for the market to change before they sell, but they want the property on the market while they wait. The properties that are currently selling are at the bottom of the price range. The majority that are higher priced are eliminated as possibilities early in the decision making process, since there are less expensive properties on the market. So they will sell only after the lower priced parcels are off the market. But as the market changes, you will start seeing the price per acre numbers moving upward. There will be an increase in activity that will run just ahead of this curve and these lines will parallel each other. Keep your eyes on this chart each Quarter and you will be able to spot where the bottom of the market was . . .

1. I can't say for sure, but if we are not at the bottom of the market right now, we are pretty close to the bottom. If we ARE at the bottom, plan on just bouncing along the bottom until the economic outlook gets better. Folks are taking care of basic necessities right now and not getting involved in the type of investment land speculation we saw in the past. If there is a "Catalyst" event, announcement of expansion of the power grid, area roadways starting, or other area developments breaking ground (finally!!) there will be an investor driven buying period, depending on the timeframe of the event.

2. It will take time for the market to recover in light of all of the inventory on the market, and all the foreclosed properties sitting in the wings waiting for an improved market. These properties will sit in the shadows until there is enough compelling activity to get them into the game. And these parcels will probably come on line nearer the bottom of the market just to sell quickly.

3. The two key items to get a recovery started are increased consumer confidence in the economy and more credit available to the consumer. Until these are in place we will continue on our current stagnant path.

If you are looking to sell your parcel, there is still some sales activity, but with the amount of inventory on the market, it is imperative that you are realistic in pricing your property. In today's market the top priced parcels are not selling as readily as those priced at the bottom end of the market. Should you decide on asking a higher price than comparable properties, you need to be prepared to wait for a longer period for your property to sell. And with the economy still softening in the face of increases in foreclosure rates, rising government debt, climbing gas prices and economic instability, who knows how long it might be before the property sells. My suggestion is to minimize your holding expenses by entering into a grazing lease and reducing your property taxes. Those who have already done this are realizing significant tax savings.

Your choice of who you deal with will have a lot to do with your success as well. There are quite a few agents who jumped on the bandwagon a couple of years ago when prices started to rise. Most of these agents haven't been seen out at "The Ranch" for years. Some of these agents call me to get values, and some even call for directions to parcels they are listing. Check the addresses of parcels in the Multiple Listing Service - a lot of agents don't know where the parcels are located. Do they take the time to get photo's, put a sign on the property or stake the corners? And are they forthcoming about information regarding floodplain impact, bad roads, huge washes that have an effect on value? Or are they just interested in generating phone calls? I have the reputation of being the "Go To Guy" for this area. Everyone calls me when they want an accurate update on what's happening, and they know they will get the facts - not "hype" or "B.S." So don't get hooked by a promise to sell your parcel at a higher price. This will just tie up your property until a price reduction is called for, putting your price where it should have been priced in the first place. There are even a few Owners who got into trouble with the Arizona Department of Real Estate because their agents were not experienced with land transactions.

If you are looking to buy a parcel, there is plenty of inventory on the market to choose from. But you need to be prepared to spend the time to investigate all of the pertinent information and be aware what current pricing will get you. Also be aware that currently parcels are selling at or very near the asking price. Those of you who are looking for "bargain" properties are getting into the market too late. There are a few bargains out there, but be very careful - a few Buyers got burned by paying too much for not so good properties. And don't think you can make a killing by offering 50% of asking price. Most Sellers are pretty savvy and know the value of the property and are not going to give it away. Fair dealings lead to intelligent deals. Knowing the history of Whispering Ranch and property values elsewhere in Maricopa County leads to the conclusion that land prices in Whispering Ranch are among the most attractive in the area. The future for this whole area is bright, and there is very little land available within a reasonable distance from Phoenix available at prices that work. With all of the indicators, this whole area is poised for growth. When the next "demand period" happens can't be precisely determined. It's not a matter of "if" it will happen . . . the question is only "when" it will happen. Compare per acre prices in Whispering Ranch to other areas, and you'll see why these parcels are still a good value. And when you get the "whole picture", you'll see that a land investment in Whispering Ranch in today's market is still a good bet for future value increase.

Whether you are interested in investing in the Whispering Ranch area, or if you are considering the sales of a parcel in the Whispering Ranch area, do yourself a favor and give me a call. I'll give you the straight scoop on what's happening along with a realistic look at the market, so you will be up to date and know what to expect. The last thing you want is for some unpleasant surprise after you have made a choice, so get all the information in advance.