There’s always something to howl about

An open letter to Dr. Jay Butler of the Arizona Real Estate Center at ASU

Dr. Butler,

I saw this on

A researcher at Arizona State University told the paper that in the hot market of Phoenix, as many as 30 percent of the properties for sale on the market right now are owned by investors

They were referencing this quote from the Wall Street Journal:

In the Phoenix area, as many as 30% of properties for sale are currently owned by investors, says Jay Butler, director of the Arizona Real Estate Center at Arizona State University. Six months ago, most investors were buying rather than selling, he says. The shift has helped to drive up inventories of homes for sale in the Phoenix area, which climbed to 22,340 in October from 8,600 in April, according to data from the Arizona Regional Multiple Listing Service.

My question for you is this:

How did you arrive at the 30% figure?

As you know, a normal market in Phoenix is about 25,000 active listings. It’s possible that the absorption rate will turn out to be so slow that we may end up with a surfeit of inventory, but I can’t see any reason to raise alarms about inventory right now. The market is balanced, and, at the middle of the bell curve of residential real estate products, recent appreciation is mildly positive.

But what I would like to know is how you determine that "as many as 30% of properties for sale are currently owned by investors"? The only way I could think of ascertaining this as a matter of fact, rather than of gut-feeling, would be to go through the MLS listings one-by-one, comparing the listing data to the tax records. Even then, the error-rate would be huge. As you know, many investors falsely or erroneously report the residence address as the tax-billing address, intentionally or not giving the impression that the homes are owner-occupied. Add to this the considerable number of privately- and exclusively-offered homes, most of which would tend to be owner-occupied, and any correlation of listed to investor-owned homes seems to me to be impossible as a matter of practice.

Am I mistaken? Is there an actual basis in data for making this claim? I have taken you–and John Foltz and Jim Sexton, et alia–to task in the past for reporting anecdotes as facts. But if there is some factual way of determining that "as many as 30% of properties for sale are currently owned by investors," I would be delighted to learn what it is.

The fact is, you can prevail upon me for a free meal, if you like. I would love to learn what data gathering tools you have at your disposal, so I am certain that I would be more than enriched by picking your brain over lunch.


Greg Swann, GRI, CBR, Realtor
Designated Broker
Vox: 602-740-7531 | Fax: 602-504-1353

Related posts:
  • Butler: Prices down, sales up, logic sideways . . .
  • Could Valley resale home inventories really only be 15% over normal?
  • Phoenix-area single-family homes down one percent from October 2005?


    2 Comments so far

    1. [...] Jay Butler is an oft quoted real estate economist. Of course oft-quoted doesn’t always mean he’s correct. Greg at the Bloodhound blog just down the road once asked Mr. Butler a question I’ve long pondered. (Did he ever take you up on that free meal offer Greg?) [...]

    2. [...] The Phoenix Real Estate Guy has a cool new theme and a link-rich post on the mainstream media’s bubble frenzy. Blogger Jay Thompson asks if we ever heard back from ASU’s Dr. Jay Butler regarding a question we asked of him months ago. The answer: Like fun! In other markets, real estate practitioners have a place at the table, even if it’s below the salt. In Phoenix, we get data we can’t verify — but which does not correspond in any discernible way to the data we can verify — and the gut feelings — reported as facts — of people who don’t actually sell real estate. I used to have a lot of fun picking on Dr. Butler and Arizona Republic real estate reporter Catherine Burroughs. By now, they’re just dead bugs on the headlights — blocking the light, but not by much… [...]