Categories
Buying A Home

House Hunting Doesn’t Have to Be Stressful

“House hunting is stressful…”  @mollykerrigan

“Find house hunting so stressful hate being decisive !!”  @bethyybowers

“I never knew house hunting could be so taxing, with so many options not sure which one to choose” @Ms_Masingi

According to popular opinion on Twitter, lots of people stress out when they jump on the house-hunting train.  But, it doesn’t have to be that way.  Owning a home should be a relatively long term decision depending upon your future plans, but it doesn’t have to be for life.  In fact, if you’re young, and you have dreams of owning a dream home some day, I would urge you to shift focus while you search for what is inevitably going to be an intermediate home on the way to your dream home.  Shift that focus from owning the perfect house, to making the right financial decisions as you move from house to house over the years.

Owning that perfect home now is often what gets people all worked up and stressed out.  Relax and remember that this is not the end of the line for your home ownership experience.  It’s just the beginning, and in a few years, you can move from where you are now, to something closer to “perfect.”  Who knows, by then it’s possible that you will have earned enough equity and saved enough money to build your own custom home, just the way you want it.

 

Categories
Personal Finances Real Estate Basics

Deferred Maintenance as Part Of Your Housing Budget

There are some very popular programs available for first time home buyers that encourage the least possible amount of money out of pocket in order to buy a home.  The problem with these programs is that they often place individuals who can’t actually afford to buy a home in a home.

The term afford must be carefully defined.  To be able to afford something does not mean that you can meet the monthly payment.  It means that once you’ve met the monthly cost, you can still implement a healthy plan of attack for your future, which includes retirement savings, and savings for deferred maintenance on your home.

Deferred maintenance is a term that we don’t typically learn until after we’ve experienced the “emergency” of replacing an air conditioner, or a water heater, or a roof.  In representing buyers and sellers I have seen many homes that have experienced deferred maintenance neglect simply because the home owner didn’t think of those expenses over the long haul.

Every house will be different, but one thing is certain, houses will wear over time, and their systems will slowly deteriorate, and will need to be either repaired, or replaced.  Those costs, such as a new A/C unit, or a new roof, or resurfacing the pool, are all deferred maintenance costs that need to be counted now, so they can be completed later.

There’s a simple formula for calculating deferred maintenance.  Simply divide the total cost of the repair or replacement by the number of months that pass between replacement or repair.  Add that amount to your costs every month and consider that part of your housing budget.  Now the only thing you need to do is make sure that you leave that money alone until the time comes that you need to actually do the maintenance.

Categories
Market Updates

Market Summary for the Beginning of November 2014

Active listing counts grew much faster in October (5.7%) than in September (0.9%), but nowhere near as fast as they did last year during October (15.4%). This growth occurred despite the flow of new listings remaining very low. We saw 8.9% fewer new listings added during October than last year during the same month. In fact it was even slightly (0.3%) lower than October 2012 which held the previous low record for October since 2000.

Yet again we see no significant sign of an improvement in demand, although comparisons with 2013 are much easier now because demand was also in a slump during October 2013. As a result the annual sales count has stabilized and the monthly sales counts are close to the same level as last year. Whether they exceed last year or not depends on exactly when and how you take the measurement. Comparing the full month is not exactly fair because October 2013 had fewer working days than October 2014. So the fact that sales in October 2013 exceeded sales in October 2013 by 0.9% is more a fluke of the calendar than a sign of improving demand. Listings under contract are down another 9.4% from last year’s depressed number. More of these listings under contract are UCB than they used to be – 34% compared with 32% last year. The remaining 66% are in pending status, which continues to go out of fashion as agents spend more time maximizing their under contract listings’ visibility on Zillow and elsewhere.

Here are the basic ARMLS numbers for November 1, 2014 relative to November 1, 2013 for all areas & types:

  • Active Listings (excluding UCB): 24,846 versus 23,330 last year – up 6.5% – and up 5.7% from 23,514 last month
  • Active Listings (including UCB): 27,561 versus 26,123 last year – up 5.5% – and up 4.7% compared with 26,336 last month
  • Pending Listings: 5,293 versus 6,047 last year – down 12.5% – and down 3.4% from 5,481 last month
  • Under Contract Listings (including Pending & UCB): 8,008 versus 8,840 last year – down 9.4% – and down 3.6% from 8,303 last month
  • Monthly Sales: 6,161 versus 6,109 last year – up 0.9% – and down 1.8% from 6,273 last month
  • Monthly Average Sales Price per Sq. Ft.: $127.98 versus $124.69 last year – up 2.6% – and up 1.0% from $126.69 last month
  • Monthly Median Sales Price: $192,500 versus $185,000 last year – up 4.1% – but down 0.8% from $194,000 last month

We can see that pricing momentum is negligible by comparing the annual and monthly medians. For normal listings across Greater Phoenix both stand at $200,000. In a rising market the monthly median will almost always be higher than the annual median, with the opposite true in a falling market. Here we are in dead calm. This is about as far from a bubble situation as it is possible to be.

Predictions of a bubble growing and bursting in Phoenix were rife in 2013 but have proven very wide of the mark. Several other “expert” predictions have proven equally incorrect:

  • Institutional investors have not disposed of their rental properties except in tiny numbers relative to their holdings
  • Rental vacancies have remained at low levels (although the rental market is now showing a few signs of coming off the boil)
  • Mortgage interest rates have trended down to 4% instead of up to 5% or 6%

In most areas the market continues to gently deteriorate for sellers with the ultra-high end luxury market for custom homes still retaining the best demand relative to historic levels.

The rest of the market remains subdued, awaiting more jobs, better wages and an economic recovery that benefits the huge number of people who depend primarily on earned income rather than capital gains.

Affordability is good, interest rates remain close to record lows and population continues to grow, but home buying remains very low key.

Easing lending guidelines may help, but stagnant or declining real-term earnings is probably one of the root causes of the current low level of demand for the housing market under $500,000. When more people fail to qualify for loans, you can try to patch the system by changing the qualification rules, but a more attractive solution for the long term would be one that increases the net earnings of the applicants. The US economy has expanded at a modest but positive pace since 2009, and faster than most of the developed world. However, very few of the benefits of expansion have so far reached the average potential home buyer. Investors have done very well as have most corporations and Wall Street. Now that investors are no longer buying homes in large numbers, we are left with a hole in demand that the average home buyer is financially unable to fill.

Categories
Local News

Remember Monti’s La Casa Vieja in Tempe?

If you haven’t noticed over the past few years how much changes has come to down-town Tempe, you’ve been living under a rock.  Through the down-turn in the market, we saw the rise and fall of many amazing opportunities, and have come full circle to the now.

As of October 29th, 2014, the land which sits at the southwest corner of Mill Avenue and Rio Salado which is made up of approximately 1.3 Acres of Commercial/Community property previously owned by Michael Monti, of Michael Montis Restaurants & Catering Inc. was sold for a crisp $16.875 Million Dollars to Hayden House Tempe LLC.

The planned projects on this site are impressive, to say the least.

Here’s what AZCentral has to say about the venture.

 

Categories
Property of the Month

Hy-View Modern Remodel

[idx_listing_details listing=”5184440″]

Categories
Featured Article Selling

“That Was Awkward”

Aside from all of the other advice that I would offer to a home owner attempting to either sell or rent their home to prospective buyers or tenants, one of the most important things you can do is simply get out of the way.

“That was awkward!”  An exclamation from one of my clients as we toured a home alongside the owner, who simply wouldn’t leave to allow us to shop.  How many of us cringe when we’re approached by sales people who want to know if they can help us find anything.  It’s Walmart.  I think I can figure it out.  Please go away so I can comment on your selection of products in peace.

The same goes for homes that are on the market.  If a prospective buyer isn’t given the opportunity to make comments on the house freely without fear of judgment from the seller (truth is, most buyers don’t want to offend the home-owner) then it’s likely they’ll leave the house and move on to the next one.

While showing a newly listed rental to a prospective tenant recently, the previous tenant’s mother met us at the property and proceeded to walk us through the house, commenting on the house from her perspective, which, according to my client, indicated that her tastes were completely different than theirs.

It’s an absolutely horrible idea to be in your home when prospective buyers or tenants are there to consider it as their next residence.  Do yourself a favor the next time you have your home on the market.  Make the buyers and tenants comfortable by removing yourself and your pets from the premises.  It’s one of the key elements to making a good first impression.

Categories
Market Updates

Mid Month Pricing Update and Forecast October 2014

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending October 15, we are currently recording a sales $/SF of $125.69 averaged for all areas and types across the ARMLS database. This is 0.7% below the $126.63 we now measure for September 15. Our forecast range was $123.11 to $128.13 with a mid-point of $125.62. Last month’s forecast therefore proved to be among the most accurate we have ever experienced, being only 7c higher than the mid point.

On October 15, REO sales across Greater Phoenix (all types) averaged $88.44 per sq. ft. (down 0.6%). Pre-foreclosures and short sales averaged $94.10 (down 6.6%) while normal sales averaged $128.62 (down 0.7%). The market share of normal sales was unchanged over the last 30 days at 89.5% of sales. REOs gained market share from 6.3% to 6.5%. Short sales and pre-foreclosures lost market share from 4.2% to 4.0%.

On October 15 the pending listings for all areas & types showed an average list $/SF of $131.10, 3.1% above the reading for September 15. Among those pending listings we have 81.0% normal, 7.6% in REOs and 11.4% in short sales and pre-foreclosures. The average pricing for pending listings within Greater Phoenix on September 15 in each category was: $139.00 for normal, $91.35 for short sales & pre-foreclosures and $90.74 for REOs. All of these are higher than last month, especially the figure for normal sales.

Our mid-point forecast for the average monthly sales $/SF on November 15 is $129.59, which is 3.1% higher than the October 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $127.00 to $132.18. Our forecast this month is for a fairly large increase in sales pricing over the next month. This goes against the prevailing trend but is based on the strong move upward in the pending $/SF over the last month. Month to month forecasting has been hazardous this year with considerable volatility from one month to the next. This optimistic forecast is due primarily to a favorable change in the mix of properties in escrow, rather than an underlying strength in pricing. The underlying longer term price trend is still slightly negative.

With demand remaining weak, we still expect the natural price range to remain stuck between $123 and $133 in the next few months.

In the current conditions we believe the strongest pricing of the year has already occurred between March and June. Pricing is likely to show at least some degree of weakness during the last 3 months of the year due to the usual seasonal increase in supply and lower sales volumes. We would need to see a sudden strong recovery in demand to change this expectation.

Categories
Market Updates

Market Summary for the Beginning of October 2014

The flow of new listings has remained very low and yet the weakness in demand is sufficient to cause active listings to rise. In the last four weeks we saw 10.2% fewer new listings than last year and 7.9% fewer than in 2012.

There is still no significant sign of an improvement in demand, although comparisons with 2013 are much easier now because the slump in demand started in August 2013.

Here are the basic ARMLS numbers for October 1, 2014 relative to October 1, 2013 for all areas & types:

Active Listings (excluding UCB): 23,514 versus 20,215 last year – up 16.3% – and up 0.9% from 23,296 last month
Active Listings (including UCB): 26,336 versus 23,151 last year – up 13.8% – and up 0.7% compared with 26,142 last month
Pending Listings: 5,481 versus 6,576 last year – down 16.7% – and down 7.9% from 5,951 last month
Under Contract Listings (including Pending & UCB): 8,303 versus 9,512 last year – down 12.7% – and down 6.6% from 8,797 last month
Monthly Sales: 6,277 versus 6,300 last year – down 0.4% – and down 3.0% from 6,471 last month
Monthly Average Sales Price per Sq. Ft.: $126.68 versus $120.25 last year – up 5.3% – and up 0.4% from $126.14 last month
Monthly Median Sales Price: $194,000 versus $185,000 last year – up 4.9% – but down 1.5% from $197,000 last month
Active listings (excluding UCB) rose 11.2% between September 1 and October 1 in 2013 but rose by only 0.9% in the same period this year.

Avondale and El Mirage are showing some promising signs, but across much of the valley the market is now deteriorating for sellers. Very high end luxury homes continue to sell well. Across Greater Phoenix in September we saw 19 closed sales of homes priced over $2,000,000, up from 15 in September 2013.

Last month we expected to be in a very neutral market with demand and supply in almost exact balance. Although we saw a little improvement it was smaller than we expected and the trend turned a little more negative for sellers in the last two weeks.

Sales in September 2013 were unusually weak and at the time we blamed it on the government shutdown. Sales in September 2014 were slightly weaker than last year which reflects the lack of financing available to ordinary homeowners. Tight lending standards, especially for first time home buyers seem to be having a major negative effect on demand. If Ben Bernanke cannot successfully refinance his home based on current lending rules, what hope do the rest of us have?

Categories
Market Updates

Mid Month Pricing Update and Forecast for September 2014

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending September 15, we are currently recording a sales $/SF of $126.76 averaged for all areas and types across the ARMLS database. This is almost exactly the same as the $126.78 we now measure for August 15. Our forecast range was $121.05 to $125.99 with a mid-point of $123.52. Last month’s forecast therefore proved to be too pessimistic and the actual result was higher than the top of our range by 77c.

On September 15, REO sales across Greater Phoenix (all types) averaged $90.03 per sq. ft. (up 0.4%). Pre-foreclosures and short sales averaged $101.90 (down 0.4%) while normal sales averaged $129.55 (down 0.3%). The market share of normal sales rose slightly over the last 31 days, moving from 89.4% to 89.5% of sales. REOs lost market share from 6.6% to 6.3%. Short sales and pre-foreclosures gained market share from 4.0% to 4.2%.

On September 15 the pending listings for all areas & types showed an average list $/SF of $127.15, 0.7% below the reading for August 15. Among those pending listings we have 80.9% normal, 8.0% in REOs and 11.2% in short sales and pre-foreclosures. The average pricing for pending listings within Greater Phoenix on September 15 in each category was: $134.32 for normal, $91.09 for short sales & pre-foreclosures and $90.48 for REOs. All of these are is slightly lower than last month.

Our mid-point forecast for the average monthly sales $/SF on October 15 is $125.62, which is 0.9% lower than the September 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $123.11 to $128.13. Our forecast this month is for a fairly small decline in pricing over the next month. After three forecasts that have proven optimistic, last month broke the pattern. Month to month forecasting has been hazardous this year with no clear direction despite considerable volatility from one month to the next. However September 15 surprised us by coming in very similar to August 15, rather than showing a significant decline as we expected.

With demand remaining weak, we still expect the natural price range to remain stuck between $120 and $130 in the next few months.

In the current conditions we believe the strongest pricing of the year has already occurred between March and June. Pricing is likely to show at least some degree of weakness during the last 4 months of the year due to the usual seasonal increase in supply and lower sales volumes. We still need to see a strong recovery in demand to change this expectation.

Categories
Market Updates

Market Summary at the Beginning of September 2014

Last month we mentioned that we expected active listings to grow between August and November. This may still turn out to be true, but they certainly did NOT grow between August and September. This is quite unusual and shows us how extreme the shortage of new listings has become. New listings have been arriving at a rate which is lower than in any August we have seen since 2001. In the last four weeks we saw 15.6% fewer new listings than last year and 13.2% fewer than in August 2012, the previous low record holder.

It is quite surprising that a slump in demand would be followed by a slump in supply, but it is certainly good news for sellers who might otherwise be facing growing competition from other sellers. If demand were to recover to normal levels now we could be facing a supply shortage fairly quickly.

Here are the basic ARMLS numbers for September 1, 2014 relative to September 1, 2013 for all areas & types:

Active Listings (excluding UCB): 23,296 versus 18,182 last year – up 28.1% – but down 2.5% from 23,900 last month
Active Listings (including UCB): 26,142 versus 21,359 last year – up 22.4% – but down 3.8% compared with 26,887 last month
Pending Listings: 5,951 versus 7,302 last year – down 18.5% – and down 2.1% from 6,079 last month
Under Contract Listings (including Pending & UCB): 8,797 versus 10,479 last year – down 16.1% – and down 3.0% from 9,066 last month
Monthly Sales: 6,417 versus 7,187 last year – down 10.7% – and down 6.2% from 6,844 last month
Monthly Average Sales Price per Sq. Ft.: $126.10 versus $119.38 last year – up 5.6% – but down 0.4% from $126.60 last month
Monthly Median Sales Price: $196,000 versus $182,000 last year – up 7.7% – but down 0.5% from $197,000 last month

Active listings (excluding UCB) rose 9.5% between August 1 and September 1 in 2013 but fell this year by 3.8%.

Demand has shown a few small signs of improvement in some isolated areas, such as Chandler, Tempe, and several locations in the West Valley. High end luxury homes continue to sell very well. Across Greater Phoenix in August we saw 19 closed sales of homes priced over $2,000,000, up from 10 in August 2013. We still have 32 listings under contract for homes of $2,000,000 or more, with 2 ultra-luxury listings over $10,000,000 currently in escrow. However the entry level luxury market is not looking quite so strong.

By this time next month we expect to be in a very neutral market with demand and supply in almost exact balance.