A funny thing happened in July and it may affect the August market update.

Well, “funny” may not be funny for buyers.

Look at this chart of new listings that come on every day in July, compared over several years.

It’s hard to see, but there is a light blue line at the bottom of the grouping of lines, with the number 6,119. That represents the number of new listings in Maricopa county that came on in July.

Notice that the July 2019 number is at least 1,000 listings lower than the next closest line. So, we have had fewer listings coming on the market this July than any July since 2010.

I also turned on all years available in the system and it is the lowest July since 2001 –and there were fewer houses in the valley back then.

Now, when you look at just listings above $500,000, that difference disappears. But it is strong for homes under $500,000.

What does that mean? Should we be alarmed?

Well, we don’t know yet. (Sorry to those of you who like certainty. You won’t get it on this one.)

It could be a blip. This trend started in June and it could disappear in August. We need to watch it.

If it continues, then those of you who are thinking of listing your home should go ahead and list (especially those at or below $500,000). There is scarcity in the market in that case and it gives you an advantage. Further, people need homes, so they will be looking.

If you are a buyer, be patient, as it may take you a while to find what you need. Also, be ready to go see a house and write an offer immediately if you like the home.

There is still a scarcity in the market and this just happens.

NOTE! This dynamic does not seem to be happening in the CenPho historic zip codes. See the chart below. So, for these zip codes, the July listing numbers seem to be right in line with previous months.

So, if you need to build a strategy around selling or buying, please call us at 602-456-9388.

Over the 11 years that I’ve been in business and the 6 years that Michelle Conley and I have been working together, we hear a few misconceptions more than once. They are not major issues, but I figured it’s worth correcting the record.

These misconceptions start with, “Oh, I thought you…”

So, just in case you were wondering, here we are to correct the record.

1. “Oh, I thought you only sell houses in… <insert one>, the historic neighborhoods, or downtown or in Central Phoenix.
   
   Fact: We work all over the valley, even though we specialize in historic.
   
   Further, we have relationships with quality agents all over the state. We are also building relationships with agents in other states, so we can get you the help you need.
   
2. “Oh, I thought you didn’t have time for real estate because of your political work.”
   
   Fact: I never stopped being a full-time professional realtor, all through my recent years in office. Thank goodness for Michelle Conley, who made certain the trains ran on time on those days when the legislature ran late.
   
   Regardless, I’m not in public office now. So, we are ready to help you!
   
3. “Oh, I thought I could sell that house for 1% commission, so I did not call you.”
   
   Fact: Most times, that “1% commission” turns into much higher costs to you. Plus you won’t have somebody to protect your interests. See my short video that details how those big wholesale buyers are taking advantage of sellers.
   
4. “Oh, I thought it would be easier to just purchase a home through the website because I don’t like dealing with people.“
   
   Fact: If you don’t have somebody to protect your interests, you are increasing the chances that the sellers will take advantage of you. You’ll definitely have to deal with people when you find out that there was major damage to the property, which was not repaired before they sold the house to you.
   
   Why pit yourself against people who have bought and sold hundreds of homes without protection?
   
5. “Oh, I thought realtors don’t do much work and just make tons of money. They sell a house and buy a new Mercedes.”
   
   Fact: Some are rolling dough, but very few. Realtor income looks much like the entire population: very few gobs of money, but most earn a modest living.
   
   Further, in order to be a quality agent we must invest years in to the trade and local knowledge. Further, typically, we sell homes that look like the community we live in.
   
   Regardless, there is a great deal more work that goes in to each transaction than most people know: needs analysis, market analysis, lending advice, neighborhood knowledge, smart home searching or listing marketing, negotiations, inspections, vendor coordination, closing preparation and post-closing availability.

So, we stand ready with decades of combined experience to help you meet your needs. Call us at 602-456-9388

So, if you needed more data to show that the market and demand is strong now, as opposed to how it looked in late 2018, have a look at this quote and chart from the Cromford Report.

“Listings under contract is a great measure of demand.  We typically see a seasonal pattern to listings under contract and 2018 was no different – except it was.  2018 started off following 2017 demand pretty well but in August of last year demand started to fall.  We ended 2018 with 19.1% fewer deals in escrow as the previous year. That trend continued until the end of March when demand started to spike.  Buyers came back and we’re now 8.2% above last year and nearly tied with 2017.  Whew.”

According to Cromford, “The weaker demand that started in 3Q 2018 and ran through 1Q 2019 has caused a slightly slower rate of annual appreciation in recent months. However appreciation rates remain well above inflation and significantly above percentage rises in earnings.”

So, what does that mean for you? Well, if you are selling you can see that properties under contract tend to drop off after June of every year. So, you could really stand out.

If you are buying, then expect less inventory to choose from, but perhaps an opportunity to make a deal if the properties are not moving.

Just watch out for flipped properties. We know that those wholesale buyers often reduce prices of homes they purchase by presenting sellers with long lists of repairs needed, but we don’t know if they did all of those repairs.

Call us to navigate this world of wholesale scams and trickery. 602-456-9388.

In the last few months I’ve been on a tirade.

I’m very concerned about how wholesale buying companies are, in my opinion, creating consumer protection issues. You know the companies I’m talking about. Their ads are everywhere.

I’m not going to give them a free plug. But you know them. These are the guys who promise to buy your house quickly and you pay “only 1% commission,” or some such nonsense.

Watch this short video on how previous clients sold their home, thinking they would pay about 1% commission, but ended up giving up about 9.4% in order to sell.

So, I’m not letting it go here. I’ve published three more videos that go in to greater detail about how these companies are mis-leading consumers.

1. The first video goes in to the reasons these companies give for you to use them. Hint: they are bogus.
2. The second video takes a deeper look at what “fiduciary responsibility” is, why a realtor has that responsibility to you and how these companies get around it, all while giving the impression that they are looking out for you.
3. The third video explains how a “1% commission” can easily result in a 9% loss in your profit when you sell your home, if you are not represented.

“But,” I hear you say, “you’re just a realtor who’s afraid that your business is going away because there is a new business model, and you are not willing to adapt.”

Well, watch the videos and then call me at 602-456-9388. I don’t bite and I’d love to hear how this model in any way protects consumers.

These companies are literally having inspections and deducting repair costs off of the price of the home with little or no resistance from the seller.

They are locking sellers in to a process that goes against their interest after baiting them with the promise of low commissions.

That is about as close to a scam as I can imagine and I’m deeply disappointed that the Arizona Association of Realtors nor the National Association of Realtors (who’s job it is to protect consumers, they say) has not taken action to educate the public.

So, it’s left to me, my little camera phone and my little office.

Oh, and if you are a buyer and you don’t think this affects you, please consider that these houses are being sold with inspections that may not be honest and possibly repairs or renovations that have not been done.

Specifically, if the wholesale buyer does an inspection in order to force the price down, how do you know that they repaired all of those items? You don’t have access to the previous contract, do you? Plus, you will often see these properties sold “as-is.” If it was serious enough to warrant a price reduction, shouldn’t it be serious enough to repair for the next buyer?

If you need a real estate team that takes your interests seriously, please call us at 602-456-9388.

We are seeing upward pressure on prices, as the seller’s advantage strengthens again in the market.

The Cromford Index analysts think that the push upward will continue in to mid-June, although not drastically.

“For the monthly period ending May 15, we are currently recording a sales $/SF of $171.19 averaged for all areas and types across the ARMLS database.

Our mid-point forecast for the average monthly sales $/SF on June 15 is $171.96, which is 0.5% above the May 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $168.52 to $175.40.

The average $/SF has been stronger than predicted over the last 4 months, and this has been largely due to the mix of homes that closed. High end homes were better represented than expected between January through April. The average $/SF for pending listings has risen again over the last month so we are expecting another gain in average $/SF over the next 31 days. The overall price trend continues to move higher, as is normal for the spring season, but we normally peak during the second quarter and then see some weakness for the following 3 months.”

So, in other words, the prices are on a solid incline. No spikes, from what we are seeing.

What does this market update mean for sellers? It means that your position is stronger than it was at the end of last year. The decision to wait is really a function of what your other opportunities are.

Will an increase of 1% on the sale of your home if you wait a month be a better outcome than if you sold now and did something else with your money? Your call.

Buyers, don’t fear a steep price jump, but don’t expect that you can wait forever. Remember, there is still a scarcity of new construction in Phoenix, especially central and downtown.

Source: AZ Central

This article in the Arizona Republic illustrates a point that I’ve been meaning to write about for a while: the true value of a home warranty.

Even though we almost always negotiate a one-year home warranty plan in to a contract when our clients purchase a home, we do have a healthy skepticism toward them.

Let me start with my own story. When I owned my first home, my air conditioning went out in the middle of the summer. I needed to get it addressed, and in a hurry. I called my home warranty company to get them to send a person out. For whatever reason, they could not get to me for a couple days. So, I called a repairman to help diagnose the problem.

Around that time, they got back to me. When they found out that I already had somebody out, they told me that they could not repair it. I guess anybody but their guy puts a hex on the equipment. Basically, my warranty was worthless in relation to the A/C.

From that point on, until I bought my next home, I self-warranteed. In other words, I tried to put away every year the amount I would other-wise spend on a home warranty. If the warranty costs $500/year, I put that away in an save investment account. I figured that, if an A/C lasts 12 years, then I will have saved most of the cost of a new A/C.

The three biggest costs that arise from maintenance of a home include roof, plumbing and A/C. Warrantees may not cover roofs. They may not cover lots of things. So, I figured I’d be better off saving on my own. Have a look at the article for some good tips and things to know about the home warranty, and what to look out for.

So, why do we write in a one-year home warranty for our clients? Simple, if we can get the seller to pay for it and you get the benefit of some protection for you, why not? Always read the policy, even if you got it as part of the contract.

However, unless you don’t have the ability to save money as I described, or if some part of the home you purchase is already really old and failing, you might be able to take care of it yourself.

Like many things, it comes down to taking the time to read the fine print. We always suggest that you do.

For more tips about home buying, contact us at 602-456-9388.

The 2018 listing activity (aka supply) has been consistently lower than that of 2017.

Seems odd, doesn’t it? I mean, doesn’t it seem like you see another flipper home every time you look around a street corner?

Ask the folks in the greater Coronado neighborhood and they’ll tell you that, I think. Of course, they have other concerns, as older homes are being gutted and doubled in size so that they often look very little like their original historic predecessors –despite the hopes to protect historic homes.

But, I digress…

Back to the listings.  Have a look at the 2018 supply compared to the 2017 supply for Phoenix. Supply has lagged anywhere from 5% (now) to 12% (March).

Why? What’s up with that? What does that mean for you?

First, the “why.” When I’ve spoken to our friends at the Cromford Report, they’ve confirmed to me the same factors we’ve seen brewing for a while: there is an insufficient amount of new construction and labor is tight. So, if developers can’t build or flip quickly due to a labor shortage, we won’t see new listings coming on the market.

What I find particularly interesting is how this breaks down by area.

See this chart. This shows the difference in supply between 2017 and 2018 by major valley areas.

What accounts for this difference? According to Tina at the Cromford Report, South Phoenix has gone gangbusters since week 23 in the median sales price zone. She believes this is one of the only areas where they are building affordable housing in gated communities.

Second, the “what does that mean for you?” If you are selling, this is great for you. Of course, over-price your home in a fit of irrational exuberance, but don’t leave money on the table. We can help with pricing your listing right.

However, if you are buying, it means you are up against an excess of demand. Too many buyers for the supply. Be prepared to compete.

We need to analyze two things if you are thinking of getting in the market: location and availability. Are you looking in an area where a lot of building and flipping is going on? Are you looking in areas that are in need to new inventory?

Call us at 602-456-9388 and we can build a plan together.

In this month’s market update, it certainly feels like some changes are coming, but it may be too soon to tell what they will be.

Our friends at the Cromford Report are seeing some tightening in supply, and thus increased prices.

“We can see that the supply of active listings without a contract dropped again during the month of May but the deficit compared with 2017 narrowed slightly to 13.3%. May was a weaker month for new listings, down about 1% compared to last year. This was a contrast to April which had seen a stronger rate than 2017. We normally see total supply drop between May and June and we still expect this downward trend to continue until September.

The sales count for May was very strong, topping 10,000 for the first time since 2011. However the number of listings under contract at the beginning of June is much lower than last year – down 6%. Even with this possible sign of wavering demand, supply is so weak that sellers still have a huge advantage in negotiations. This situation inevitably leads to price increases and the annual rate of change has reached 9% for average $/SF and 9.5% for median sales price. This growth is about 4 times the inflation rate and with interest rates rising, homes are obviously getting less affordable. At some point this trend will impact demand, which is why we are keeping a close watch on the annual sales rate and the number of listings under contract.

The rise in interest rates does not just tend to lower demand, in the current circumstances it can lower supply too. Home owners with an existing mortgage will be less inclined to move if their next mortgage is going to be at a much higher rate than their existing one. This is more likely to be the case with every passing month. As a result we do not see prices as likely to fall because of interest rate rises, but we do anticipate limited growth in sales volumes.

It is important to compare sales numbers year over year, but we should also point out that the presence of iBuyers means that there are more transactions than there would be without them. In situations where a seller accepts an iBuyer offer, the home is resold again in a matter of months, so we see 2 transactions instead of 1. The first sale is not shown within the MLS numbers but the second almost always is. Both sales appear in the counts when we look at recorded deeds. With iBuyers representing 4% of the re-sale market, counts of recorded sales are about 2% higher than they otherwise would be.

We started referring to the chronic low inventory over 5 years ago and it is now at the lowest level we have seen during those 5 years. Fluctuations in demand are unlikely to have much impact on the market until we see an increasing trend in listing counts. This was the first sign of a slowdown in April 2005 and will be the first sign of a slowdown if and when we get one in the future. It came suddenly and unexpectedly in April 2005 and it may do the same at any time. However, nobody paid any attention in 2005 and I am assuming we are all older and wiser now. Any unusual activity in the listing counts will show up in the daily Tableau charts which we create and study each and every day.”

New, just last week is this beautiful downtown town home –2br/2.5ba, 1,664sf with a 2-car garage. No parking headaches for you downtown if you live here!

This property represents downtown living in a rare and roomy town home, in the thick of all the fun. You can live about 200 yards from the Gold Spot Market, 1/8th mile from light rail, and a quick hop away from all of the entertainment, education and shopping downtown.

Have a look at our listings page for more information and lots of beautiful photos.

All this with a garage and quick access to the freeways. This town home was built in 2015 with added extras, chosen by the owner: upgraded floors and kitchen features.

So, if you love the historic neighborhoods and that front porch experience, but don’t want the historic home maintenance, this property is for you.

This home is priced competitively with the almost identical (but slightly smaller) MetroWest town homes nearing completion around the corner at 2nd Ave and McKinley. Have a look at this link for the story I did on that new development.

With everything happening downtown, you won’t want to miss this.