Well, it’s been a long time in the making, but I’ve got a new website.

Now you can:

1) Find more information about Get Your PHX events.

2) More blog posts, news and analysis.

3) Log on and instantly to search the real estate market in the entire valley. There is sooooo much more power in this website!

4) Access pre-made searches for everything from historic homes to those super-cheap condos around town.

Let me elaborate on #3.

On my previous site you could see some searches, but only the criteria that I create for you. Click on “Search the Entire Valley” and you will be able to define your own searches!

I’m even opening up the blog to contributors who want to share thoughts ideas and experiences about how they “Get Their PHX”. So, have a look. Poke around.

Send me your thoughts!

Cheers,

Ken

I can’t let this article go by. Fortune Magazine says that it is time to get bullish about the housing market again. Read the entire thing here. It is worth a read!

Here is a summary of their arguments:

1) The historic drop in construction is leaving a void. People still need houses and they have not been built. Further, the steep decline in prices from 2006 (from 30% to 55%) has created an affordability that will bring buyers back in to the market.

2) It is cheaper to buy than to rent. Plus the portion of income devoted to buying a house is down to 9.8% from 17.2% in 2007.

3) Even in distressed areas like Phoenix, there are so few new construction homes entering the market that the former glut of foreclosures is getting eaten up.

The article likens the increase in demand to raising cattle: the increased demand will not be met immediately by new construction. In other words, prices will start going up again.

I’m glad that somebody is out there countering the constant doom and gloom of the Arizona Republic. For me, the proof has always been in the data. See this chart, below, from the Cromford Report. This comes directly from the MLS data. Phoenix has seen a decrease in foreclosed properties (REO) and short sale properties week over week since December.

I think Fortune Magazine is correct. It is time to reconsider the market!

If you’ve read my blog much you’ve seen that I have a more positive view of where the market is going than, say, the Arizona Republic.

You may be asking, “When is a good time to buy in Phoenix?”

Well, pretty much any time now. Below are some data-based reasons why you should feel comfortable buying a house this year. This information is based on The Cromford Report, which is data aggregated directly from the Multi-Listing Service, the most accurate account of sales in the market.

1) Combating the myth: “The Wave of Foreclosures”

A whole army of chicken littles out there like to tell you that there is a “wave of foreclosures” coming down the pipe. This chart should tell you just how wrong that prediction is. You can see how the general trend has been downward since 2009. It is important to note that it is not in the banks’ interest to allow too many foreclosures on the market all at once. That would depress prices and mean fewer golf trips for the bank executives.

2) Pending Foreclosures

“But aren’t there a bunch of people who are likely to foreclose soon?” Well, fewer now than any time since March of 2009, actually. Further, as the economy slowly improves fewer people will foreclose on their homes. See below how the number of pending foreclosures is going down quite dramatically now.

3) Myth #2: “Prices are going to drop again.”

So, knowing what you see above, it makes sense when you see that prices are higher now than the lowest point in the market, back in April of 2009, and are edging toward the 2010 averages. HINT: The high buying season in Phoenix is always the summer. So, watch for prices to keep going up. Further, people are saving an average of 6% of their monthly income (compared to about 1% a few years ago). Once they hear enough good economic news, they are going to start spending that pent-up money on big-ticket items (read: “houses”).

4) Days Inventory

How am I sure prices will go up? Well, when inventory goes down, prices go up. Its Econ 101. Here’s the trend! Inventory is going down! “Days Inventory” means how long would it take to exhaust all of the inventory of houses at the current rate of sales in Phoenix. We are at about 140 days right now.

5) Sales per Month

Want another reason? The sales per month are going up. So, when inventory goes down and sales go up what happens? Prices go up. I said it here! It won’t be dramatic, but prices will go up. Interest rates are going up now, too (over a point in the last 2 months). If you want to grab something before both interest rates and prices go up, now is the time to make it happen!

Is is time to buy in Phoenix yet? The answer is “yes”, you can feel safe making that decision. We can watch the market together. Call me at 602-456-9388.

I was reading this hilarious post today by an agent sharing the ABCs of what she’s learned over the years. It’s probably funnier if you are an agent or if you’ve bought a house.

But the blogger mentioned how Zillow and real estate sites like them generate home price estimates, which are most often incorrect, but which many people take as gospel.

This is particularly important when buying or selling home in Phoenix. The market changes so rapidly that you don’t want to get the wrong information about home prices.

The CEO of Zillow was smart enough to respond to this agent’s post and pointed people to a page where they declare how accurate they are. He also said clearly that “agents or appraisers will always be more accurate than a computer model.”

See an image from that page, below.

You can see that in Maricopa county only 20% of Zestimates are within 5% of sales price. The median error is about 14%. So, a house worth $200,000 could show up on their system as $228,000 or as low as $172,000. That is a huge difference!

Lesson: if you want to buy or sell a home, get an agent who will get you on the Multi-Listing Service where the sales numbers are more accurate than any other option. I can help you by calling me at 602-456-9388.

Last week I posted market data which showed that there was shrinking inventory and that homes were staying on the market for less time.

I want to tell you this week about interest rates. You’ve probably heard that interest rates are climbing again. In just the last two months, they have gone up from about 5% to 5.25%. At their lowest point last year they were at about 4.25%.

This is huge. While interest rates are at their lowest point in centuries (really), every incremental change increases the cost of owning a home. We have every indication that rates are going to keep moving upward.

For instance, if you buy a $100,000 house at 5.5% interest, your monthly payment (before taxes and insurance) would be $568. The same house at 6% interest would cost $600 per month.

That extra $32 per month is $384 per year or $11,520 over the life of the loan!

Another way to look at it is that in order to have the same payment every month that you had at 5.5% interest, you could only afford a house that costs $95,000 at 6% interest.

So, what does this mean? It means that you want to consider getting in to the market before interest rates go up.

It also means that you probably want to act before both prices and interest rates go up. That is to be avoided!

Give me a call. I’m more than happy to help you navigate the market: 602-456-9388.

NEWS FLASH

For the longest time you could not get a loan on about 90% of the condos out there.

It looks like that is about to change, at least for the condos here where I live.

Check this out. You could get a 2br/1.75 bath, totally renovated condo here for a principle and interest payment for under $300 per month (assuming 5% loan). There is one on the market right now. Click here to see what’s available.

Naturally, you will have HOA fees and insurance on top of that, but you are still living large for under $600 per month.

I met a woman who bought one of the condos here with a normal good old fashioned loan. I spoke to her lender and we think we could do it again, due to changes in the way FHA views some condos now.

This is a HUGE development.

If you want to find out more, please call me at 602-456-9388.

Every so often some incredibly inexpensive properties come open at my condo complex here in CenPho.

See here for three of them. Two are 1br, 1ba and one is a totally renovated 2br, 1.75ba.

The reality of most condos is that you probably won’t be able to get financing for them. However, if you are in the market to pay cash, or can work out a private loan with a family member, the world is your oyster.

The $55,000 property would cost $260 to live in per month in HOA fees (which covers water, exterior maintenance and structural insurance).

Figure you borrowed money at 5% from a family member, and you can get a 2br/1.75ba, 1,100 square foot condo for about $560 per month. The 1br/1ba units would be as low as $343 per month under those conditions.

Oh, and by the way, I think that $55,000 price tag is too high. I would work to lower that.

My condo complex is shady, retro, built like a tank, with a groovy pool and a huge back yard where you can harvest pecans, dates or figs.

I’d really love to see some more owner-occupants here. Investors are great, but I would love to see us preserve the balance between investors and owner-occupants.

So, if you have any questions, please give me a call. I don’t represent these listings, but I can help you grab them before they are gone. 602-456-9388.

I’ve reported in the past that we as a society have so many choices that we don’t know what to do.

There was a book that came out a couple years ago called The Paradox of Choice by Barry Schwartz. The author spoke about how our multitude of choices actually stresses us out, rather than add convenience. It used to be that we had 5 watches to choose from at the department store. We pick one that is not perfect, but over time it becomes us. Now we have thousands to choose from and the moment we pick one we think that perhaps we picked the wrong one. The author also suggested that this might apply to our love lives, too. But, I’m not going there.

But I do believe that this is the same with real estate.

There are tens of thousands of homes out there and if you look on line its overwhelming. What do you do?

When confronted by so many choices, the first reaction may be to put off the decision. After all, interest rates are really low and you keep hearing that there are more homes ready to “flood” the market.

Well, interest rates just started to move up last week and I’ve covered previously in my blog why you won’t see a flood of new foreclosures in the market.

But, as for the process of choosing the best house when confronted by seemingly unlimited choice, my suggestions:

1) Before you look at even one listing, write your priorities on a piece of paper. Don’t want to renovate? Don’t want to live next to a school? Then refer to that later in the process. You list need not be unchanging, but it should serve as a guide.

2) Weed out the ones that are unacceptable, put them in a pile and don’t look at them again. They won’t get any better.

3) Split the rest among those that you really love and those that you think have some good features, but which are not perfect. Save that “imperfect” list for later.

4) As you go and see the properties in person, take lots of notes. If you are looking at homes with me, I’ll give you a clipboard with all of your listings. Make lots of notes to trigger your memory. It is easy to forget all of the details and you first impressions. After about the 5th house you see, they all blend in to one blur.

5) Don’t let the perfect be the enemy of the good. Once you’ve looked through your favorites in person and if you are not finding what you want, consider seeing ones from your “imperfect” list. The experience of looking and what you’ve learned about the neighborhoods might actually change what you consider perfect and imperfect.

6) Don’t procrastinate. Once you are in the market, see it through. If you hold off your purchase, you risk seeing the inventory of homes shrink and the interest rates go up.  An imperfect house that you passed up could have been the perfect house with a little work. Or the price could have been negotiated. Then all that work will be wasted and you won’t find the house that fits your needs, despite all the choice. Now, that is irony.

I love me some contradictions.

Any time you hear somebody telling you that there is a massive wave of foreclosures coming down the pipe, or that everything will be rosy tomorrow, just remember: it will be a mix of good and bad. As a home buyer or a home seller, your best option is to make plans as you normally would and to your best to mitigate any negatives.

In other words, find the opportunities regardless of the market.

Take a look at these stories:

1)  Forbes: Phoenix housing prices falling dangerously. There are obvious problems with this story. First, Zillow is far from accurate about home prices. and trends. Second, the market softens near the end of any year. Third, and most important, this is an opportunity if you are looking to buy, regardless of whether the market remains flat next year or not. Negative, positive!

2) Real estate opportunities starting to grow. Here is a story of how people are finding huge opportunities in this market. They are going in together on investment properties, forming Real Estate Investment Trusts (REET). They are buying homes at historically low cost, which will pay off even if prices dip a little in 2011 –they will probably start coming back in the next year and savvy long-term investors will reap the reward.

What is the problem with this story? Maybe it is a bit too rosy if you are a first time home buyer and don’t have access to quick capital. How do you fix that? Make a plan and save every month so you can act as soon as you can build up enough for 3.5% down and get a FICO score over 700.

Maybe its time to talk to people in your family about getting together to do some investing. It is not as difficult as it sounds.

I just heard today that manufacturers are sitting on $2 trillion dollars of cash, just waiting for people to start spending. Add that to the fact that the savings rate in America is now over 6%, average, and you see that there is starting to build a pent-up demand. Will that express itself in terms of home purchases or product purchases? I think both. As soon as people hear some good economic news, they are going to spend.

So, you have a choice. See the opportunity in the market while prices are low, or let that dam of pent-up savings break and watch prices go up.

To me, that is not a contradiction.

So, when the inventory goes down, what happens? Yep, demand goes up.

I’ve heard all this talk about a double dip recession (which we now know never happened) or this second huge wave of foreclosures (which has also not happened). I’ve learned not to trust the doomsayers in the press or at the universities.

In fact, the market has been clearing the inventory of new foreclosed homes as quickly as they have been coming on.

This time last year, we were on track for 24,995 annual home sales in Maricopa County. As of today, we have sold 30,063 in the last 12 month period. (Source: www.cromfordreport.com)

Wave? Right.

So, here is what I’m seeing:

1) Inventory is actually down a little since September. See below. This is an incredible time to pick up a new home.

2) I’m seeing investors snapping up the good homes in less than a week. Those that need more work sit on the market longer. So, if you are looking, be ready with your Loan Status Report or your Proof of Funds so you can jump on a good deal when you see it.

3) Don’t expect prices to drop too much further. They tend to drop around the holidays, but people start scooping up properties in late January.

4) We still don’t know how long these low interest rates will hold out. A slight change in interest rates can mean a huge increase in your monthly payments.

5) If you are thinking of selling, hold off a little longer, unless you have true equity in your home.

Give me a call if you have more questions.