I have clients from time to time who get very worried about an interest rate difference of .01%, 5.45% vs. 5.40%. Sure, it can make a big difference on a 30 year loan, if you stay there for 30 years. But putting it all in perspective, is that difference worth not buying the house that you want right now and then going back on the market for a house that may cost more, or for which the interest rate will have gone up by more than that same .01%?

 Those fears of “getting a bad” deal over .01% get put in to perspective when you look at the buying power that we have now versus 2003 or 2006.

 Have a look at the chart below. For about $1,060 (P&I only), you got a $201,715 house in 2003. You got only a $195,331 house in 2008. But today, you got a $246,648 house.

So, right now –as in this summer– we have a lot of houses listed higher than they should be, a lot of buyers who are sitting on the fence and incredibly low financing.

You get my drift here. If you are thinking of buying a house, now is the time. Call me at 602-456-9388. 

Our friends Michael Orr and Tina Tamboer at the Cromford Report continue to give us great data and perspective on where the market is these days. 

Interesting trend: there are about 50% more homes listed this year than last, but about 23% fewer homes under contract. See the nifty images below and this Cromford summary:

• Active Listings (excluding UCB): 24,440 versus 15,692 last year – up 55.7% – but down 4.4% from 25,555 last month
• Active Listings (including UCB): 27,695 versus 19,463 last year – up 42.3% – but down 4.3% compared with 28,950 last month
• Pending Listings: 6,426 versus 8,892 last year – down 27.7% – and down 7.7% from 6,965 last month
• Under Contract Listings (including Pending & UCB): 9,664 versus 12,663 last year – down 23.5% – and down 6.6% from 10,360 last month
• Monthly Sales: 7,254 versus 7,924 last year – down 8.5% – and down 4.0% from 7,558 last month
• Monthly Average Sales Price per Sq. Ft.: $129.46 versus $120.13 last year – up 7.9% – and up 1.5% from $127.51 last month
• Monthly Median Sales Price: $197,000 versus $182,500 last year – up 7.9% – and up 2.5% from $192,250 last month

Further, they expect prices to sit at about the same range for a while:

“We continue to expect the price range between $125 and $135 per sq. ft. to be a natural resting point after the rapid rise from $78 that has occurred since September 2011. It will take a big change in market conditions for prices to move significantly out of this range.”

So, what does this mean? Michael and Tina would have finer analysis than I would, but based on what I’m seeing in the field, I think there are a lot of sellers who are listing higher than the market will bear, while the buyers are not coming out (see last month’s analysis to see the painful public policy reason why).

So, what does this mean for you?

If you are a seller, DON’T do these two things:

1) “We will list 10% higher than our agent suggests so that we have some ‘wiggle room’ to negotiate.” This is not a good strategy. First, if you list at the right market price and you don’t like an offer, don’t take it. Second, if you list too high people won’t even consider looking at the property, let alone making an offer. You will sit on the market for too long and your house will become “stale.” Then you will get mad at your agent for not marketing your home properly. While it could be possible that your agent did not market your home property. But, more likely you are losing possible buyers.” If you don’t trust your agent’s price analysis, spring for a $300 appraisal. You will probably save yourself a lot of heartache.

2) “We don’t have to renovate anything. The buyers will want a new kitchen, anyway.” The buyers might  do this, if you are listed below market price. But, more likely they won’t look at the house at all. Unlike 2009-2011, buyers are expecting houses to show well. Of course, there are folks who want fixer-uppers. We are even listing a good opportunity. But, the percentage of the buying market who wants that has decreased substantially.

If you are a buyer, you have more negotiating power. There are a lot of folks who are pricing as if it is 2013, when the market climbed dramatically in the first half of the year. We just are not seeing that right now. We are not declining, but we are not popping upward, either.

If you need more information about the market, or your particular situation, please contact me at 602-456-9388.

This post is the sixth in what I hope will become a 35-video series of videos. These are the neighborhoods that have officially-recognized historic designation.

So, while there are many neighborhoods in Phoenix with beautiful older homes full of character, folks are always asking me about these. So, I figured I’d put some of what I know on videos. This project may take a while, so please come back and check it out again soon.

And, of course, if you are looking to buy or sell in historic, older or unique Phoenix neighborhoods, please contact me at 602-456-9388.

Follow this link to see the other previous videos.

6. Brentwood

That’s all for now. Stay tuned for more!

If you want to see the kind of video I can produce to help sell your unique home, please have a look at the video below. The internet (and buyers) increasingly relies of video as a form of communication. I can help you communicate the story of your home better.

If you joined us at the last Quarterly Market Briefing, you saw that we are in a bit of an odd market. Properties over $500,000 are selling quickly because financing above that price (jumbo) has opened up, after years of severe restrictions. Properties under about $200,000 are dropping in price because most of the investors and distressed properties have left the market. Everything, everywhere, is more likely to sell if is properly staged, updated and renovated –unlike the gritty days of the recession.

In a market that Cromford Report founder, Mike Orr calls “boring”, we are seeing a pretty flat market without as much activity as last year –and we are going in to summer. The high-end homes stop selling then as those folks leave the state for the summer. The “middle class” and “working class” homes continue to sell as these folks stay in Phoenix, but might move to a bigger house or a new school district. 

Orr points to several causes for a weaker market, which I find more credible, especially the idea that an entire generation of potential home buyers has been undermined by decades of higher university tuition and therefore higher debt. But, don’t get me started on the way our legislature has failed eduction. It almost makes me want to run for office.

To quote Orr:

Now we are seeing an increasing number of commentators adding to the discussion of what we believe are more realistic causes of the continued weak demand for homes to buy, not just in Phoenix but across much of the country:

• low participation by first time home buyers
• the inhibiting effects of massive student loan debt
• millennials preference for the flexibility of renting
• the foreclosure wave in 2008 through 2012 which has introduced a new sensitivity to the fact that home ownership can sometimes be financially hazardous
• a large tranche of former home owners who have not yet repaired their credit enough to re-enter the market
• low rates of household formation, especially among 20-30 year-olds
• a growing wealth gap causing stronger demand for high end homes but leaving large numbers of people renting for the foreseeable future

Back to me: So, what are you to take from all of this? Two things:

1) If you are a buyer, get in the game now while sales are low, other buyers are delaying for all the reasons above. You will be one step ahead later, especially as interest rates have only one way to go –up. This is where I rock on my figurative rocking chair on my imaginary front porch and tell you that I wish I would’a bought my first house a couple years before I did. I’d be fair bit better off, I’ll tell ya. Whipper-snappers!

2) If you are a seller, you are still doing better than you were even a year ago, because sales for nicely-renovated and properly priced homes are good. Just expect to update that kitchen, or bathroom, etc.

See below for two charts.

1) The number of active listings in CenPho between about $150k to $500k are shrinking in number. So, if you are looking, there is a decreasing number of homes to see (probably through the summer). If you see something that looks good, expect it to be gone in hours or a day. So, be ready to move quickly.

2) The Cromford Index tells whether we are in a buyer’s market or a seller’s market, and to what degree.  The dividing line is 100. So, we are squarely in a buyers’ market, but not as far in to that category as we were in 2008-09. However, this may be just a condition through the summer. 

We hosted our Quarterly Market Update on April 22nd with the help of Jeannie Bolger of Nova Home Loans and our friends at Old Republic Title, featuring Tina Tamboer of the Cromford Report.

Here is what we learned:

1) The seller’s advantage, which has been dropping for a while, has started to manifest concessions for the buyer (some closing cost and price concessions).

2)  Overall sales volume is down 26% Year over Year for March, but that reduction is from distressed properties going away. The number of “normal” sales has stayed almost exactly the same as last year.

3) Average prices are still going up because the market share of sales has shifted away from distressed sales and more towards normal sales, which generally have a higher price per square foot. In other words, more sales in the luxury market have a higher impact on average sales per square foot than they do on the median sales price trend line.

4) Normal active listings are sitting longer in MLS because investors have left for the most part because:

a. First-time and “Boomerang” buyers often don’t have the cash reserves to fix up a property

b. These consumers often purchase a smaller property in good condition at a higher $/SF over a bargain larger home for the same price that needs work. In other words, the days of listing a property without having done improvements first are gone. Buyers expect nice properties, rather than distressed properties. 

5) Homes in historic neighborhoods are still commanding higher prices as more people want to live in CenPho and downtown.

 This is a market in shift. If you need some help figuring out the best strategy to buy or sell, please contact me at ken@getyourphx.com or 602-456-9388.

Cromford Indx and Concessions

Loss of Distressed Properties -2014

This post is the fifth in what I hope will become a 35-video series of videos. These are the neighborhoods that have officially-recognized historic designation.

So, while there are many neighborhoods in Phoenix with beautiful older homes full of character, folks are always asking me about these. So, I figured I’d put some of what I know on videos. This project may take a while, so please come back and check it out again soon.

And, of course, if you are looking to buy or sell in historic, older or unique Phoenix neighborhoods, please contact me at 602-456-9388.

5. Fairview Place

“So,” people ask me, “if we crossed in to a buyer’s market in most places in November, why are prices still going up and why are people continuing to list?”

Okay. Nobody actually asks me that specific question. At least not in your average public setting, like in line at the store or while ordering a latte at Lux. But it’s instructive and I’m going somewhere with this. So, please, humor me.

The answer is that the perception of what the market is doing lags the data by 3 to 6 months. So, look at this chart. The market crossed to the buyer’s favor in November according to the data (the purple line crossing 100), but the people listing and buying homes did not start behaving that way until 3-6 months after that. 

So, really, that time when we just crossed that 100-line of the index represents market equilibrium. Unlike the orange line from 2009, which was a severe buyer’s market.

Even though the data shows that sellers are losing advantage, the sellers set their prices based on what they saw in the market last year –because they hear from their friends and the newspaper that the market is really hoppin’.

This year buyers have not been coming out, so the prices drop after the homes sit on the market for a while. That is why the listing success rate took a header at the end of last year, and is just starting to recover. See Chart.

So, does this mean that prices are going to start tanking soon? “No”, says our friend Tina Tamboer of the Cromford Report. “Prices will level out.” How does she know this? She doesn’t for sure. But, she says, we are not seeing signs of economic distress, job losses, etc. This indicates that there will still be a strong enough demand to prevent price drops. She sees two causes: (1) people are still clearing out past bad credit and (2) younger folks are just getting employed long enough to buy a home.

That is one reason why homes under $200,000 are dropping in price, but homes above that are increasing in price. 

So, what does this mean for you? It means if you are waiting for prices to drop for houses over $200,000, you are not likely to see it. If you are waiting for prices to drop under, $200,000, you may see that for a little longer, but buyers are likely to start entering the market soon.

I can help you see the forest through the data and buy or sell the right home. Call me at 602-456-9388.

This post is the fourth in what I hope will become a 35-video series of videos. These are the neighborhoods that have officially-recognized historic designation.

So, while there are many neighborhoods in Phoenix with beautiful older homes full of character, folks are always asking me about these. So, I figured I’d put some of what I know on videos. This project may take a while, so please come back and check it out again soon.

And, of course, if you are looking to buy or sell in historic, older or unique Phoenix neighborhoods, please contact me at 602-456-9388.

4. Greater Coronado Neighborhood

To see #3 in the series, click this link.

This post is the third in what I hope will become a 35-video series of videos. These are the neighborhoods that have officially-recognized historic designation.

So, while there are many neighborhoods in Phoenix with beautiful older homes full of character, folks are always asking me about these. So, I figured I’d put some of what I know on videos. This project may take a while, so please come back and check it out again soon.

And, of course, if you are looking to buy or sell in historic, older or unique Phoenix neighborhoods, please contact me at 602-456-9388.

3. F.Q. Story

To see #2 in this series, click this link.

This post is the second in what I hope will become a 35-video series of videos. These are the neighborhoods that have officially-recognized historic designation.

So, while there are many neighborhoods in Phoenix with beautiful older homes full of character, folks are always asking me about these. So, I figured I’d put some of what I know on videos. This project may take a while, so please come back and check it out again soon.

And, of course, if you are looking to buy or sell in historic, older or unique Phoenix neighborhoods, please contact me at 602-456-9388.

2. Encanto-Palmcroft

To see #1 in this series, click here.