How long will prices continue to go up?

Supply continues to be insufficient for demand for housing in Metro Phoenix as population continues to boom, according to a local expert. While recent increases in mortgage interest rates may have very slightly cooled the trend, there is nowhere near the number of homes needed to satisfy demand, according to Tina Tamboer, senior residential housing analyst for The Cromford Report.

Real estate market remains strong in Metro-Phoenix despite increase in mortgage rates.

During the third week of February, Metro Phoenix had a total of 4,603 active home listings — just 3.5 percent higher than a year ago, Tamboer said during a web conference for HomeSmart this week. But that number of homes for sale is more than 75 percent lower than the same timeframe in 2018 or 2019, and about 60 percent lower than 2020.

The median price of a 1,500- to 2,000-square-foot home in Metro Phoenix is currently $435,000 — up 28 percent from a year ago, Tamboer said. She added that at that pricing, a typical mortgage payment would be about $2,232 per month. Based on estimates suggesting housing costs should not exceed 28 percent of income, she said a family would typically need to earn at least $80,000 annually to afford that monthly payment.

Tamboer said that despite record low population growth nationwide (0.12 percent), Arizona saw 1.01 percent growth in population last year. In 2021, Arizona gained 269 people per day — a population increase rate only exceeded by Texas and Florida.

New construction is not keeping up with current demand, Tamboer said, with issued permits lower in the last half of 2021 after steady increases during the prior year.

“Supply is 25 percent of normal,” Tamboer said of current conditions. “The active supply is extremely low.”

As a result, Tamboer predicted home values will continue to rise through at least June, and probably at a faster rate.

After that, Tamboer predicted further, “Property values will not start to decline — they will go up slower.” 

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Local real estate expert says, “If you can afford it today, get them in today.”

Valley’s hot real estate market continues in 2022
Metro Phoenix home prices are expected to continue rising through at least June 2022, according to a senior housing analyst.
Tina Tamboer of The Cromford Report, which provides real-time analysis of the real estate market in Greater Phoenix, had advice for people in the market to purchase a home during a mid-January webinar.
“If (homebuyers) can afford it today, get them in today,” Tamboer told Realtors during the session. 
While the Valley saw a slump during the holiday season as is tradition during the winter, Tamboer said the equally traditional uptick in demand for homes is ramping up now. 
Annual home value appreciation is at 26.7 percent this month — a normal seller’s market sees 4 to 7 percent appreciation. That said, the continued demand from people moving into Arizona probably means prices will be rising even faster through at least the first half of 2022, Tamboer noted.Other highlights from Tamboer’s presentation:

• The median sales price for a home in the Valley is $440,000 — up 29.4 percent from January 2021
•  Nearly 43 percent of all Phoenix area home sales closed for an amount over the asking price. In a normal seller’s market, the number would be 15 to 18 percent.
• The median amount over list price is $10,000 this month — a normal seller’s market would see amounts up to $3,000.

Despite all of this, buyers needing a home now need to be aware that prices are expected to continue rising as supply is still behind demand. In addition, while many building permits have been issued for new construction homes around the Valley, the supply chain issues for materials have caused the average new home to take 10 to 14 months to complete, Tamboer said.
Tamboer added that the unemployment and forebearance issues caused by COVID are “effectively over,” as unemployment in Arizona has recovered to pre-pandemic levels. She added job growth in the Valley is drawing people to relocate from California, Illinois and even New York.
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ASU economists say all signs pointing upward for Phoenix real estate

Real estate and the economy in general are expected to continue to trend upward in the Phoenix metro area for the foreseeable future.

That was the consensus from three Arizona State University economics professors who provided an update on the status of Arizona’s economy during a May 6 webinar sponsored by ASU’s W.P. Carey School of Business.

Mark Stapp, professor of Real Estate and executive director of ASU W.P. Carey’s Master of Real Estate Development Degree Program, said a biannual survey of commercial real estate brokers shows virtually no concern that the Phoenix real estate market is cooling off anytime soon.

Stapp said the poll of brokers showed little to no concerns for a break in demand for housing in the Valley of the Sun.

“Is this a housing bubble? Absolutely not – it’s a supply problem,” Stapp said.

Stapp noted the supply of residential housing in the Valley was stagnant for several years after the Great Recession that began in 2007, and the housing supply stayed flat for the past decade, basically meeting demand.

“We underbuilt for the last decade,” Stapp said, adding that any prior oversupply in Phoenix was depleted by 2014.

Regarding concerns that availability of housing affordable to entry-level buyers is declining in Phoenix, Stapp added, as long as interest rates stay low and well-paying jobs are added and continue to be available, “we’ll have affordability.”

However, demand will continue to outstrip supply in the Valley because rising material costs, such as lumber prices, are having the greatest impact on stifling residential construction, Stapp noted.

In terms of economic impacts affecting the Valley, ASU Professor of Economics Dennis Hoffman said Arizona ranks first nationwide in growth of transportation and warehousing jobs. Overall, Arizona and the nation are recovering at a much faster pace than experienced following 2007’s Great Recession.

Lee McPheters, ASU Research Professor of Economics, added that he expects a full recovery from COVID’s economic effects “certainly by the first part of next year.”

“(Rising) population is the ace in the hole for Arizona’s economic development,” McPheters said.

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Phoenix real estate market not weakening soon

Local economist expects Maricopa County’s economic boom to continue until at least 2023

For those who wonder when the Phoenix area’s increasing real estate prices might level off or decrease, most economic signs point to “not anytime soon.”

In a FOX-10 Phoenix news story earlier this month, Scottsdale economist Elliott Pollack said the local boom is likely to continue through “at least 2023.”

The report noted increased hiring among both existing and new businesses in Maricopa County is unrivaled in the nation in recent months.

Pollack said the Phoenix area was the best performing major employment market in the entire country last year. He told FOX-10 that among U.S. jobs added over the past last 10 years, 98 percent were lost nationwide in March and April 2020 as a result of the pandemic. During the same time period, Phoenix only lost 40 percent of such jobs. In the current rebound, the report added, the United States as a whole has recovered 55 percent of those jobs lost, while metro Phoenix has already recovered 75 percent.

“We’re in for an extraordinary period of growth,” predicted Pollack, thanks in part to Arizona’s business-friendly policies. “We expect Phoenix to continue to grow extremely rapidly over the next two to three years.

“Phoenix is structured right now to do better than virtually anybody else,” Pollack concluded.

How does the region’s economic performance affect its residential real estate market? With the continuing positive economic news and a growing number of jobs allowing work-from-home flexibility, Arizona’s weather and reasonable cost of living are drawing more and more people to move here from other states.

According to Pollack’s “Monday Morning Quarterback” newsletter, 1,479 new homes and 7,863 resales were sold in metro Phoenix in February. “Median resale price increased nearly 20 percent to $352,000 compared to the price of new homes at $379,900.”

Realtor.com’s most recent forecast predicts Valley home sales will increase 11.4 percent compared to last year – more than the national average.

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Legal advice offered on fix-and-flip properties

If you plan to sell a home after renovating or remodeling it — commonly known as a “fix-and-flip” property — a Valley lawyer recently offered a few tips on ensuring you don’t entice a lawsuit from the buyer after the sales contract is signed.

Attorney Patrick MacQueen, a 16 year veteran real estate lawyer of Macqueen and Gottlieb, PLC told a webinar audience this week that he has handled about 235 cases involving fix-and-flips in the past four years, accounting for approximately 40 percent of his client caseload.

There are five major allegations a buyer can accuse the parties involved with the sale, MacQueen said. The first is “common law fraud,” meaning an “outward statement” about the property’s condition that is “an out-and-out lie.”

The second is fraudulent misrepresentation is “fraud by omission,” MacQueen said, such as when a question about the property comes up, but the seller or seller’s agent “fails to say anything” despite a known problem with the home with respect to the question. Such can be the case of non-disclosure of mold in the property.

Third is “Consumer fraud” typically has to do with statements or representations made in advertising materials, MacQueen said. “For example, if the MLS listing says the home was a ‘complete remodel’ but not everything was redone,” he explained.

The fourth is “Negligent representation” which involves a statement made to the buyers about the subject property that you didn’t know was false, and the buyers relied on that information. For example, if the seller tells the buyer all needed permits were obtained in the construction of a major addition but one necessary permit was never granted, that would be negligent representation, MacQueen said.

MacQueen said he also sometimes sees breach of contract claims filed against sellers if a claim made by the seller in the signed contract is found to be untrue.

MacQueen said the best practice in selling a fix-and-flip property is to avoid adding superfluous “as-is” statements in the sales contract, because standard Arizona real estate contracts already include a standard as-is language.

Further, MacQueen urged that sellers “disclose what you know” in the Seller Property Disclosure Statement (SPDS) that is typically included in a sales contract, rather than try to avoid using the SPDS when they are selling a property they never occupied.

“Disclose everything,” when selling a fix-and-flip property, MacQueen concluded.

For a Buyer purchasing a fix-and-flip property, MacQueen offers advice. Conduct a third party inspection, request contractor information, warranty, receipts and confirm verbal representation via email through your Realtor. So, when the Seller claims that the contactor who completed electrical repair is licensed, have this confirmation in the form of an email.

Following these tips could reduce the risk of facing a potential and costly law suit.

What does Woodside Homes LLC offer that other builders don’t?

The answer: A frame walk through. The frame walk through is an added value that buyers get if they purchase a home from Woodside Homes LLC at Heritage Crossing in Mesa, AZ. It is conducted by the field supervisor with the buyer, and agent if applicable. The supervisor goes over every aspect of building the electrical, mechanical, plumbing, cooling and heating, sewer, foundation, grading, etc. of the interior and exterior of the home prior to installing drywall.

I recently had an opportunity to witness this walk through with a client, which so many builders do not provide. It gave my client and myself an idea of what is hidden behind the walls and gives us a good feeling that the builder is being transparent about how they construct your house.

Angela, the field supervisor, walked us through the entire house and found a few items that needed to be fixed. She immediately contacted her workers and the job was completed even before we finished the walk through. That is great service!

A frame walk through is similar to what a third-party inspection does. With Angela’s competent guidance, it gave my client the assurance that Woodside Homes LLC strives to do their best to build a great house for their client.

My client will be closing on the home in a few weeks and so far Woodside has been communicative and coordinated in providing my client the information they need to close on the new home. Builder representative Susan Collins kept us informed and delivers high quality customer service.

In addition, unlike many builders with one lender, Woodside Homes LLC partners with four different lenders, which allows the buyer to shop around for the lender that best fits their needs.

Currently, homes are going fast at Heritage Crossing by Woodside Homes LLC. Their Landmark development can sell only four lots a month and their Village development can only sell nine lots a month. Both developments have waitlists, since they both exceeded their lot quotas because of early demand. Insane!

Valley real estate demand as hot as ever following COVID19 pause

Residential real estate in Metro Phoenix continues to be in an affordable range, and prices are likely to appreciate over the next five years given the current economy and demand, according to recent remarks by a local real estate analyst.

During a June 25 ZOOM webinar, Tina Tamboer, senior analyst from local real estate statistical analysis publication The Cromford Report, reported that historic low mortgage interest rates are helping Valley homes continue to be affordable for buyers, even though the supply is low and prices are up.

For example, she said, the selling price of a 1,500- to 2,000-square-foot home in the Valley is up an average of $50,000 compared to last year – but mortgage payments are roughly the same for buyers because of the low interest rates.

Tamboer said the Phoenix area market is still affordable for homebuyers with an average income ($72,000); the normal range of affordability is between 60 and 75 percent, and Phoenix is currently at 63 percent. (Nationwide, affordability is at 61.3 percent, she noted.)

However, affordability is declining, Tamboer said. “If incomes do not rise with pricing, we may become below normal in affordability.”

Therefore, she added, “buyers need to buy now. No price declines are coming.”

Supply of homes for sale in the Valley are down 11 percent since the start of the Coronavirus shutdowns, and also 13 percent lower than June 2019, Tamboer added. 

“Demand is shooting up, but there is no surge in new listings,” she said, adding that the supply of homes in the $200,000 to $250,000 range is down 61 percent from a year ago.

Ibuyers offer “Convenience”, but at what cost?

We’ve all seen or heard the ads, because they’re everywhere. 

 

Opendoor, Offerpad. Zillow — all “iBuyer” companies that want potential home sellers to bypass the traditional sales process and accept their cash offer in the name of “convenience.”

 

My first thought about all these ads is that a lot of money is being spent to get all that attention. Think about some of the other categories of goods and services that blanket the airwaves with advertising: Automobile manufacturers and insurance companies come to mind — two products that are very expensive for consumers at least partly because of these corporations’ big marketing costs. 

 

These iBuyer services purport to be the quickest, most convenient way for a person to sell a home. According to a representative from one of these companies who spoke at a recent local real estate continuing education session, a prospective seller can contact the company, send them some photos, and they will respond promptly with a cash offer based on what they say is a proprietary formula — which includes a look at what similar houses have sold for recently.

 

If you, as a seller, want to accept that offer, the company sends a member of its staff (not an appraiser, not an independent inspector) to assess the value of the home first-hand.

 

Any repairs or other issues that need mitigation will be reported back to you, along with a choice: Let the companies’ contractors come in and, for example, fix a leak in the roof or the toilet — at a deduction to your offer price — or have contractors of your choosing make the repairs and show proof of satisfactory completion.

 

As for convenience, this particular company charges all home sellers a 1 percent “convenience charge.” Yes, that’s exactly what they call it. 

 

That’s on top of a buying agent commission ranging from 2.5 to 3 percent; 0.1 to 0.2 percent “listing costs,” and a range from 2 to 6 percent for “holding cost and risk.” The company’s “cap” on the total fees charged to a seller, it was noted, is 14 percent.

 

Fourteen percent. Compare that to the typical and negotiable 6 percent commission a Maricopa County home seller will pay to have his or her property actively marketed and listed by a Realtor. So, for example, on a home sold for $280,000 — the current median home price in the Metro Phoenix market — the 6 percent commission would be $16,800. If a homeowner’s fees to sell to one of the iBuyers reached 14 percent, the cost would be $39,200. That’s a $22,400 premium for a “quick” sale in a market that has rarely seen quicker turnaround than exists today.

 

The reason the market is currently seeing quick sales transactions in general is that the Phoenix real estate market has a very low supply of homes available, as well as heavy demand — Arizona’s population growth is the fastest in the nation, up 2.21 percent to climb to over 7.1 million residents last year. 

 

That high demand means homes are sold more quickly — current average days on the market, according to the Cromford Report, is 56.48 days — the fastest since August 2013 (58.73 days on average). More proof: On Oct. 1, 2019, there were 17,535 active listings on the MLS. On the same date a year ago: 20,292 listings. In 2017: 21,804 active listings.

 

What does this mean to prospective home sellers who are trying to decide between contacting an “iBuyer” program or reaching out to a Realtor with a fiduciary responsibility to work diligently on clients’ behalf to market and promptly sell their home at the best possible price? 

 

It means looking up a local Realtor before contacting one of the “iBuyer” companies would be a very wise move.

2019 Arizona Real Estate Market Update and predictions

I attended a class on real estate recently and listened to Bill Grey, ASU professor on real estate and very well informed on past and current issues.  He mentioned many interesting views about varied subjects that affects the future of Arizona which I will share with you.  Many of which we take for granted.

• Arizona private land ownership is rare: 43% of AZ land is owned by the Federal Government, 26% is owned by Indian reservation, 12% is owned by State of AZ Trust to build schools. So, only 19% is owned by private citizens like us.
• Arizona home ownership: Sixty five percent can afford to own a home. This is a drop from 75 percent from years ago because mortgage loans are tougher to get.
• Arizona home sales: Looking bright. Many people are moving to AZ from California, Utah, Colorado, Washington because of low cost of living, jobs, weather and quality of life.
• Rental Market in Arizona: Booming and rent is increasing. A legislation to cap rental increase would help.
• Arizona median Age: 35.5 years old
• Arizona unemployment rate: 4.3 percent
• Arizona median income: $56,000
• US median home income: $60,000
• US median home prices – $250,000
• AZ population: 1.7 million , growth rate is 1 million  per 10 years
• AZ largest employer: Banner Health Care
• Retail market prediction: Malls without experience will close and convert to medical offices, restaurants. Dollar store, 99 cent store, Goodwill are gaining demand. Middle American stores like Macy’s, Penny’s are struggling. Luxury stores are doing well.
• Industrial Market: Many distribution hubs are staying or moving to AZ because it is cheaper – Dicks, Ace etc…
• Entertainment centers are gaining success. Customers are looking for fun experience such as top golf.  Golf courses are on a decline.
• Challenges facing Arizona: Lack of water, huge national debt, available land, education.

 

*Information and figures provided were based on March 18, 2019 and are subject to change.

What would you do if the house you made an offer on was used to shoot porno films?

A couple rescinded their offer on a Paradise Valley home after they found out that the house was used for pornographic films.

What are the porn laws in Arizona? When selling real estate, the Seller is not obligated to disclose the type of business the house was used for. Other items that are not required to be disclosed in Arizona when selling a home are as follows:

The home being the site of a natural death, suicide or homicide or any other crime classified as a felony.
The home being owned or occupied by a person exposed to HIV or AIDS.
The home being located in the vicinity of a sex offender.

The Buyer has the right to cancel within allowable time frame due to their inspection or morale standard but Arizona law doesn’t prohibit the sale of the house regardless of its past. It will just have to wait for the right Buyer.