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.

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.

Is Selling a home through Offerpad or Opendoor better than hiring a Realtor?

For many months in the Phoenix metro area, alternative services to real estate agencies and Realtors  like OfferPad and Opendoor have been aggressively advertising and promoting their alleged advantages to selling a home “a different way.”

I recently visited  one of these websites to find out how much they would offer to purchase my own house.  As a Realtor, I have a strong sense of where my house should be priced at to sell. The resulting offer was a price about $10,000 lower than what I would sell my house for in today’s market.

However, that wasn’t the end of the story. On top of the $10,000-below-market-value offer, the service deducted 9 percent from its offer price to be applied towards their holding costs (utilities, HOA fees, and maintenance) until they sold the house to another buyer, and also covering their sales commission to sell the house, plus other miscellaneous administrative costs.

Finally, in addition to the holding costs, the service noted that it would deduct repairs or replacement costs after an inspection. These items included, but were not limited to, the air conditioning unit, roof, water heater, appliances or structural flaws.

Will customers receive more money for the sale of their house if they go with one of these services instead of selling the home the traditional way by hiring a Realtor? Below is an example that shows the comparisons:

                                                         Alternative Home Buying Service            Realtor

Sale Price                                             $360 ,000                                                              $370,000

 

Commission/holding cost/           -$32,400 (9%)                                                     -$25,900 (7%)*

Closing cost deductions

Repair/Replacement cost             -$2,000 (estimate)                                           -$1,000 (estimate)

Net Profit                                            $325,600                                                              $343,100

Difference in Gain                           – $17,500                                                              +$17,500

In summary, hiring a Realtor to sell a home in my area would result with the homeowner pocketing well over $15,000 more than using the alternative service.

However, for some sellers, the convenience of selling their house “as-is,” not having to show the house to buyers or waiting for a buyer to make an offer, plus the sometimes lengthy closing process may be enough reasons to justify the a more than $15,000 reduction in profit.

Like any investor, OfferPad or Opendoor will give you less money in exchange for convenience.  The choice is yours.

 

Why is the Listing Agreement Important When Selling Your Home?

by: Maria Hass, Chandler and Gilbert Realtor

A seller in her senior years approached me wanting to relist her house with me. She is not happy with her current Realtor from Keller Williams. She showed me the listing agreement, and to my surprise, the listing agreement expired more than a month and a half ago, but the Realtor didn’t inform the seller and continued to conduct open houses at the seller’s house even though they were no longer authorized  to market the house.

I talked to the listing agent and she said they had a verbal authorization to continue listing the house past the listing’s expiration date.

Whether or not this is true, EVERY agent should know that a verbal agreement does NOT change any terms of the written agreement. Everything has to be in writing.

In addition, the listing still shows “Active” in the MLS indicating that the listing end date entered by the Realtor in the MLS was not the same date that was agreed upon in the listing agreement.  Otherwise, the listing status would show “Expired” a month and a half ago.

The Seller has the option to pursue a code of ethics violation with the Arizona Department of Real Estate, an MLS violation for dishonest conduct and incorrect entry and an appropriate fine could be sanctioned against the Realtor.

What is the moral of the story?

1. Read the listing agreement before signing — Ask the Realtor to send you a blank copy of the listing agreement a few days before you meet so you have time to read the terms and conditions and ask any questions before signing.

2. Know your listing period by heart and mark it on your calendar.

3. Ask for copies of ALL the documents you signed showing your signature, not just a blank copy. This way you have a copy of the executed agreement.

4. Know your right to cancellation. The Arizona Association of Realtors (AAR) listing agreement, which is the standard form used by Realtors for resale homes, gives the Realtor a “unilateral right” to cancel. But it doesn’t give the Seller an automatic right to cancel. So, every Realtor has different terms when dealing with seller cancellations. Some Realtors charge a $500 upto $3,000 marketing fee to release the seller from the listing early. Other Realtors don’t charge anything to cancel.

Find out the Realtor’s cancellation policy before you sign.

5. The listing period varies by Realtor. It can be anywhere from two months to a year. The longer the listing, the longer it takes to get out of it if you are unhappy with your Realtor. A six-month listing period in Arizona is standard.

Protect yourself by taking time to read the listing agreement. Once you sign the agreement, you are bound to follow the terms of the contract.

How Accurate is Zillow.com?

by: Maria Hass

By now most people have heard of Zillow.com – a website where home buyers or home sellers can go to find out the worth of a property. But is it really accurate? My answer is a resounding NO! In fact, there is usually a huge difference between the home value calculated on Zillow.com versus the true market value of the home.

Why is Zillow.com not accurate?

1. Zillow.com determines a home’s value based on tax records, which are hardly accurate nor updated. I tried experimenting on my old home to see what the site has to say. Zillow.com estimated my home at $223,000. I was able to sell it for $250,000. Zillow’s estimate showed that my home was only a three-bedroom without a pool when in reality it was a three-bedroom plus a den with a Pebble-tec pool and built-in barbecue. Home buyers visiting my home without the help of a Realtor would argue that the home is only worth what Zillow says it is. Well, in the real estate industry, Realtors don’t give Zillow’s estimates any respect.

2. Zillow.com provides a comparative market analysis of your home based on what sold in the last year. Real estate agents typically pull up homes that sold within the last three months because the market is constantly changing. We also look at what is pending and active to get an idea of what the future sales look like. Zillow does not do that.

3. Zillow.com does not have specific search criteria. The website does not take into consideration the condition of the home, any upgrades to the home, the number of levels of the home (single-level, two-story, with or without a basement), the direct and indirect competition of the property for sale and any additions to the home. Zillow does not distinguish whether the home that sold backs out to a main street or to a lake. This property description alone can add $20,000 more value to a home on a lake and a lot less to a home that backs to a busy street. It does not know if the home that sold has an extremely big lot or extremely small lot. Again, this can add a greater value to a home with a huge lot. Zillow does not identify whether a home that just closed is bank-owned or a regular sale. The type of sale matters to real estate agents because distressed sales normally sell for a lot less than regular sales. So, your four-bedroom home will be compared to all the four-bedroom homes close by, regardless of valuable property features, condition, upgrades, etc.

4. Zillow’s estimate is computer-generated. There is no human intervention to identify the changing market conditions. It does not have the eye to see the condition and competition of the home for sale. Zillow.com is one big misleading home search website. It is a quick and easy way to find a home’s value, but is far from being 100 percent accurate. If you are serious about finding the value of a home, take time to call a trusted and knowledgeable real estate agent. Realtors have the tools and expertise at their disposal to find out what your home’s value really is. If you need help with determining the value of your home, feel free to contact me for assistance.

Every Realtor is Different

by Maria Hass

There is a growing misconception that if Realtors belong to the same real estate company, then they all perform the same way.

This is absolutely incorrect! Here are some reasons why

The real estate firm does not move the transaction

Real estate companies like HomeSmart, Keller Williams or ReMax do not manage the transactions. The individual Realtor does. From the time the listing is marketed to when an offer is made, negotiated and closed, the Realtor oversees every step to completion and solves problems, if any. On the other hand, the firm provides Realtors educational training, technical support, broker support, marketing assistance and and processes commission checks. None of these matters directly affect your individual transaction.

Every Realtor is Different

Realtors differ in the way they conduct business, including their style of communication, marketing strategies, knowledge of the area, years of experience, personality and work ethic. Some Realtors may know the area better than other Realtors and can better price a house to sell. Some Realtors are more honest than others. Some Realtors may use technology more than others and will communicate better via email than a phone call.

Go with Performance and Do Your Homework

As a client looking to hire a Realtor, you need to gather as much information as you can about the Realtor before setting up an appointment with him or her. With online exposure, this information is not hard to come by. I’ve lost out on a listing in the past because the seller went with a referral recommended by their adult child. The house sat on the market for three months with no offers because it was $40,000 overpriced. The Realtor they hired has done multiple open houses pretending to work to sell the house, but in reality is looking to attract buyers as clients. No house will sell if it is overpriced $40,000. An honest and knowledgeable Realtor will know how to counsel the seller to list at fair price. I don’t have a problem selling a house in 30 days or less but I feel sorry for Sellers who hire the less qualified Realtor and see them go through the agony of house selling.  My philosophy is…“You hired me to Sell your house, not to list it.”

 

 

 

With thousands of Realtors to choose from, which one should you hire? 

1. Get recommendations from trusted friends and family.
2. Find out the closing statistics to determine Realtor’s results.
3. Check the Arizona Department of Real Estate to find out if the Realtor has any complaints on file.
4. Find a Realtor that you trust and fits your expectations and produces RESULTS! After all, this is the reason why you needed a Realtor in the first place.