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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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February 17, 2022 at 4:42 pm Leave a comment

Phoenix, still best in the West

A recent Wall Street Journal article noted something many from out-of-state clearly understand about real estate in Maricopa and Pinal counties: Homes here are still affordable.

“Even as home prices in Phoenix soar, housing in the area is still cheap compared with many other big cities in the West,” the article’s author wrote on July 25th.

“Once a poster child for the foreclosure crisis,” Nicole Friedman wrote, “Phoenix’s housing market is booming again, boosted by robust population growth and relative affordability.”

Friedman noted Phoenix “was a hot market before the pandemic,” and has since benefitted from the popularity of remote work policies, as people living in more expensive cities decided to move to cheaper locales. 

The article explained the median sales price in June for an existing Phoenix-area home was $399,900 — up 31.1 percent from a year earlier according to the Arizona Regional Multiple Listing Service. 

That price puts Phoenix homes more than $100,000 below median home prices in San Francisco, Los Angeles, Seattle, Portland, and Denver, Friedman wrote.

“When people come here from Seattle and Portland, they are thrilled at what they can buy,” Alan Jones, division president for home builder Lennar told the Journal. “And from California, they go beyond being thrilled.”

With mortgage rates still available below 3 percent, prospective home buyers will continue to view Metro Phoenix real estate as an excellent value.

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July 31, 2021 at 2:26 pm Leave a comment

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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May 8, 2021 at 1:27 pm Leave a comment

Selling a home? Commission is not everything. Service and Competence matters!

I woke up this morning to see a “For Sale” sign in one of our neighbors’ front yard. They listed their home with Homie, one of the recent tech-based discount real estate brokerage in the Metro Phoenix market.
I was disappointed to learn their house that has the same floor plan as mine was listed for $519,000 – at least $40,000 less than its current fair market value. Apparently, the seller did not get competent pricing guidance from the Homie listing agent.
My neighbor hired to list their home for a flat fee of $3,000 compared to $12,975 – the amount of a 2.5 percent commission at that low listing price using a traditional Realtor. 
Sure, they may save nearly $10,000 on the listing commission — but they gave away almost $40,000 by underpricing the home based on Homie’s “guidance.” 
With the market so hot right now, it is not surprising to get bids $20,000 or more above list price when using an experienced Realtor. This means the neighbor’s total loss could add up to up to $60,000 — or perhaps even more.
If you are a potential seller, please use this true story as an example that your decision to hire a Realtor should not be solely dependent on the amount of the commission. Many wholesale investors like Offerpad, Homie, Opendoor will sell you on a flat-fee commission. With a flat fee, you get less or no guidance, inferior expertise and often, inexperienced newer agents.

To make my point clearer, I called Homie group to explain their selling option to me acting as a potential Seller. The Homie agent indicated that they would sell my home for a $3,000 flat fee vs a traditional  $18,000 6 percent commission (3 percent for the listing broker and 3 percent for the buyer’s broker) for a traditional Realtor on a $300,000 home. They indicated this would “save” me $15,000 just by listing with them.
But I had to correct his calculation. First, I said, the going rate for traditional Realtor commission is now 5 percent, not 6 percent, due to home values rising. Second, the Homie agent failed to mention that I would also have to pay a 2.5 percent commission for the buyer’s broker if I listed with Homie. 

So, my total commission to list with Homie would be $10,500 (the $3,000 listing flat fee plus $7,500 buyer broker fee). The accurate comparison is below:

$300,000 home                                                                 Traditional Realtor
$3,000 flat fee + 2.5% (buyer broker fee)                     2.5% listing fee + $2.5 Buyer broker fee
$3,000 + $7,500 = $10,500 Total to sell home              $7,500 + $7,500 = $15,000 total to sell home

Total savings to go with is $4,500, which is a difference of just over 1 percent. This is far less than the $15,000 the Homie agent initially mentioned as savings. “What business would give away $15,000 is too good to be true. “

At the end of my conversation with the Homie agent, he was impressed with the questions I asked and invited me to work for their company. My response was: “Thank you but because selling my home is the biggest investment in my life, I should care enough to know I am selling at the right price using the best services available.” I hope you do too.

April 9, 2021 at 6:00 am Leave a comment

What’s Driving Arizona’s Population Growth?

BLOG – April 5, 2021

As families begin taking road trips again as more people get vaccinated and normalcy slowly returns,
Arizona serves as an excellent state in which to play the license plate game (if the kids ever stop playing
with their iPhones or Nintendo Switch).
Even a short drive anywhere around Metro Phoenix – to get groceries or takeout, say – will usually offer
glimpses of cars with license plates from several other states: Minnesota, Nebraska, Michigan, of course –
but also Oregon, Washington, and of course, California.
A quick look at the drivers behind the wheel in these cars pretty convincingly proves these visitors are not
within the typical “snowbird” demographic of people we’re used seeing here temporarily at this time of
the year.

No, these folks are here because they’ve just moved to Arizona full-time – or are still looking for a home.
An outcome of the pandemic has been more acceptance and flexibility for working from home – so
Californians and others are free to uproot themselves from states with a higher cost of living to Arizona’s
healthy economy boasting thousands of new jobs in case the old job isn’t staying with work from home
positions forever.

Regarding that booming economy, local real estate analyst and economist Elliot D. Pollack noted in his
April 5th blog that the non-profit Milken Institute has ranked Metro Phoenix as the seventh-best in the
country for jobs, wages and high-tech growth. Pollack said the rankings also take housing affordability
and broadband access into account.

“Among the ranking of large metro areas, Greater Phoenix came in seventh behind communities such as
Provo-Orem, Utah (ranked first), Austin (third), and Raleigh (fifth). Nashville was ranked just behind
Greater Phoenix,” Pollack wrote.

“Phoenix’s ranking is certainly an indicator of a strong, surging economy, one that is built on a diversified
employment base rather than just population growth (which we are a leader in as well),” Pollack
continued. “But the amazing thing is that Phoenix can attain this ranking given its size. Phoenix is by far
the largest metro area on the list of top ten communities and some cities are so small they don’t even
belong on the same list.
“For Phoenix to even be on the list is testament to the efforts of our economic development organizations,
the universities, and the businesses that now are making their way here from high tax states,” Pollack
All of these indicators bode well for Metro Phoenix’s continued climb

April 5, 2021 at 3:51 pm Leave a comment

Master Bedroom or Primary Bedroom- what is fair?

Stunning Primary Bedroom!

During a recent real estate class, an examination of fair housing laws brought discussion of how crucially important these protections are for home sellers, buyers, landlords and renters.
The Fair Housing Act of 1968, expanding on previous U.S. acts, prohibits discrimination concerning the sale, rental and financing of housing based on race, religion, national origin, sex, handicap and family status, as a follow-up to the Civil Rights Act of 1964.
The act helps ensure these factors are not considered in transactions involving people seeking a place to live. A good REALTOR® will help clients selling a home to comply with all laws preventing housing discrimination, and also help ensure clients searching for a new home are not discriminated against. 
As stated on the National Association of REALTORS® (NAR) website, “fair housing is more than a list of dos and don’ts, rights and penalties, and mandatory continuing education. 
“As stewards of the right to own, use and transfer private property, fair housing protects our livelihood and business as REALTORS® and depends on a free, open market that embraces equal opportunity. REALTORS® recognize the significance of the Fair Housing Act and reconfirm their commitment to upholding fair housing law as well as their commitment to offering equal professional service to all in their search for real property,” the NAR website says.
Earlier this summer, the level of dedication to this equal service commitment is being shown by some real estate organizations recognizing sensitivity to potentially offensive language that even a few years ago might not have raised any concerns.
As reported in Newsweek magazine in June, the Houston Association of REALTORS® “decided to replace all descriptions using the terms ‘master bedroom’ and ‘master bathroom’ with ‘primary bedroom’ and ‘primary bathroom’ earlier this month on its Multiple Listing Service (MLS). The change came after several members of the association asked for the terminology to be reviewed.”

“The MLS Advisory Group regularly reviews the terms and fields used in the MLS to make sure they are consistent with the current market environment,” the HAR said in a statement sent to its members. “It was not a new suggestion to review the terminology. The overarching message was that some members were concerned about how the terms might be perceived by some other agents and consumers. The consensus was that ‘primary’ describes the rooms equally as well as ‘master’ while avoiding any possible misperceptions.”

Newsweek reported Tiffany Curry, an African-American real estate broker and former board member in the National Association of Realtors (NAR), said she supported the change because of the negative connotation from the term “master.”

“‘Master’ represents a stigma and place in time that we need to move forward from. As a progressive, diverse city, Houston should be reflective of its citizenship,” Curry was quoted as saying.

Developments like this demonstrate the care professional REALTORS® take when marketing properties and assisting their clients.

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September 10, 2020 at 1:47 pm Leave a comment

Will there be a real estate bubble soon?

Arizona’s real estate market surged before and during the pandemic, with an average 8-to-10-percent increase in home values over the past five years. According to Core Logic Case-Shiller U.S. National Home Price NSA Index, Phoenix leads the nation in home appreciation. But what happens after Coronavirus subsides? Will there be a real estate bubble?

In a recent webinar, Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research for the National Association of Realtors, said he believes the real estate situation during Coronavirus is not the same situation as the real estate bubble in 2016 which makes him to conclude that a “bubble” is far from reality.

The following are reasons why the pandemic will not likely bring about a bubble:

  1. There is NO sub-prime lending. Borrowers are qualified to borrow a loan.
  2. Arizona has had 10 straight years of economic expansion since 2010.
  3. Job losses are temporary. Once the pandemic is contained or a vaccine is discovered, those jobs will return – examples include retail, travel, dining, entertainment, health and fitness.
  4. Arizona real estate is well positioned to face any downturn because unlike New York, which had a long lockdown, and Nevada which relies on travel and entertainment, Arizona’s economy and businesses continued.
  5. Many people’s income increased during the pandemic due to the stimulus package. Many of these people placed their money in savings. This means there is potential for spending power that will be unleashed after the pandemic and will drive the economy back up quickly.
  6. Unlike the 2016 bubble, new home builders are scaling back during the pandemic. There is no overbuilding of homes.

Other insights from Dr. Yun’s webinar:

  1. The work from home phenomenon is real and lasting. People find value in owning a home. Many first-time home buyers are looking to buy a home. More people will find living in suburban areas more attractive than in downtown. Big tech companies like Twitter have announced they will allow employees to work from home forever. Facebook is also allowing half of their work force to work at home. Smaller businesses will soon follow this lead.
  2. Commercial real estate is hurting. Customers and workers are staying home.
  3. Mortgage applications increased by 20 percent compared to last year. There is a long pipeline of buyers who are waiting to get into a home.
  4. Homes under contract have increased 30 percent compared to last year.
  5. The United States is fortunate that the U.S. dollar is accepted in any part of the world. That’s why it can get away with $4 trillion in new debt. The Federal Reserve in Washington is buying the U.S. debt. However, five to seven years from now inflation may occur. The best defense against inflation is gold and real estate. Real estate appreciates and you will have earned equity on the property. So, if you have money in savings and have a good steady job, Dr. Yun believes this is a golden opportunity to purchase a home while interest rates are at historic lows.
  6. he outcome of the presidential election will not dramatically change the real estate climate. It will affect the higher income class more than the middle class due to changes in tax system.

August 14, 2020 at 12:17 pm Leave a comment

How can appraisal account for wild swings in home values?

The COVID-related fluctuations in Valley housing prices, marked by a huge downswing in March and culminating in unprecedented increases in June and July, are cause for paying extra attention to home appraiser practices, according to a Phoenix appraiser.

During a ZOOM webinar with local Realtors this week, appraiser Jay Josephs said these “dramatic fluctuations can cause panic in the appraisal industry” because of the recent wild swings in prices paid for home in the Phoenix area over just the past five months.

Josephs said that in March, before COVID-19 affected the marketplace, Metro Phoenix had about 8,900 sales for the month, and the average price per square foot for a home was $231. In April, home sales dropped 19 percent to 7,180, and the price per square foot dropped 8 percent in that one month.

In May, 7,028 homes were sold — a 2 percent drop, while per-square-foot prices plummeted 16 percent to $181, Josephs said. 

Then in June, a rebound to 9,719 homes sold — up 38 percent — with per-square-foot pricing at $197.

“We didn’t think the rise would be that dramatic or fast,” Josephs said. “How does an appraiser account for these changes?”

Josephs told Realtors that when representing a home seller, it is important to meet with the appraiser and provide information about the property they may not otherwise be aware of. He encouraged agents to work with sellers to provide a year-by-year listing of important improvements or remodels to the property, to ensure the appraisal is fair and can justify the selling price. In addition, it is a good idea for Realtors to determine the geographical competence of the appraiser and discuss comparable properties or share details of comparable homes that are significantly low or high.

“Arizona and Maricopa County are positioned really well to come out of COVID from a real estate perspective,” Josephs said. “There is a gravitation from higher- to lower-density markets, and a release of pent-up demand — I just didn’t expect it in June. Our market is thriving.”

July 21, 2020 at 12:56 pm Leave a comment

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.

July 14, 2020 at 4:26 pm Leave a comment

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!

July 5, 2020 at 2:44 pm Leave a comment

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