What's Happening in Phoenix, Scottsdale & Paradise Valley Real Estate?
Real estate in the Valley of the Sun is dynamic! Miss a minute, miss a lot. Check back regularly to stay on the top of the latest affecting Metro Phoenix, including Phoenix, Scottsdale & Paradise Valley. Can't find what you're looking for here? Call, text or email me. I’ll help you find what you need.
For Buyers:
January is one of the top months for new listings to hit the market, making it a good time to start looking. Buyers gain a negotiating advantage when there are more listings in competition with each other. Typical inventory trends tell us that November through January are the peak months for buyers to have the maximum choice of properties before competing buyers begin dwindling the supply and their negotiating advantage. The market as a whole is still a seller’s market, meaning that supply is below normal for the level of demand out there. This shortage is mostly for properties below $200,000, expect more choice in the upper price ranges.
For Sellers:
Get ready for the beginning of the purchasing season! The first week of the year is typically the lowest point for pending sales due to low buyer activity over the Christmas and New Year holidays. The lull doesn’t last for long, however. January is a big time of year for large tourist events in the valley including the Barrett Jackson Car Show, Waste Management Open, Collegiate Football Championship and more. By February, open house traffic will pick up and a notable increase in contracts submitted. In 2015, the number of contracts in escrow nearly doubled between January and June before submitting to the summer slowdown. This year, we’re starting off with 15% more properties in escrow compared to this time last year, a good sign for sellers to kick off the year. There are still a significant number of boomerang buyers recovering their credit after foreclosures and short sales a few years ago, providing a healthy level of optimism for demand in 2016.
--Written by Tina Tamboer-Glatfelter, The Cromford Report
In short: We're off to a good start. We'll see a slew of new inventory (buyers hope) before long and this will set the pace for the months to come and most importantly, the spring buying season. Sellers are still in good shape and buyers will have slim pickings for a bit longer, but that will change pretty quickly. As it's been before, Buyers below $200K will continue their struggle to find affordable homes in good areas and when they do, they'll compete with all of the other buyers looking for the same.
Stay vigilant and call or text me with any questions you may have! Be well!
I know at times during inspections I can seem a bit... nitpicky. It may even feel overbearing at times, but there's good reason behind that. I'll tell you why it pays to be patient and go through process.
What do you think it would cost to repair a little damage to the floors in the picture above? You may even be asking, "WHAT damage?!" Here's a closer look:
A client is in escrow on this home. It will be an rental property in a great part of McCormick Ranch (Scottsdale) with good schools that commands a premium. After reviewing the seller disclosures and inspections, we determined there were 2 roof claims on the CLUE Report (from the insurance policy)- one for the shingle roof & the other for the flat roof (which needed to be replaced); fortunately we determined the shingle roof was OK AND still under warranty after requesting more detail from the insurance company. The termite report showed active infestation & damage to laminate plank floors in hallway. We thought we could repair the boards inexpensively with a few leftover replacement planks the seller had (4, to be exact).
12/9/15- On a visit, it became a little obvious that if we tiled the area in the hallway, it may not match the adjacent bath or laundry room. The hallway also ran into a nearby 4th BR/office, the living & dining rooms and kitchen. Yikes! If we tiled, we might need to change the baseboards if the tile couldn't be installed under the baseboards. Wood sounded nice and may have been a little easier, but would have been more expensive.
12/10/15- The seller determined he didn't have enough boards.
12/15/15- a wood flooring contractor determined that he could probably repair the floors and quoted $250 for up to 4 boards and $65/ea additional board.
At some point... Insurance determined they couldn't match the few replacement boards. With that option out, the actual replacement costs became critical. We had a tile contractor come to measure the floors and give an estimate. The seller did the same.
12/16/15- I send a tile contractor out to measure the floors and give an estimate.
12/17/15- Our tile contractor gave a bid that came in at $3400 for install (labor) & haul-away of trash, but did NOT include the tile (materials)! He estimated the area he was looking at to be ~900SF. At a minimum to not get completely cheap tile that wouldn't at least be comparable to the laminate-wood floors, we estimated about $2/SF for tile (~$1800)- a total cost of $5200!
12/18/15- Buyer makes a judgement call on how to proceed.
12/21/16- The seller asked if he sweetened the opt and threw in another $1000 whether the buyer would tackle all the repairs himself. Hmmm...
12/23/15- The seller's estimate from the insurance company's estimate came in at over $12000 and included the termite treatment, floors, baseboards, etc.!
If you found yourself in that situation, what would you have done on 12/15? If we had stopped right there with the info we had, how do you think that would have worked out for my buyer?
What do you think the buyer finally opted to do? If you guessed, take a $2K less reduction and have insurance do it, you're right. We signed the response to the inspection notice on 12/20/15. He will have most of the house refloored AND is paying below market for a great income-producing rental!
The bottom line... what we thought was an easy $250 repair will really cost $12K!
It pays to be patient and take the time to estimate needed repairs to make wise decisions when negotiating the sale of a home.
Ironically, yesterday I got an email from an insurance agent asking why I was requesting so much info about a FIRE that had occurred in one unit of an 8-plex that another client is in escrow on... This little flooring repair pales in comparison to all the issues we've found in the multi-family building...
Numbers don't lie and being too hasty can cost you. It goes both ways- both buyers AND sellers should always be diligent! It's just part of the service I offer ALL my clients so they're happy at the end of the road!
The Metro Phoenix real estate market is remarkably stable as compared to last year. The subtle shift I've been following for the last 2 months has apparently ended. Why? By of November 28th, listing counts of homes (supply) stopped increasing and demand held stable. Here's the most recent Cromford Report market infographic for a brief overview of the market and what Buyers and Sellers can expect in the near future.
Make sure you make it all the way to the bottom for the handy summary from these highly regarded valley economists. Then, please call or email me with any questions!
For Buyers:
The residential market is still positive for buyers. The most recent Home Opportunity Index (HOI) released by the National Association of Home Builders and Wells Fargo, which measures buyer affordability, measured 70.9 for Phoenix compared to 62.2 nationally. This indicates that a family making the median household income in Phoenix (reported at $64,000 annually) could afford 70.9% of the homes sold in the 3rd Quarter of 2015 given today’s lending standards. Normal range is between 60-75%.
Supply continues to be short for listings under $250,000. This price range makes up 64% of all year-to-date resales through the Arizona Regional MLS. Short supply with good demand in this price point indicates that positive price appreciation will continue over the next few months. If your price point is higher than $400,000, then resale supply is 10.1% more abundant today than it was at this time last year.
For Sellers:
Despite the shortage of competing listings under $250,000, there has been a 25.6% increase in seller price reductions in this price range from an average of 91 reductions per day at the end of June to 113 per day at the beginning of December and appears to be rising at the moment. This implies that high demand has created an overly optimistic opinion of market value in this price point. While sale prices are continuing to rise, they are at a more conservative pace than some sellers would like.
Price reductions between $250,000 and $400,000 saw a mild increase in October, but have since settled back down to an average of 71 per day for the holiday seasons. The over $400,000 market saw a 44.8% surge in average daily price reductions in October, going from 58 per day in mid-August to 81 per day by the end of October. Since October they’ve settled back down to 63 per day. Don’t be fooled by the cool down. Every year daily price reductions dip in the 4th Quarter, only to surge again during the first week of January.
Written by Tina Tamboer-Glatfelter, The Cromford Report
Are you ready for the holidays?? Thanksgiving is right around the corner!
Our market has been quietly cooling over the last couple of months, which is fairly typical of this time of the year as most people start getting ready to entertain, travel & see family. The higher end market in the Phoenix/Scottsdale Metro area reflects this too. However, this is also the time of year that well-heeled snowbirds come to town to enjoy the warmth, golf and the much-appreciated lack of snow. These folks fuel a lot of the higher end sales that occur yearly when they're in town, typically between October-April.
If you have a million dollar home to sell, there are a few places where your odds are actually quite good to get a sale.
November 17 - "Taking a fresh look at the market over $1 million we see 6 ZIP codes with their days of inventory under 12 months. These are the best luxury areas for sellers. They are shaded pink below. Those in white are moderate while those in blue are the most difficult areas for sellers."
Source: Cromford Report
I have to point out that all fall inside what I call "The Core" of the Metro Area. They include the ever popular areas of Arcadia, Old Town Scottsdale, the "heart of Scottsdale", the "magic" 85254 zip code, Sweetwater Corridor & Arrowhead Ranch. Most of these locations are central, have easy access to freeways & businesses, airports & good schools. Just outside of 365 days are 85258- McCormick Ranch & Scottsdale Ranch, 85259 (Ancala). Further behind are 85253 (Paradise Valley), 85016 (the Biltmore/Camelback Corridor Area), 85255 (DC Ranch, Grayhawk, McDowell Mountain Ranch & Pinnacle Peak), Ahwatukee & Queen Creek. 85253, 85255, & 85262 (North Scottsdale- Troon North, Desert Highlands, Estancia) have the lions share of $1M+ homes on this list.
Take a look at the map below of all actively listed homes inside "The Core", priced at $1M or higher:
Glendale is comprised of many zip codes, but only 2 have active listings over $1M- 85308 (3 listings) & 85310 (1 listing). Several of the zip codes in white (under 600 days of inventory) also fall into the core, which is still a lot, any way you look at it.
So, Buyers who plan to buy a $1M+ home in the next few months, want to consider a few places shaded in blue. If you're looking in the areas shaded in pink, do your homework, being informed always goes a long way.
For Sellers who plan to sell, if your home is in a blue shaded area, you might want to think about what you might do to stand out from the crowd. There's a lot of competition.
Whatever you do, please call me so you know you're armed with the right info either way!
Residential real estate in Metro Phoenix is still strong as compared to last year, but the subtle shift I spoke about last month is ongoing. Take a look at this infographic from the Cromford Report for a quick overview of the market and what Buyers and Sellers can expect in the short-term.
Make sure you make it all the way to the bottom for the handy summary from these highly regarded valley economists. Then, please call or email me with any questions!
Weekly Price Reductions Up 14.7%
For Buyers:
Supply of homes for buyers to choose from continues to creep up. This is most notable in the $250,000 to $400,000 price range where current levels are now very close to last year at this time. Supply between $175,000 and $250,000 is also rising and gaining on 2014 levels. This is good news for buyers and a relief after dealing with low supply conditions since March. Increased competition amongst sellers is beneficial for buyers as can already be seen in the number of weekly price reductions within the Arizona Regional MLS. Between May and August, the average number of weekly price reductions for listings between $175,000 and $400,000 were 1,015. Within the past 8 weeks, encompassing September and October, that number has increased to 1,164 per week, a 14.7% increase.
Supply under $175,000 is still well below 2014 levels, while supply over $400,000 is running higher than 2014 as it has all year.
For Sellers:
While it may be disappointing to find out that competition is rising amongst sellers, the good news is that demand is holding steady. Listings in escrow between $175,000 and $500,000 are up 32.4% from this time last year and up 7.7% from just 5 weeks ago. Listings in escrow over $500,000 is declining seasonally, but is still 14.4% higher than this week last year. The added inventory has caused price appreciation to flatten out between $175,000 and $500,000. However over $500,000, added inventory and a 58.6% increase in the number of weekly price reductions since the end of June have resulted in a 5.2% decline in sales price per square foot.
Written by Tina Tamboer-Glatfelter, The Cromford Report
Buying a house is fun, exciting and liberating!! But you also want to buckle down and know what's happening and you're doing too. We agents do a TON for our clients, but being armed with the right info to help the process (and yourself) along, you can actually make it a pretty smooth process.
There are a few key points every buyer should note. Here's a quick snippet of what I had to say, as quoted in an article published today in the US News & World Report:
"4 Things You Should Know Before Your First Buyer-Agent Meeting"
By Devon Thorsby | Contributor
Nov. 6, 2015, 1:22 p.m.
Real estate brokerage is becoming an increasingly full-service profession – from acting as a source of market insight and information to helping in home selection and providing support before closing. But as much as agents can assist in the homebuying process, they’re also not your fairy godmother.
The best way to ensure a smooth process is to come to the first meeting knowing a few things. Arrive armed with the following knowledge, and your agent will have an easier time making your homeowner dreams come true.
Your actual budget. A key step to successfully buying a home is to first find a lender and receive preapproval on a mortgage. The preapproval amount that the lender offers will help you figure out the home price range you can afford and what you’ll be expected to pay monthly.
But be careful here, says Camille Swanson, a Realtor with Realty Executives who serves the Phoenix metropolitan area.
“The lender will go back and see things on a credit report and say, ‘Here’s what your liability is and here’s what your income is.’ What they won’t see is if you like to take lavish vacations, or you like to go to Starbucks every morning or if you have a gym membership. Things won’t show up on the report, [but] they still are part of your monthly spending and your disposable income, and they can still detract from your ability to buy a home,” Swanson says.
I've been saying that our Metro Phoenix residential real estate market is still very strong. Here's a quick overview so you know exactly what that means. Check out this infographic from the Cromford Report for all the latest! Then call or email me with any questions!
VIEW the video or scroll down to READ the text version
It's Fall!!
FINALLY- we get back to truly awesome weather 70's and 80's as far as the eye can see. And the sunsets in the fall... to die for!! (I took this one from my front yard)
It's that time of year again and there are LOTS of events i.e. Bentley Scottsdale Polo Championship this weekend, on Saturday 10/25. Realty Executives is the exclusive Real Estate sponsor and we hope you will come join us for the fun. Tickets are still available at www.thepoloparty.com.
THE MARKET IS SHIFTING!
Somewhere in the last month, the market got a little funky. On the weekend of 9/4, I put 3 listings into escrow. One of them fell apart a short time later and now it's a struggle to get another buyer. Another deal I put together for a buyer also fell apart and I’m not alone. Lots of other places aren't selling or are falling out of contract too. I’ve watched this waning buyer-sentiment grow and have confirmed it with several of my fellow agents. Recently able to put some meat behind it.
About a week ago, a client had an offer that was about $10K lower than the previous offer that fell out of contract. When I gauged the market to see what was happening, I realized that almost NOTHING was selling! The most recent, closed comparable sale was another listing I sold the month before! I advised him to bend a little to get *this* sale to work, which he was willing to do. After all that, the buyer flaked anyway after waffling for a week! We're revising our strategy...
THE HARD DATA
My go-to source for this info is always the Cromford Report. There, of the last 18 posts in October, 10 were about how the market is deteriorating (seller's perspective). Looking a little closer, the Cromford Market Index for single family homes (this is the chart at the top of every email newsletter I send) is down nearly 10 points from 8/30 (148.4) to 10/16 (138.0) and appears to be falling about 1.5% per week.
In another place, almost all of the cities in the top 17 largest report are trending down, except 2- Fountain Hills & Cave Creek. All the cities are still at or above 100 (normal/average), except Buckeye. Watch the progression from June to now:
In a nutshell, buyer demand is the same or slightly worse and listing inventory is up- across the board. Listings were up by 4.5% (8,750) in the 28 days before 10/1. on 10/1 & 10/2 alone, there were 1,155 new listings!
My favorite, recent chart shows where the action (sales) is to paint a good picture: (YoY Percentage Change in Dollar Volume by Price Range):
10/9/15, Source: Cromford Report
The volume of closed sales are UP in all price ranges with double-digit gains from September 2014-September 2015, EXCEPT for homes below $150K and above $1.5M. Here's how it breaks down:
The biggest declines are in these ranges: 1) $0-150K -26%, 2) $1.5-2M -24% 3) $2M+ -62% (luxury slip could be attributable to lower stock market??)
The biggest gains are from: $500K-$1M, with the $800-1M market up 96% year over year!!
OTHER POINTS TO NOTE
The silver lining: Higher values are the biggest opportunity for sellers right now. One of my biggest wins this year was an appraisal on on a home that I was able to get under contract in 3 days at asking price in late August. The problem is that the most recent, comparable sold home closed for $23K below my contract sales price! I was able to get the appraisal value up $10K from the last closed comp. My seller was able to net the extra cash AND set the bar for values in her neighborhood.
Luxury Sales: in short, some areas are still doing well (based on the supply of inventory):
10/07/15, Source: Cromford Report
Doing the best (with under 365 days of listing inventory): includes Arcadia (85018), Central/Old Town Scottsdale, (85251/85254/85260/85250), McCormick/Scottsdale Ranch (85258), East Shea Corridor (85259) & PV (85253) make up the top 1/3 of zip codes with this inventory- in pink.
So-so(365-600 days): includes the Biltmore (85016), DC Ranch/Pinnacle Peak (85255) and North Scottsdale (85266)- in white.
Not so well (600+ days): includes North Scottsdale (85266), N. Central Phoenix (85012), Carefree (85377) & Cave Creek (85331)- in blue.
I want to point out the last little comment that accompanied this chart was:
"56% of million dollar sales are in just 3 ZIP codes - 85253, 85255 and 85262, which have moderate days of inventory at 342, 405 and 514. We again note among these 3 that the closer the area is to the airport, the stronger the market is for sellers."
This is a recurring theme and has been since the market started it's legitimate recovery in about 2012 (Buyers take note!).
IN SUMMARY:
The market is drifting from Seller territory to NEUTRAL territory. I repeat- it’s is NOT falling off a cliff. These little corrections happen constantly- the market moves up and down along the index line as that delicate dance between Supply and Inventory goes on. We’ll reassess as time goes on and plan for each individual's situation.
Buyers: absorb all of the new inventory and afford to get a little choosy and maybe even be brave enough to take a chance and ask for what you want. You still need to be aware of your area and price range. Not everyone is going to have an easy time of just picking and choosing what they want. I'd say, if you're buying under $150K (if you can find something you like) or over $2M, go for it!
The 10 spec homes priced at/above $2M in about 0.5Mi of me (85253) are not moving very quickly... The one that sold took an 18% haircut from it's original list price! Another active listing has just shy of 1,000 days on market and has dropped 31% from its original list price. There are 5 still under construction or nearing completion. They're probably facing an uphill battle unless things change in a hurry, which is always possible...
Sellers: be nice to Buyers and put a little effort into your home before you list it. The “shiny penny” will always stand out from the crowd. See any of the myriad of articles and videos I've created over the years that show you exactly how to dress up your home for success!
That’s it! Please be sure to check out our complete breakdown of the CFPB's new TRID guidelines (AKA: Know before you owe!) that started on 10/3! Call with any questions and we look forward to hearing from you soon!
On 10/03/15, the Consumer Financial Protection Bureau (CFPB) implemented it's new rule affecting all home loan disclosures. It will allow consumers more transparency and a better understanding of the loan terms & process and hopefully prevent mass amounts of borrowers from defaulting on loans which they had little understanding of their obligations to repay. This new rule doesn't just affect buyers and sellers in the Phoenix & Scottsdale area. It's been implemented nationwide and will affect ALL US buyers & sellers involved in a sale with a financing.
Everyone Needs to Know:
This only applies to buyers using financing- does not affect CASH purchases!
Communication is Key! Any/all contract changes should be sent to all parties (buyer, seller, lender, escrow officer, appraiser) quickly.
The Lender is Important! Is the Buyer’s lender local (originating and processing loans in AZ) or an out of state lender, who may not be familiar with AZ closings? In AZ, a loan is “closed” not when ALL parties have signed but only when the documents are recorded with the county recorder’s office. In other states, the sale is “closed” when the Buyer signs the loan documents and the loan is funded. This difference can add a few extra days to the process of “closing” in AZ.
Do not assume you can change most things at the last minute anymore. You can’t.
Expect that some of this information may change. This is uncharted territory and many questions are still unanswered. We will update this information as soon as we have more clarity.
What Buyers Need to Know (TRID's main purpose is to protect you!):
Start comparing home loan interest rates and lenders BEFORE you find the perfect house. It’s now or never- once you are under contract you need to be ready to commit to your lender & give him/her any/all of the following:
Pay stubs
W2s or 1099’s
Tax returns- personal & corporate, including schedule K-1’s, if applicable
Proof of Down payment/Reserves (bank and/or asset statements)
Gift documentation (if you will be using gift funds)
Other credit/liability documentation
There is no more Good Faith Estimate – it was replaced with the “Loan Estimate” or LE
After you execute the contract, you have 3 days to give the lender the following (remember “ALIENS”):
A-ddress of the property
L-oan amount
I-ncome
E-stimated value or the purchase price
N-ame of the borrower (YOU & co-borrower, if applicable)
S-ocial Security number of borrower(s)
The first 3 items (A-L-I) can be collected up front when you start talking to a lender. The last 3 items (E-N-S) can ONLY be collected after you have an accepted contract! Your failure to submit this info may result in your breach of contract. This means the seller may issue a “cure notice” requiring you to “cure” or fix your breach in 3 days. Your failure to comply may result in you paying the seller “liquidated damages”- forfeiting your earnest money deposited with the escrow company.
The loan estimate expires after 10 days; before the expiration, you must:
Give the lender your intent to proceed
Sign/return all lender disclosures & required documentation (see Item 1!)
Your failure to do “a” or “b” may result in having to start the process again and potentially lose up to 10 more days to complete your purchase by the agreed close of escrow date…
Ask your lender questions about your interest rate! Specifically, find out when the lender will lock in your rate and how long you will be locked in at that rate. Also, just in case, find out the cost to extend your rate lock and/or to buy down your rate.
Last-minute changes to the loan program, an increase in interest rate (0.125% for fixed loans; 0.25% increase for adjustable loans) or adding a prepayment penalty can delay a deal, or break it if the seller is not willing to agree to a contract extension.
You must receive your closing disclosure (CD) at least 3 lender days[1] prior to loan “consummation”, (the date you sign your loan documents), for your review if emailed or mailed (USPS). If the CD is delivered in person, it can be considered delivered on the same day. So, simply put, you should have your CD 6 “lender days” prior to the day you will be closing, unless you have will see your lender in person. If you’re short, plan on adding that number of days to your actual closing and plan accordingly, which may require a contract addendum to extend the closing date- both you and the seller must agree in writing. (See P3 of chart: http://www.ctitle.net/system/files/Reference%20Guide%20CD-TRID%20Rule%20Requirements%203-30-15.pdf )
Per our AAR purchase contract, you must have signed your loan documents at least 3 days prior to the actual close of escrow (the recording date) or you could again be “cured” for breach of contract. This has NOT changed- it’s always been this way.
[1] There are 3 types of “days” in a purchase contract:
o Calendar days- common to the AZ Assoc. of Realtors (AAR) and what governs our residential contracts
o Lender days- days the lender is primarily open for business; typically Monday through Saturday, but be sure to check with your lender for clarity!
o Business days- working days of the week (M-F), excluding major holidays (Memorial Day, Labor Day, Thanksgiving, etc.). These are the days that the county recorder and frequently title/escrow companies work by.
