State of the Market

My fellow Phoenicians, the State of the Market, is strong!

If you listen to the national news, and look at the stock market bounces in the last week or so you’d think that we are plummeting into an abyss and doomed to repeat the past economic bubble burst. I have a different view of things.

Personally I believe, being that we are in a heated election season…again…the “panic” is more for votes than a reality. I also tend to believe that markets are manipulated in sync with the politics by those that have the most control in order to drop stock values, only to gobble them up and grow them again, thus making more money.

But enough of that…let’s talk about how this effects real estate.

People tend to hear the news, look at the ebbs and flows of the stock market, and make their decisions on buying or selling a home based on the media interpretations. What I feel they should do is buy and sell based on your community, and your needs at that time.

So…that said, Phoenix is doing very well. Pricing is fair, homes are selling. Let’s take a look.

 

Starting with Monthly Sales, according to the ARMLS in July the Phoenix market was very active. Historically speaking, summertime sales slow a touch. Not for the heat, but for the fact that people tend to take vacations, and just aren’t thinking of buying a home. The exception being families that relocated to different areas and don’t want to move their kids during a school year.

This past July showed a different trend, sales flattened out for the most part rather than fall. Buyers were more active than they typically are this time of year. Why is that? 

 

Well, it wasn’t due to added inventory.

In this market we have always been accustom to almost twice the amount of available listings at any given time. The inventory levels today have gone from “Oh my…it’s a sellers market…prices are going to explode and we are going to have another bubble”

To

“This is the new normal.”

We can expect the amount of homes available for sale to stay around the levels you see below. This tends to be the byproduct of the low prices and low interest rates we experienced as we dug out of the downturn that started in  2004-05.

Many buyers on the way back up were able to get their “Forever home” at a great price and have no need to sell. This results in lower availability, and our “New Normal”.

What feels odd to many is the old adage of “Low inventory creates higher demand, thus uncontrollable growing prices.”  This market has tossed that adage out the window, and buyers understanding of what happened in 2004-2005, chasing pricing up, has prevented us from repeating the woes of the past and simply accepted that this inventory is, indeed, normal.

 

Below shows how the buyer is controlling the market, even at these inventory levels, rather than the seller controlling it as if it was a supply and demand situation.

Look at the “New List Price” chart from prior to March 2019, and then what has happened from March to July. Prior to March, especially in January, asking prices were climbing. This was the result of sellers, and sellers agents, living in the world of “Supply and Demand” and reaching for higher and higher prices based on what they perceived as low inventory. The old way of thinking.

Compare that to the actual sales prices in the next chart. Prices that buyers were willing to pay. Actual sale prices didn’t follow the asking prices up. They seemingly stayed somewhat flat until the asking prices began to come back to those sales levels. When they got close enough to be comfortable, and normal, buyers began to buy, compete, and eventually you see the sale prices begin to increase.

There is no such thing as a “Sellers Market” anymore.  There is “Fair Market”.

The fair market falls in line with healthy appreciation as you will see next.

This chart is probably the most important one I am showing you.

The shaded area is a healthy 2-3% annual appreciation of home values. That is now, and has always been, the goal for growth in your investment.

The squiggly line is a chart of average sale price per square foot.

A couple of points to look at:

  • In 2004 we see that the sale prices began to out pace the actual value of homes in Phoenix. That created the panicked feeling in buyers of “If I don’t buy NOW I’ll be priced out of the market and never own a home!” Couple that with lenders that were more than happy to loan you as much money as you could want and more, and buyers pushed sale prices way too high. Miles above the appreciation values.  That, is your bubble.
  • In 2006-2007 that bubble broke. Loans came due, people couldn’t pay, foreclosures and bankruptcy were taking over and the real estate market collapsed taking the economy down with it.
  • Jump ahead to 2019. See where in roughly January (recall the pricing above)? We spiked! Sellers agents fell into the ‘Supply and Demand” mindset and pushed asking prices, and yes some sale prices higher.  Again, right out of the appreciation levels (or actual value). The difference here…as you saw above, buyers didn’t come with them.

Where are we today?

  • As you can see, we are currently holding at the very peak of the appreciation levels. Homes are selling for top dollar (Good for Sellers).
  • Homes are not selling for more than they are worth. (Good for buyers)
  • As long as we hold steady at these levels, appreciation will grow a touch beyond the sale price levels, and the market will eventually follow it up…we just can’t allow the sale prices to out pace the appreciation…and buyers seem to be savvy enough to keep that from happening.

One final piece of good news, “Home Affordability”. This is a measure of household income. Regardless of what we hear in the media, the numbers show that wages are up, income is higher, consumers are feeling good, and potential buyers can afford homes.

If we can keep homes priced within the appreciation range, and Phoenicians keep working hard, the State of the Market will continue to stay strong!

Bottom Line:

Sellers. Understand that there is no such thing as “Supply and Demand” driven pricing in our real estate market anymore. It’s about fairness. If you sell at the high end of your appreciation value, you did well. Let’s visit your home and see what we need to do to get those buyers interested.

Buyers. Keep up the good work. You are in control of this market. Keep playing fair, understand the value of a well-finished home, and make strong offers. Let me help you navigate the neighborhoods you are most interested in and develop your home plan to get into your new home.

I have an awesome team of professionals in our corner to ensure a smooth transaction.

If you’re not ready yet, we can help you set a plan to get there with free advice and guidance.

I would be honored to earn your trust, your business, and your referrals. Give me a call, let’s get started today! (602) 818-6065 or Kevin@GiantAgent.com

 

Posted on August 20, 2019 at 8:11 pm
Kevin Jacobs | Category: Affordability, Market Information | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Welcome to the party!

Welcome to the party! That’s my message for the agents that spent the last 6-8 months giving bad advice on pricing. Welcome to where the buyers are.

If you read my blogs, or follow my social media I have been hammering home that buyers are not interested in the “Sellers Market” that most agents felt we were in. As the low inventory created a mindset of “You can ask a higher price”, the actual contracts have been showing that simply thinking your home was worth more was not a great sales technique.

Here’s a refresher from March 2019 where I pointed out that asking prices were slowly coming back to where the buyers are. Make note of the bottom right where sales prices were going up, yet contracts were going down. 

At this point in March, these numbers had already shown great signs of improvement, even though they were still moving away from each other telling us that, for the most part, buyers weren’t interested in rising prices.

I pointed out, in February and March, a trend that was showing asking prices coming down (just a little), and as a result more homes were going under contract.

April seems to have found the sweet spot where sellers are being realistic with their pricing, and buyers are willing to jump in and make offers close to, or at, asking price.

In short, homes are selling! Here…take a look…

Notice that the Average Sale Price has settled, and as a result contracts are showing improvement. The asking prices have backed up to a palatable level. Not to say that there is no growth, or that the market is crashing. To the contrary, this is showing steady growth and active buyers. The market is strong!

My point is that over priced homes don’t sell. Well priced homes do…and fast!

Bottom Line:

Sellers – Be sure that you don’t let false promises lure you into a listing contract. Look very closely at the comparable sales in your neighborhood (within 1 mile and 6 months). Try to separate the emotion from the reality and price accordingly.

HIRE A REALTOR®!!!  

Don’t get suckered in to the “Hassle Free” “We buy your house TODAY for top dollar, and you can pick the day you move”…if those guys were really giving you “Market Price”, THEY WOULD GO OUT OF BUSINESS! HAHA. They are in it for profit…that profit should be YOURS! I can show you…call me for a free consultation.

 

Buyers – Pricing is fair and homes are selling fast! If you are thinking of buying a home, now is the perfect time considering that interest rates are still very low. Give me a call, let me go to work for you. A buyers agent is free to you…yeah…you don’t pay me to represent you, so you have nothing to lose! Let’s get started!

I have an awesome team of professionals in our corner to ensure a smooth transaction.

If you’re not ready yet, we can help you set a plan to get there with free advice and guidance.

I would be honored to earn your trust, your business, and your referrals. Give me a call, let’s get started today! (602) 818-6065 or Kevin@GiantAgent.com

Posted on May 7, 2019 at 10:07 pm
Kevin Jacobs | Category: Affordability, Market Information | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Adjustment in Mindset

As I have been telling you for months now, real estate in the Phoenix area has been a bit non-traditional for the last year or two. Market adjustments are happening, and the numbers are reflecting that, but it’s not an adjustment based on inventory as in normal circumstances, this seems to be an adjustment in mindset.

Let’s take a look at the latest numbers from the Arizona Multiple Listing Service (ARMLS) from February.

First, the sales in the month of February 2019 looked really good. In keeping with “seasonal trends” the are up from the last quarter of 2018 and we would expect that to have continued through March. Spring is typically very good for sales overall.

Also keeping with the seasonal trends are the amount of new listings coming on the market. This typically reflects most sellers getting their homes on the market after the holidays and before the spring buying season.

While the inventory of available homes grew in January, it is important to note that total inventory is still lower than normal. The best explanation for this is that many homeowners purchased when the market was at its lowest or still recovering after the downfall. Simply put, they got a great deal then, likely an historically low interest rate, and now have lots of equity that they don’t care to lose by selling and purchasing a new home that would cost more. They truly have a nest-egg and are “sittin’ pretty”.

Now, we get into where the market adjustments or mindset adjustment is reflected in the market, and it is positive overall. The adjustment? Asking prices of homes for sale.

As I have been shouting from the hilltop for months, sellers have been reaching for the stars with their asking prices. In my opinion, this came from bad advice from their real estate professionals.

Typically low inventory lends itself to higher prices, it is simple supply and demand, right? Well, if your agent was really watching the numbers they would have identified that the “demand” was simply not there. Buyers are buying, but they were not comfortable with the increases in pricing. It felt like a bubble to them, and they weren’t scrambling to buy. As pricing went up, the sales slowed. If your home was priced fairly, it would sell quickly, if not, it would sit on the market until the price was reduced.

See the chart below and you will notice that “New List Prices” have been creeping down. This is good for our market. The pricing is coming back to where the buyers are more comfortable. These are closer to “fair” prices…buyers are willing to take a fair deal, and sellers are not sitting in wait as much as they have been.

Make note of the “Sales Price” graph below. It is a flat line for the past 5-6 months. That is where the buyer is, and they are not budging.

So, where are we headed for the remaineder of the spring selling season? 

According to the ARMLS projection, we are staying put where we are. Buyers are comfortable with the current sale prices, so sellers should take note and meet them there. We should see more pricing adjustments down, or better yet, new listings at the fair market value and not reaching for the false premise of “Low supply means high demand, so reach for more and more”. In most cases, supply and demand does effect pricing, pushing it up. As for the Phoenix real estate market…I’ve been saying this for months (scroll down to previous blogs to see) low supply doesn’t equal sale prices higher than actual value.

Bottom Line:

Sellers: You are getting great offers on homes that are priced fairly. Pricing has risen considerably in the last few years, but that was a return to normal, NOT supply and demand. Your agent should be knowledgeable and show you what homes in your area are actually selling for. They should NOT promise the highest price in the neighborhood by thousands more than your comparable sales…if they do, they are likely trying to get you to sign the listing contract knowing that they will simply drop the price later. Please feel free to reach out to me for a free, no obligation market analysis so you know what your home is worth.

Buyers: Stay the course. You are in control of this market. You will probably not get the amazing deal where you buy a home for tens of thousands less than value as in years past, but you will get a fair deal and know that you paid the correct price for your new home.

_

Are you ready to buy or sell your home? I have an awesome team of professionals in our corner to ensure a smooth transaction.

If you’re not ready yet, we can help you set a plan to get there with free advice and guidance.

I would be honored to earn your trust, your business, and your referrals. Give me a call, let’s get started today! (602) 818-6065 or Kevin@GiantAgent.com

Posted on April 4, 2019 at 6:11 pm
Kevin Jacobs | Category: Affordability | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Appreciation for Appreciation

For months now I have been beating the drums and sending the message to sellers and agents alike that when pricing your home, you must have appreciation for appreciation.

What I mean by that is illustrated in the graph below courtesy of The Cromford Report. There is a lot of information on the graph, so let’s try to simplify it a bit.

First, the good news. We see that despite some folks fears, we are not in a “bubble”. In 2006 the average sales prices (here shown as price per square foot) were towering over actual home value, as shown on the “Annual Appreciation” shaded area of the graph. Basically, we were all clamoring for a home, paying whatever it took to get it, way over the homes value…and predatory lenders were more than willing to lock us into contracts for homes that we couldn’t afford driving pricing up, up, up!

Skip ahead on the graph to the last year or so. Home values continued to increase at the annual 2-3% appreciation, sale prices seemed to lag behind until recently when we jumped above the homes value with higher and higher asking prices. The result? Coupled with low inventory, sales began to slow.

Are the slowing sales and available inventory cause for concern? In my opinion, no.

There are a couple of reasons for the slow down. For example, many people bought their homes at the bottom of the market. Low price, low interest rates, they got the home they wanted, they have equity and no desire to sell it. As a result, listing inventory is low.

However, the biggest reason for the slow down in sales, as I see it, is illustrated in the graph. Asking prices are growing faster than home values, or appreciation. Buyers that have memories of 2006-08 and the bubble/crash are very savvy, and smart to not chase the pricing up. They have a value threshold of “the actual value”, and that is what they are willing to pay.

Sellers agents are, in many cases, giving bad advice to their sellers telling them “Low inventory means Sellers Market! We can push the asking price up because there isn’t much competition.” In the past that may have been the case, it’s supply and demand, right? In this situation, with the experience many of us had in 2006-08 and no desire to repeat that, it’s about fair value.

Today’s buyers want a fair price.

Recently we have seen an increase in inventory for the “Spring selling season” (see the graph courtesy of ARMLS below). This makes your initial asking price even more vital. Over priced homes will sit on the market.

There is something to be said for a “Stale Listing”. The longer it sits, the more buyers begin to wonder if there is something wrong with it and seem to put it on the bottom of the “Gotta see it” list.

I have seen quite a few “Price Reduced” signs as of late, some as much as $20,000! I think we can agree that a $20,000 price drop is a clear sign that the initial asking price was a bit aggressive. 

Bad advise from the listing agent, or are they just telling the seller what they want to hear in order to lock them into the listing contract? Either way, I bet those sellers wish they would have shopped around for their representation. That kind of disappointment is avoidable and should never happen.

 

The Bottom Line:

Sellers.  Always shop around for your agent. Don’t get trapped in a situation where you are being told what they think you “want to hear” rather than the actual facts and market situations in your neighborhood.

Personally, I think it’s highly unethical to give the seller false hopes for an unreachable sale price in order to lock them into a listing contract and months of “price drops”.

If you have questions about your property value, or questions about what you should be asking an agent prior to signing a listing contract, call me. I am happy to advise you. Even if you choose someone else to list your home, I will feel better that you went into it knowing you have an honest agent, and an honest valuation of your home.

 

Buyers.  Your agent should be advising you on the fair sale prices of the home based on comparable sales in the neighborhood.

While everyone is looking for the best deal, you should have an initial mindset of “What is the best house for me?”, followed closely by “Is this a fair price”. Not too high, but it will likely also not be too low either.

In the end you should feel as if you, and the seller walked away feeling as if the transaction was a fair one, and everyone is happy.

Are you ready to buy or sell you home? I have an awesome team of professionals in our corner to ensure a smooth transaction.

If you’re not ready yet, we can help you set a plan to get there with free advice and guidance.

I would be honored to earn your trust, your business, and your referrals. Give me a call, let’s get started today! (602) 818-6065 or Kevin@GiantAgent.com

Posted on February 26, 2019 at 6:34 pm
Kevin Jacobs | Category: Affordability, First Time Buyer, Market Information | Tagged , , , , , , , , , , , , , , , , , , , , , , , , ,

The Good News Is

The numbers for the month of December 2018, and a look at the 2019 Real Estate Market are painting a picture of what homeowners, new and current, can expect. The good news is, it is not a “Sky is falling” scenario, but we need to be realistic about the current state of the market. We have a lot of numbers to look at, so I’ll get straight to the point.

First, let’s take a look at the sales from Dec. 2018. These numbers, courtesy of the Arizona Regional Multiple Listing Service (ARMLS) show a continued slowing in sales month over month as well as year over year. There are a couple of factors that are causing this. One being the rising interest rates throughout 2018 that we have been discussing.

The other factor being (in my opinion) bad advise from listing agents to sellers. They spent 2018 seeing low inventory as well as rising prices and advised their clients to reach for higher and higher sale prices, as they would in a typical “Sellers Market”. However, buyers were simply not paying those prices. As you can see in the graph below, sales continued to slow month over month in the second half of 2018. Something I have pointed out repeatedly.

 

The “Low Inventory” aspect of the market continues as the amount of homes on the market dropped a touch. The prediction is that will add to the trend of higher asking prices in this faux seller’s market. I can tell you that as a “Man on the street”, I am seeing lots of “Price Reduced” notes recently. This shows that sellers have over priced (in a sense that buyers aren’t paying their asking price), and they are dropping the asking prices down trying to find the “sweet spot”. I call that chasing a falling market. Not a crashing market…simply an adjusting market.

The next two graphs are the most telling to me. The first graph shows the average list, or asking price around $389k. As you can see it is slowly adjusting down. Chasing a falling (adjusting) market.

The second graph show the actual average sale price around $326k.

On average it’s a $63,000 difference between what sellers want, and what buyers are willing to pay. This is not a sellers market…but it’s also not a crashing market. We are searching for the afore mentioned “Sweet Spot”. 

I tend to approach things cautiously and my attention is drawn to one number that was released this month that needs attention, and that is the Distressed Property (REO, Foreclosure) number. ARMLS actually adjusted their numbers for the last 5 months as they had received bad data, and that number shows an ever so slight trend upwards.

The reason for this could be that homeowners who bought 5-8 years ago when prices were rock bottom made the typical mistake of cashing in on equity and over extending themselves to the point of not being able to pay the loan(s) on their homes now. That is speculation on my part, but experience tells me that cashing out equity is very appealing to some, and not always a great idea.

Whatever the case may be this number, while nowhere near a worrisome level, has been rising. It is one to watch.

 

The bottom line:

Sellers: Don’t be fooled. Your home is not worth more than what a buyer is willing to pay for it. An average asking price $63,000 over the average sale price should tell you that most sellers are getting bad advise from their agents. BE WARY OF AGENTS THAT PROMISE A WINDFALL!!!

If given the opportunity to earn your listing I will give you a realistic snapshot of ACTUAL comparable sales in your area, advise on how to sell your home fast and maximize your sales price.

I most certainly will not tell you what I think you want to hear simply to get your signature on the listing contract. Don’t fall in the “chasing falling prices” trap. Let me analyze the numbers with you, and get your home sold!

 

Buyers: I say it repeatedly. Now is the time to buy! Interest rates are continuing to trend upwards, and predictions are they will do so at a rapid pace in 2019. Historically, they are still fantastic, but you want the very best rate available and that opportunity is now.

Home prices are rising. Slowly, but they are. Waiting a few months will likely cost you a few thousand dollars more. Is that cash out of pocket, or do you give up your pool, 3rd garage, larger yard to offset the higher cost? Buy now, and don’t give up a thing!

 

I have an awesome team of professionals that I work with in all aspects of real estate. We have already helped many buyers set a path to home ownership whether they were ready to go, or needed guidance on credit etc. to get there. We are here to help you live your dream!

Call me, refer me, and THANK YOU!  (602) 818-6065 – Kevin@GiantAgent.com

 

 

Posted on January 21, 2019 at 5:43 pm
Kevin Jacobs | Category: Affordability, Market Information, Mortgage Rates

Home Sellers Adjusting Prices Down

We have discussed at times in the last few months the fact that asking prices for re-sale homes have been rising at the same rate as new contracts are falling. This now has home sellers adjusting prices down to meet the “comfortable purchase price” that buyers are willing to pay. In a sense, sellers are beginning to chase a falling market.

How far it will fall is hard to determine, and there are many factors that will effect where the “bottom” will be, but personally, I don’t see a massive disruption coming. This feels like an adjustment, not a bubble.

ARMLS released the numbers from October, as well as some expert opinion that I’d like to share with you.

First, the total sales in October on the surface look pretty good. However digging deeper, for those that are inclined to do so like “The Cromford Report’s” Michael Orr, an expert in Real Estate trends, you’ll see that they are actually a tad weaker than they should be.

He explains that the month October had 1 more working day in it in 2018 than in 2017. You may ask, “What difference does one day make?”. According to Mr. Orr, it makes about a 6% difference. In his opinion, October 2018 should have finished with up to 6% more closings due to the extra “Work day” available.

Mr. Orr Stated:

What stands out to me in Mr. Orr’s comment was the last sentence. This is the message that I have been sending for some time now to sellers, “Buyer enthusiasm is fading”. Due to this, “Price cuts are getting more common.”

With my most recent listing I discussed this current market adjustment with the seller, and we priced the home at the current market value based on real trends. 3 weeks later we have a full price offer (which is in line with the comps).

A listing on the same street, with the same floor plan was priced based on the upward swing of selling prices this year and reaching for about $13,000 to 15,000 more than the high comps. It was listed a week prior to ours, and is today still on the market.

The market is falling away from that seller, whereas my client saw the trend for what it was, and got his home sold.


Let’s look at List Pricing vs. Sales Price from October.

As you can see below, the “New List Price” averages went up yet again, but look at the line on the chart. It seems to be leveling off. This seems to be reality setting in and agents (hopefully) are done with the “Reach for the starts” pricing advise.

Compare the “New List Price” line to the “Sale Price” line and notice how the trend up for “New” is not followed by the actual “Sale” trend. Buyers are not chasing the pricing up, it’s that simple.

What is not clear is why they aren’t. It could be rising rates, it could be that the demographics of “Millennials” simply prefer to rent, it could be folks are satisfied with their current situation? Whatever the cause buyers are, to paraphrase Mr. Orr, simply less than enthusiastic right now.

Overall, this quiet trend is not concerning to me. Buyers are out shopping. Fewer of them, but they are there.


What does concern me, just a little bit right now, is a very slight uptick in distressed sales. Foreclosures are up ever so slightly. This is a number I am going to watch in the coming months.

Right now they are still very low, so it’s not an issue, but something to watch in nonetheless…if you like watching number in real estate like I do that is.


So, bottom line, here’s my advise:

Sellers. Make your home “The One”! Put in some work tp freshen your property. Paint, perhaps new fixtures, flooring, make it stand out and give the buyers a feeling of “Move in ready”. In most cases you will fetch a more desirable sales price that will earn your investment back, maybe even a bit more, and your home should sell quicker than most.

Buyers. I have said it all year…NOW IS THE TIME! Even as pricing adjusts down, any rise in interest rates will offset the price drops. Our parents and grandparents had rates of 9, 10, even 18%…5% doesn’t look so bad when you consider what it could be.

I have a great team of professional lenders on my team with programs to fit every buyer. If you’re not ready yet, they will help you set a plan to get there with free advice and guidance. Give me a call if you would like to chat with them.

If you are ready to buy, or sell, or know someone that is, I would be honored to earn the business. Give me a call, let’s get started today! (602) 818-6065 or Kevin@GiantAgent.com

 

 

 

Posted on November 27, 2018 at 11:28 pm
Kevin Jacobs | Category: Affordability, Market Information, Mortgage Rates | Tagged , , , , , , , , , , , , , , , , ,

Interest Rates Have Risen

As expected, mortgage interest rates have risen. Many consumers understand that a change in rates will effect the cost of buying a home, but few realize the impact it has on your pocketbook.

In January, I posted a blog with a chart that showed the potential impact of rate increases in 2018. Some feedback was, “They won’t increase THAT much this year”. Well as you see above, they did. Those same people that felt it wouldn’t be a big impact are likely regretting waiting to purchase their new home. Let’s take a look at where we were, where we are now, and where we may be heading.

The afore mentioned chart is below, remember this was drafted in January when the “Current Rate” was around 4.35%.

In a simple purchase scenario where the buyers monthly mortgage payment budget is about $1525 per month, a conventional 30 year mortgage at 4.35%, with a 20% down payment would have yielded a purchase price of about $383,000. That was then…what would the purchase price be today at a rate of about 5.1%?

Looking at the same 30 yr mortgage, with a 20% down payment and the intention of keeping the monthly payments in the $1500-1525 range, todays buyer can now afford a total purchase price of approx. $331,800.

That is a difference of $51,200! In order to get the same house, today’s buyer can either increase the monthly budget over $150 per month, or come out of pocket with a larger down payment, north of 20%.

The other option is to just buy less home. So what should they give up? Location, size, a pool, home office, chef’s kitchen? Tough decisions to make there.

So where are we going now? Well, the experts in the industry see more rate increases coming, maybe even by the end of 2018, certainly in 2019. Another 1/2 to 1% increase may just price some potential homeowners out of the market.

My advice, let’s go get your home today! I have great business partners in the lending industry that will work tirelessly for you to ensure that you get the best possible loan terms, and you get into your home before rates increase more.

Call me, let’s chat about your individual situation today.

(602) 818-6065 – Kevin@GiantAgent.com – www.GiantAgent.com

Posted on November 2, 2018 at 8:01 pm
Kevin Jacobs | Category: Affordability, Mortgage Rates | Tagged , , , , , , , , , , , , , , , , , , ,

Sales are slowing in Phoenix

There has been a lot of chatter lately about the real estate market taking a turn and many are wondering if another crash is coming. While we don’t have a crystal ball to look into the future, one thing we do know is that sales are slowing in Phoenix.

There are many theories about why, and even more about what it mean. I’ll address my thoughts at the end of this blog, but for now some market numbers that you should find interesting.

Let’s start with the first graph I developed for you after researching information from the ARMLS. The following is a derived from a search of the Phoenix Metro area (roughly Anthem to Maricopa, Wickenburg to San Tan Valley). The criteria was for single family homes from 1500-3000 square feet with 3+ bedrooms and 2+ bathrooms that closed in the months of April through July. I thought that would be a good sampling.

As you see in this initial graph of sale prices year over year, on the surface this looks really good. We seem to be up to somewhat normal prices for a healthy market, and steadily growing month to month.

 

In the next graph, I split the sales into “half months” to see what the trends were last year vs. this year in relation to sales price fluctuation. As you can see, the prices tend to stay strong reflecting growth and stability. This shows that buyers have been willing to pay what the market has demanded, even with the rise in pricing. Again, this seems to be healthy for the market.

 

In the graph below we find the issue that some are wary of with the current market. The reaction has been mixed as to what this means. When looking at “Units Sold” we have seen a sharp decline in the month of July. While the summer heat does slow sales a bit, this July seems to be an extreme shift.

 

Take a look at the July number year over year for total units sold.

In 2017 the total number of homes sold in the month of July was 3,669. That was 401 fewer homes than in June 2017.

This year (as of about 4p on July 31st) we show 1,816 homes sold in the month. That 2,084 fewer sales than the month of June 2018. So, why did the sales slow so drastically this year?

 

As I said, there are many theories. Some feel as if it is the heat that is preventing buyers from diving in to the market. Others feel that the political climate effects peoples willingness to make a major purchase. There is a school of thought that many folks bought a home in the downturn at a great price, they have an unbeatable interest rate and no desire to move. Still more are running around screaming that the “sky is falling”! I personally don’t buy into that theory because the nations economy is strong. That is something that could not have been said in the crash of ’08

Personally, I feel that pricing has reached a peak. After all, your home is only worth what buyers are willing to pay for it and they don’t seem to want to pay the current asking prices. (Note: This is just an opinion…like I said, I don’t have a crystal ball.)

Whatever the case I HIGHLY recommend that if you are considering selling your home, NOW IS THE TIME! The last thing you want to find yourself doing is chasing a down turn in the market. Nothing will frustrate you more as a seller than reducing your price repeatedly because values are declining right under your feet.

In addition, IF this is a market downturn and you sell as it turns, you should get a decent deal on your next home purchase. Timing is everything!

Curious what your home is worth? Call me for a FREE comparative market analysis (CMA).

Please also think of me when you hear anyone talking about buying or selling a home. I am NEVER too busy for you and your referrals. (602) 818-6065.

 

Posted on August 1, 2018 at 4:29 am
Kevin Jacobs | Category: Affordability, Market Information | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , ,

‘Tis the Season for Phoenix Area Real Estate

The real estate market in the Phoenix Metro area continues to strengthen. We are “in season” some might say, buyers are out shopping and that is creating a healthy increase in sale prices. 

We are still not seeing a plethora of bidding wars driving pricing to unsustainable levels as we have seen in the past (circa 2005-2008). Personally, I don’t see that happening again anytime soon.

We do see a steady, healthy increase of pricing that is considered to be normal growth in a healthy economy.

Below are some statistics from the month of March showing the continued growth. Couple these stats with increasing mortgage interest rates and the results are going to be:

For Buyers. Waiting too long to buy could result in a higher purchase price and a higher monthly payment. You may be forced to give up a want or need in your new home to keep your monthly payment within your budget.

For Sellers. The value of your home is increasing, however, history shows that it could be short lived. Just like the stock market you want to “sell high”, but waiting too long could find you on the other side of the hill where you need to lower your price and offer many concessions.  Buyers are out there, but they are savvy. A fair deal now sells at a very good price. Waiting could put you in a less positive position. 

Consider too that you are likely looking to buy a new home. The increased cost of the new home will offset the “few thousand more” that you might get by waiting. Now is a good time to sell.

Let’s look at the numbers:

Monthly sales are up! As I said before, this is a great time of year to sell as buyers are shopping before the summer heat hits us. 

 

There are more homes coming on the market, again due to the time of the year, but we are still well below average for total listings available. This is a “sellers market”, but buyers are seeking out fairness. Overpriced homes tend to sit.

Take the advice of your listing agent on pricing and strategy in order to sell as quickly as possible for top dollar.

 

Not a surprise to see the total days on the market go down a bit this time of year. This number is the average in the entire Phoenix Metro area. Your neighborhood will vary.  Some areas are selling in a matter of days.  Contact me if you would like more specific information. 

 

To illustrate the “Sellers Market” a bit more.  If there were no more listings added, and the pace of sales continued as they are, there would be no homes for sale in the Valley in just over 2 months. Of course that’s not going to happen, but it shows that it pays for you to have a well connected real estate agent to find your home, get your offer accepted, and get it closed  before someone else snatches it up. 

 

To Summarize:

Sellers – Now is the time to get a great price on your home. Use an experienced REALTOR® to advise on pricing in your neighborhood, and market your home directly to buyers and buyers agents, stage your home beautifully, and get it sold fast!

BuyersDon’t wait! Interest rates are on the rise as expected. Just last week they went up about .15%. That may not sound like a lot, but when you look at the monthly mortgage payment that you have allowed in your budget, an increase of .15% could force you into a lower priced home for the same monthly payment.  Perhaps you won’t be able to afford that 3rd garage, or extra bedroom?

Bottom line. REALTORS® are here to maximize your value, buying or selling. We work for you in your best interest, and I would love to be YOUR REALTOR®.

 

 

 

 

 

Posted on April 27, 2018 at 6:16 pm
Kevin Jacobs | Category: Affordability, Market Information, Mortgage Rates, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , ,

Why rent? You CAN buy!

Recently, I saw an article from the Urban Institute about a new metric they created called HARI (Housing Affordability for Renters Index). The index measures the percentage of renters who can actually afford to own a home.

To simplify, they examine the price range of homes available on the market, what the cost of ownership would be, and compare it to what renters are currently paying monthly. The results paint a picture that renters should explore.  

I was surprised to see that 31% of renters may not be aware that they can own a home in the Phoenix Metro area. 

Yes! You read that right. Almost 1/3 of renters may not realize that they have the option to own a home. It seems that the healthy economy paired with loosening lending restrictions has created new opportunities for people that they aren’t aware of.

Are you one of those renters? Do you know someone that may be? 

Reach out to me today. Along with my lending partners we can review your current situation and lay out a roadmap to home ownership. Let’s flip that monthly rent payment around and get it to work for YOU, and not some landlord.

 

(CLICK HERE to read the article from the Urban Institute.)

 

Posted on April 3, 2018 at 5:06 pm
Kevin Jacobs | Category: Affordability, First Time Buyer, Market Information, Mortgage Rates | Tagged , , , , , , , , , , , , , , , ,