Stats from the MLS

The latest stats from the ARMLS have been released, here are the highlights.
First, let’s look at the monthly sales.
As is normal for this time of year sales are slowing down headed into the holidays. They won’t come to s screeching halt, but folks tend to get a bit more focused on holiday events, travel, etc.  We should see this flatten out for October-November, small decline around Christmas and New Year, then we are headed into the spring season that tends to be rather active.
Year over year, however, there is an increase in total sales showing that buyers are buying, the market is healthy.
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Now, take a look at “New List Prices” below. Notice the August and September spike in “Asking Prices”.
As I have said in previous blogs…many, many times…this is a problem because it is typically due to agents “Getting the listing” with false hope of sales price like, “I can sell your house for $xxx.xxx”, knowing that they will get you under contract and then drop the price 5%, 10%, or more a few weeks later.
(Small adjustments are normal to pique buyer interest, but if they are coming to you with massive decreases, they should have either done better research, or been more honest before the seller signed a listing agreement.)
The indicator to this is also in the next chart. It shows the “Sales Prices”.  Take a look at the gap between the average list price, to the average actual sale price. Pretty large gap. 
Buyers are not chasing the pricing up. GOOD! That’s how we create bubbles and volatile markets.
It also shows a slight decline in average sales price…very slight, but that is the reason we see, and will likely see more asking price reductions across the board.
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This is not bad news…it just shows that asking prices are out pacing appreciation (this year roughly 5%…which is great!).
Sale prices are keeping with the 5% appreciation through the year.  
Buyers are willing to pay that…just not more than that. 
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All taken into consideration, the market is healthy, homes are selling, you just need to find the “sweet spot” where the buyers are comfortable. I can help!
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Bottom Line: (Remains the same as prior “Bottom Line’s”)

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 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 October 21, 2019 at 8:43 pm
Kevin Jacobs | Category: Market Information | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

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 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Room for Tech Companies In Real Estate

I am going to open here by saying, there is room for the tech companies in real estate, we just don’t have room for their, we’ll call it, “Misleading Information”.

They are good if you are in a situation where you simply must sell, and losing money in the end is a non-factor. For example, maybe you inherited a home from a relative that passed and you don’t have the time, or don’t live locally to deal with it. Fine, quick sell it and move on.

Maybe you got a job out of state and have to get out fast, OK…sell it to them and move on.

Just understand, that they are in the business to make money, and that money comes from YOUR equity.

Recently, I saw a sign for Opendoor go up in my neighborhood. Being that this is my business, and that sign is on my neighbors house, I was very curious about the price they let the home go for. As it turns out they sold for about $5,000 below a recent comp on the same street (loss of money to the seller), and Opendoor is now asking $20,000 more than the same comp. Assuming they get their price, that’s a $25,000 LOSS for the seller.

But that’s not what caught my eye when on the Opendoor website.

Below is a chart that they put together comparing using them to buy a home with a “Discount Brokerage”  where in many cases you do all the work for viewing, negotiations, contracts, inspection, etc., and they simply file the documents.

The 3rd column is how they compare themselves to using a traditional agent, like me. The notes in red are my rebuttal, if you will, to their mis-information.

Here’s a summary:

1) They say that they “Give you a refund on a home purchase” and traditional agents do not.    

  • The Truth: Most lenders will not approve of a “Refund” to a buyer. They will, in many cases, allow a contribution to closing costs, likely NOT $3000.
  • Personally, I have contributed to closing costs many times where needed to ensure my client can get the home they want. For them to leave that blank, as if your agent will not contribute, is disingenuous to say the least.

2) They offer “Online support”.

  • Why is that better than “In-Person Support”? Need help? Call your agent…we are here to help, and happy to do so,

3) Free Property Reports!

  • I have never heard of an agent that would charge to give you information about a property. To pretend that we do, again, disingenuous.

4) Free On Demand Tours.

  • When you schedule showings with your agent, you not only gain access to the home to view it, you have an extra pair of eyes that have experience in looking for signs of issues that may be present, information to pass on to an inspector to further investigate. You have area information, neighborhood comps, offer price suggestions, the ability to negotiate with the seller, and someone who knows the contracts to review, advise, and protect you in your transaction.

5) They “Manage Offers Online”.

  • We manage your offer In-Person.

6) Top Rated Buying Agent.

  • They have the same Arizona State Real Estate License that we do. If you want to know how good your agent is, ask to speak to their former clients. Or, better yet, get to know your agent on a more personal level, have them buy you lunch!. That will determine how they will care for you. I guarantee it will be more personable than a computer.

7) Option to work Directly.

  • Why in the world is it an “Option” for you to work directly with the individuals that are responsible to protect you in your biggest life investment? You are spending Hundreds of thousands of dollars! Direct attention should be required, and expected.

8) Finally, did you see the disclaimer?

  • I have never used, nor will I ever use a disclaimer. My duties to you are clearly spelled out in the first disclosure I give you. They are Fiduciary. They are governed by Ethical Rules. No disclaimers, no surprises.

Bottom Line:

Whether you are buying or selling a home, you deserve the one on one, honest, ethical support of a traditional real estate agent.

Don’t be fooled when the tech companies try to make the word “commission” dirty. In the end, many sellers pay MORE in a lower sale price plus “Fees” than they would in commission. I can demonstrate that to you if you are interested in learning more.

You simply cannot beat the one on one, personal attention you get from a professional real estate agent. Technology is not always to your benefit.

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 July 15, 2019 at 7:30 pm
Kevin Jacobs | Category: Market Information, Real Estate Industry News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

The Monster is Feeding Itself

Read my previous blog before you read this one and you’ll better understand why the “Purple Monster” is a major concern for not only myself, professionally, but for you the consumer. As we dig deeper into the Monsters Layer we see that the Monster is feeding itself.

You will be seeing news stories in the coming weeks about the real estate industry, specifically realtors and commissions. Recently there have been 2 class action lawsuits filed against real estate agents claiming (it’s everyones favorite word these days) “collusion”!

These suits claim that we, as agents, get together and set commission prices at a hard 6%. 3% for the sellers agent, 3% for the buyers agent. They claim that we force this on the home seller and don’t budge. If you refuse to pay, they claim, we simply team up to avoid showing your home and selling it.

These claims are patently ridiculous!

Yes, the standard for a sale has been for decades 6% total commission. However this, like most items in a real estate transaction, is negotiable.

Compare that to the “Purple Monster” commission…er, sorry…”FEES”… 7.5% PLUS a lowball purchase price PLUS the “Repair costs” they will deduct from your purchase price 2-3 weeks into the contract (which by the way are not negotiable), and the 6% is pretty darn reasonable.

Here’s what they won’t tell you in the news stories. The news companies have ownership interest in the “Purple Monster” tech companies that are trying to take over the real estate industry. Yes…they ARE the Monster, and they are feeding themselves with your equity, while trying to put me and my fellow realtors out of business.

NewsCorp, owner of Fox News, Market Watch, The Wall Street Journal, and dozens of other news entities also own tech real estate sites like Realtor.com and Move.com. Imagine that…the ones that control the “News” are pushing “News” about how terrible realtors are, while simultaneously trying to take over the real estate industry. (There’s your collusion. Ugh…that word again.)

As you see in the headline above, they are making billions of dollars with their venture into tech real estate. This is their new gravy train and they want more.

So, what is the best way to push out your local face of real estate? Lawsuits and smearing us in the news…which, again, they control.

Here is an example headline of a story recently written on Market Watch (a NewsCorp company) telling you that realtors are greedy people who need to be shut down, but the tech companies (that they own) are great for you. The “future of buying and selling”, they tout. Make note of the convenient “Zillow” ad in the story:

This article makes claims that Real Estate Agents “Steer buyers away” from listings that have a lower than 3% commission.

In my 10 years as a real estate professional, I have run into that one time. The seller didn’t want to pay a 3% commission, we NEGOTIATED it to 2.5% (total of 5%). I had and agent call me saying that she wouldn’t show the home because the commission was “low”. I told her that she was HIGHLY unethical, and if I knew who she was I would have reported her to the ADRE.

That behavior is by far the exception, NOT the rule in my industry. Agents like that will not be successful. My guess is that she was not, and is likely doing a desk job in a different industry these days.

The article goes on to accuse real estate agents of a quiet “I’ll scratch your back” policy in the business alleging that we sit in a dark room, wringing our hands, and plotting to take your money. Devious huh? Simply not true. Here is an example of a real situation that I had where one of these tech companies would have costed my client about $15,000, maybe more, if he had sold to them. 

This client had some cosmetic work to do on the home, just carpet and paint. He was curious about how these instant “Purple Monster” deals work, so he called me. After explaining it to him, I acquired an offer from one of them that came in at $269,000 with approximately $7,000 in commission…sorry…”Fees”. This was “site unseen” of course, so there was, and always is, a clause that at inspection they can lower the purchase price to “offset their costs”.

Oh…the inspectors are employees of the tech company, so there is a bias and a goal to find “issues”. (Is that…collusion?)

The home needed about $4000-$5000 worth of paint and carpet, a few minor wear and tear patches, and 2 new light fixtures. The owner opt’d to do that himself, it took about 2-3 weeks and we sold his home in 1 day for $285,000. 

If we had listed “AS-IS”, the fixer-upper comps in the area were selling around $275,000 (NOT $269,000). In the end, after the evil real estate fees, he walked away with $6,000 MORE than he originally expected.

The tech company would have pocketed that profit in 3 weeks, not my client, had he sold to them.

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Another lie the tech companies are trying to push on you is this:

They want you to believe that we, real estate agents, are inflating prices in order to get buyers to pay all the commissions…wait…earlier they said we were taking advantage of the seller with commissions…well…which is it?

Go back a few blogs and look at what I have been preaching about the Phoenix Market for months. Seller agents have been suggesting higher asking prices, due to low inventory and high demand, and the result was that buyers were not buying. The asking prices were too high.

Buyers determine the sale prices by what they are willing to pay, not the agents. As a matter of fact, a buyers agent typically recommends a lower that asking offer in an attempt to get a great deal, make the buyer happy, and get referrals.

If we were so focused on “fixing things”, we’d have a lot of angry clients and we’d be out of business. A realtor survives on referrals, that’s a fact. Ripping people off is not a great way to get a referral, would you agree?

Here is the bottom line, and I’ll let the tech Monster tell you themselves:

Note the terms “Disrupters” and “Little actual real estate experience”. But mostly, make note of “There’s money involved…we want a piece of the pie.”

That’s it. The “Purple Monsters” want the multi trillion dollars to be in their pocket.

That money comes from YOUR EQUITY!

Sellers: A web based buyer is an investor. The are in it to make money. If they gave you a full market value price for the home, they wouldn’t be able to resell it and make their money. The only way for them to profit is with your equity. It’s that simple.

Don’t give your equity away!

 

Buyers: A web based home purchase cannot find you a lender with local knowledge that has a proven track record, a home inspector with the knowledge and experience to properly advise you on potential issues, a local title representative with knowledge potential title issues in individual neighborhoods and homes.

It cannot negotiate sale price, seller concessions towards costs and repairs, home warranty, HOA fees, etc. etc.

Your local real estate professional is in this for you. As a seller to make you more money for your sale, as a buyer to save you as much as possible.

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Do we earn a commission for the service? Yes, absolutely. We EARN it through experience in the market. We are your neighbors, friends, and family. We are not “colluding” (there’s that word again) against you because WE NEED YOU to survive.

Some CEO in San Francisco doesn’t…he or she just wants your money. Let’s not turn real estate, the biggest most personal investment in your life, into Amazon.

Stop feeding the “Purple Monster”.

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 June 20, 2019 at 6:25 pm
Kevin Jacobs | Category: Market Information, Real Estate Industry News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

“PurpleOpenZillPad”

Remember the old song “One eyed, one horned, flying Purple People Eater”? Well, that monster has been replaced. Today it’s a “PurpleOpenZillPad” Equity Eater! It’s gobbling up homeowners equity all around you!

Allow me to explain, and help you avoid the beast!

You see, there is this really convenient, “No Hassle”, “No Showings”, way to sell your home with the onslaught of Real Estate Tech Companies pounding their message into your head on TV, Radio, Billboards, etc. etc. They promise a “Fair market value” and a “No hassle purchase”, and ask you “Why pay commissions to a real estate agent?”

  • Let’s start with the first promise, fair market value. Common sense tells you that cannot be factual because if they paid you fair market value they, in turn, would not make any money. They have to resell the home in order to profit. That means they pay you BELOW FAIR MARKET VALUE, then turn and sell the home AT MARKET VALUE. Your equity, is their profit.

 

  • They tout that “Showing your home is a hassle…we buy it and you don’t even have to show the home”.  Translation, “We [the tech buyers] won’t have to compete with other buyers that may be willing to pay you more for your home.” Why would you not want competitive offers that maximize your “Cash in hand” potential? 

 

  • Then they try to tell you that they don’t charge that nasty “6% Commission” that your agent charges. True…they don’t charge a commission. They charge “Fees”. “Holding fee”, “Repair fees”, “Processing fees”, “Title fees”, etc. that typically equal 7.5% or MORE…and that’s AFTER they buy your home for thousands, even tens of thousands LESS than actual value. (NOTE: That 6% commission charged by a Real Estate agent can, in many cases, be negotiated on.)

Below are randomly selected tax records of sale that illustrate to you just how much money these companies are taking from you (the seller that doesn’t want to be hassled).

You will see the sale price from when the original owner sold to the “PurpleOpenZillPad Monster”, then what the monster re-sold the home for weeks later.

In the 6 examples above, the total amount of money lost to the 6 people (or couples) that sold to these companies is up to $133,915! 

Bear in mind that that is money that is not only lost to the sellers, but to the local community. This money goes to the company headquarters, San Francisco for example. Now, it’s not in the hands of the seller, or the local realtor that shop in our communities. The economy grows when you and I spend our hard earned dollars at local stores, restaurants, and entertainment. It is very important to keep those dollars local so we can all succeed.

Bottom line: Share the facts with your neighbors. Stop feeding the monster. KEEP YOUR MONEY! Hire a LOCAL, PROFESSIONAL, ETHICAL REALTOR.

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 June 18, 2019 at 11:56 pm
Kevin Jacobs | Category: Market Information | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Call it “Consumer Confidence”

Call it “Consumer Confidence”, maybe it’s the fact that school is out and families can move without disrupting their kids routine. Whatever it is, the market is feeling pretty good right now and if you have been considering selling your home, now is the time to do it!

See below for the market statistics that, in a nut shell, show that buyers are out there, and their choices are slim.

Interested in a free market analysis on your home? Call me and we can take a look at your personal situation…it could be much better than you expected!

(602) 818-6065 – Kevin@GiantAgent.com

 

 

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 June 4, 2019 at 7:43 pm
Kevin Jacobs | Category: 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 , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

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 , , , , , , , , , , , , , , , , ,