by MICHAEL BODEEN | Apr 4, 2016 | Bodeen Team Blog, Mike's "Real State" of the Market, Real Estate News
Though Jonathan and I like to provide market updates each week, the most accurate data comparisons are quarter vs quarter, and having just wrapped up the first quarter, we can now compare this 2016 first quarter with the first quarter of 2015, with much thanks to Michael Orr of the Cromford Report.
For readers who would prefer the, “Just get to the bottom line Mike,” in a nutshell, the market is quite healthy except for the low end (hugely diminished inventory making it tough on entry level buyers) and the high end luxury (too much supply) which is great for our high end buyers who have lots of choices.
Now a little more detail: Market conditions remain very diverse with different price ranges in dramatically different situations. We will start with the overall numbers and then break them down to try to make more sense of what is going on.
Here are the basic ARMLS (Arizona Regional Multiple Listing Service) numbers for April 1, 2016 relative to April 1, 2015 for all areas & types:
- Active Listings: 22,493 versus 22,303 last year – up 0.9% – but down 0.4% from 22,587 last month
- Under Contract Listings: 12,427 versus 11,986 last year – up 3.7% – and up 5.6% from 11,773 last month
- Monthly Sales: 8,548 versus 7,893 last year – up 8.3% – and up 46.6% from 5,829 last month
- Monthly Average Sales Price per Sq. Ft.: $138.96 vs $131.99 last year – up 5.3% – and down 1.7% from $141.09 last month
- Monthly Median Sales Price: $215,000 versus $200,000 last year – up 7.5% – and up 1.4% from $212,000 last month
Sales, pending listings and under contract counts are all up from both last month and last year. This represents a firming of demand, which has brought the Cromford® Demand Index to a level we have not seen since June 2013, almost 3 years ago. This demand increase mainly affects the price range from $175,000 up to $600,000.
The supply of active listings is now higher than 12 months earlier for the first time since December 2014. However the Cromford® Supply Index has stopped rising and reached a plateau of 81.3, telling us we have a continued shortage of homes for sale compared with a normal market. This is deceptive for much of the market because almost all of the missing homes for sale are at the affordable end of the market below $175,000, where they are missing in huge numbers. The absence of the normal low end supply is not just in homes for sale. Affordable homes for rent are also extremely scarce. Entry level buyers and potential tenants are facing strong rises in price with no sign of relief.
So the low-end of the market has too little supply while the high end has too much. The mid-range is in the happiest “Goldilocks” state, with neither too little nor too much. Mid-range prices are stable and volumes are growing. Since the mid-range is by far the most important sector for the construction industry this is excellent news for most builders.
Despite the excessive supply, the high-end luxury market had a good first quarter from a volume perspective, with 79 closed sales for ARMLS listings priced over $2 million. This compares well with 68 in the first quarter of 2015 and we have to go all the way back to 2008 to find a first quarter with higher sales volume. The abundance of supply means there is plenty of choice for high-end luxury buyers and they are finding homes they like. For sellers it means they will need plenty of patience because of all the competition from other sellers. It also means they may have to settle for a lower contract price than they anticipated, especially if they are accustomed to looking up their home on Zillow.
by MICHAEL BODEEN | Mar 21, 2016 | Bodeen Team Blog, Real Estate News
Rental demand continues to skyrocket and with it rental prices have risen dramatically. The average lease price for an active rental listing in the Arizona Regional MLS is now at $2087 per month, which is 11% higher than last year at this time. Recently there were only 2,140 home listings available on the MLS, a veritable dearth of inventory. The all-time low, per Michael Orr of The Cromford Report, was a couple weeks ago when there were just 2090 rental listings available.
To give perspective on this problem (yes, it’s a problem), back in 2008, there were close to 10,000 MLS rental listings available. The current count for rental listings is 27% below last year and 45% less than 2014.
The average leased price per square foot is currently 79.1 cents psf, while last year it was 71.7 cents psf. That represents an annual increase of over 10%.
So, what’s a Renter To Do?
So, what’s a renter to do if they can’t buy a home yet and they don’t want to move? Can they avoid a landlord’s annual rent increase? Not always, but here’s our advice: Be Nice! Being a really good renter can sometimes soften a landlord when it comes time to consider raising rents.
I have some clients who began renting their Scottsdale investment property to some folks over 15 years ago. The same people are renting the house today with few rent increases because they were nice and my clients liked them.
What is my definition of nice?
1) Be on time with your rent! (Yes, this is obvious, but it goes long in the goodwill department) If there is a month where there’s a rent shortfall, send what you can with an explanation of why, and that you’ll get caught up next week, or whenever. Some rent plus timely communication will go a long way for you. And then do it!
2) Don’t sweat the small stuff! If you can fix something yourself at little to no cost, do it! Landlords don’t like renter phone calls for the minutia. Look at it this way, if your rent is $1500 per month and you’ve had to fork out $150 yourself over the past year on small stuff, that’s cheap considering a 5% rent increase (which totals $900).
3) Keep your yard, especially your front yard looking great. Mow the lawn, pull the weeds, plant flowers. Hey, you’ll enjoy it too!
4) Be a good neighbor. Often the neighbors are connected to the landlords. If you’re a renter who gets along with the neighbors, this may aid you come renegotiation time. And if not, your neighbors will really like you.
5) Every three months or so, let your landlord or property manager know that you’re taking care of the place. Mail them a front yard photo of the house with a short note telling them you’re really enjoying their home. “Oh, and by the way, Mr./Mrs. Landlord, we took care of that leaky bathroom faucet — just needed a washer.”
You get the picture? And if you still can’t stop the annual rent price spiral? Get into the ownership side of the game. That’s where you need to be anyway.
by MICHAEL BODEEN | Feb 22, 2016 | Bodeen Team Blog, Real Estate News
FHA loans have long been an important and fundamental part of providing American home buying consumers with affordable mortgages using down payments as low as 3.5%. Other benefits with the FHA loan include more relaxed loan qualifying standards than conventional mortgages.
The Wall Street Journal (WSJ) had a front page article today about a new loan product that is just being introduced by Bank of America that looks like quite an improvement over FHA loans – if you qualify. The required down payment amount is slightly less (3%) but the big difference is there’s NO PRIVATE MORTGAGE INSURANCE (PMI) which can add $100 or more per month to the mortgage.
According to the article many big banks have pulled away from FHA insured lending over the past few years “citing the risk of being hit with penalties for minor errors…the banks retreat from the loan program has made it more difficult for low income borrowers to get home loans.”
B of A is able to avoid the PMI by partnering with a Durham, NC non-profit called Self-Help Ventures Fund (https://www.self-help.org) which will step into a loan default situation to help decrease losses to Freddie Mac (lender) before Freddie Mac has to take a loss.
To get this loan, borrowers will need a credit score of at least 660, which is higher than FHA’s requirement, and an income that is less than the area’s median. The 660 is higher than FHA’s minimum, but that is part of the overall strategy of the Self-Help organization to assist those folks who are showing responsibility in paying their bills. The article did not cite the maximum loan amount that B of A would make. FHA only loans $271,000 in Maricopa and Pinal counties.
Bottom line? If you’ve got a decent record of paying your bills and your income is less than the county median, this could be a great loan for you. If your credit however has some challenges or your income is higher, the FHA product or other low down conventional loan may be the right one for you. Either way, do it!
Either way, with the record low interest rates we currently have, or this new product, the time is (still) ideal to buy a home.
http://www.wsj.com/articles/bank-of-americas-newest-mortgage-3-down-and-no-fha-1456117203
by MICHAEL BODEEN | Dec 15, 2015 | Bodeen Team Blog, Real Estate News
Drones Fight Wars and Sells Homes – Take a Look!
We’ve all seen how the American military has been utilizing robotic drones to help fight wars, especially in the Middle East. It has eliminated many Al Qaeda and Isis terrorist enemies without having to jeopardize allied “boots on the ground” which is another issue far too big for this discussion.
Personally and commercially, the use of drones today is controversial! The invasion of privacy is a big deal – it certainly is to me. Awhile back, Karen and I had a drone examining our backyard while we were there. It was, to say the least disconcerting even troubling. I can certainly see why many of these drones have been shot down by angry homeowners.
That being said…
From a real estate marketing standpoint, however, I sure see advantages. Jonathan and I recently experimented with drone marketing on a current listing we have, hiring my friend who had recently spent $4000 purchasing the drone. We felt good about the fee we paid as a marketing investment for this particular home which was on an acre parcel in North Phoenix. The views are terrific and we added the drone shots to go along with an interior video filmed previously.
Rather than describe this, why don’t you enjoy this. We’ve linked both interior and exterior drone shots below. Oh, and by the way, if you know of someone who might like this home, please send the links to them and have them call us. Our asking price is $644,500.
by MICHAEL BODEEN | Dec 7, 2015 | Bodeen Team Blog, Buying a Home, Real Estate News
Solid and Balances Market Continues
The good news is that the Phoenix Metro real estate market will surpass the last two years in many important categories including the number of sales, average and median sales prices, numbers of homes under contract and the time it takes to sell a home. The only bad news is that the good news is good news for sellers, not for buyers who find themselves still on the sideline.
Compared to 2013 and 2014, this year is doing well. Balanced is the term we’ve used consistently this past year which benefits both buyers and sellers. Some Examples:
| |
2015 |
2014 |
2013 |
| Active Listings |
19,601 |
23,579 |
22,043 |
| Listings Under Contract |
7,951 |
6,203 |
5,519 |
| Sold Listings |
75,574 |
66,448 |
64,855 |
| Median Sales Price |
$212,900 |
$200,000 |
$190,000 |
| Average Sales Price |
$268,791 |
$259,604 |
$252,052 |
| Days on Market (Sales) |
70 |
80 |
62 |
| Month’s Supply Inventory |
4.4 |
4.9 |
5.0 |
How Much Can You Buy?
Buyers Take Note!
The Phoenix Metro communities remain some of the most affordable in the nation. A recent article by mortgage firm HSH.com indicated Phoenix home buyers who make $43,836 can afford to buy the median priced home here, currently at $213,000. The mortgage payment on that priced home, per the article is $1023 per month.
When one considers the average cost to rent which is $1200 – $1377 per month, home
ownership begins to look pretty good.
Remember, the first place to start home shopping is through an excellent and reputable lender. Buyers will need a PQF (Pre-Qual Form) for us to give to the listing agent as part of the offer. Give us a call and we’ll be happy to recommend one of these professionals.
