by MICHAEL BODEEN | Feb 9, 2015 | Bodeen Team Blog, Real Estate News
Today’s Jeopardy Answer: February 2011.
Today’s Jeopardy question? When was the last time the Phoenix Metro real estate market was as balanced as it is today?
So, what exactly does a “Balanced Market” mean anyway and what is the Cromford Market Index? It might help for our readers to know. According to the Cromford Market Index (Michael Orr of ASU).
Cromford Market Index™ is a value that provides a short term forecast for the balance of the market. It is derived from the trends in pending, active and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyer’s market, while values above 100 indicate a seller’s market. A value of 100 indicates a balanced market.
The Cromford Index is showing “99” (as of 2/6/15), a balanced market. But why doesn’t it feel that way? I think the answer to that question has to do with how we view the market and whether we are looking from the eyes of a buyer or a seller.
Actually, the market is probably as healthy as it’s ever been and positive for both buyers and sellers. For sellers or prospective sellers, the latest data from Michael Orr of the Cromford reports states the following for “normal” sales – not distressed, as in bank owned, pre-foreclosure, or short sale:
- Active Listings – down 5% from 22,872 to 21,750
- UCB (Under Contract) Listings – up 38% from 1,825 to 2,519
- Pending (Also Under contract) Listings – up 14% from 4,404 to 5,036
- Days of Inventory – down from 138 to 132
- Months of Supply – down from 6.1 to 5.6 months
For buyers, the market is still very good, but if you see the above numbers benefitting sellers, we know that the opposite is true also – that we’re seeing a swing away from buyer advantage. According to the Index, we’ve been in a Buyer’s market since December of 2013, but it could easily swing above the line to a Seller’s Market. I believe that trend will continue and our balanced market will head north into Seller positive territory.
At an open house this past Saturday for one of our sellers, Jonathan and I had 14 groups though plus 4 Realtor showings. This resulted in two offers that we’re currently negotiating with the possibility of receiving another offer today. The result of multiple offers usually results in a seller getting the highest price possible for that home, or even above asking price. These sales then become the new “comps” (aka comparable sales) for new listings, which in turn drives prices up.
Our market can change rapidly and judging from what we’re seeing on the street, coupled with these supply numbers, we may not remain hanging in the “balance” for long.
by MICHAEL BODEEN | Feb 2, 2015 | Bodeen Team Blog, North Scottsdale News, Real Estate News
For most of the nation, the holidays ended after New Year’s, but in Arizona, especially the Phoenix Metro communities, the party continued unabated through January, and ended yesterday with a Patriots interception in Super Bowl XL1X with 19 seconds left on the clock. Or did it end in a slugfest? Either way it ended and will go down as one of the great Super Bowls of all time. And in my opinion, it was a week (actually a month) that saw Phoenix and Arizona positively elevated by the glow of Super Bowl publicity.
It’s difficult (at best) to actually gauge all the benefits that will accrue to the Valley and State from the events of this past month. Is golf your thing? Well, not only can you play here in the dead of winter, but the Phoenix Open had some of its cooler temps and light rain Friday and Saturday but it still trumped most all other weather in the U.S. and had Tiger Woods and Phil Mickelson (for Thursday and Friday anyway), and then Sunday’s warmth and sunshine climaxed a great finish, and timed the ending perfectly to switch over to the Super Bowl.
Are cars or horses a great love for you? Well, if so, the month of January would have pleased with the Arabian Horse show and the Barrett Jackson Car auction/event in North Scottsdale. And just as the football season ends, here comes baseball and spring training that will be starting up shortly.
And if you’re living here, whether it be as a snowbird or permanent resident, there are so many incredible great eateries and resorts, arts and sports throughout the valley to enjoy. And our people, including visitors, are a proverbial smorgasbord of niceness. And of course, the beauty of the Sonoran desert is amazing.
Regarding our local housing market, this type of continuous and positive national media coverage serves to reinforce a terrific and high quality place to live. Make no mistake, companies and prospective residents will continue to be checking us out. And as my baby boomer generation continues to age, many will want to age in warmth and recreation. And judging by what I’ve been observing recently with out of town buyers, they are liking what they see – and feel.
Do we have issues? Of course. All places do – welcome to humanity. But more important, welcome to a place that seems to really be learning how to provide folks with a Super lifestyle.
by MICHAEL BODEEN | Jan 26, 2015 | Bodeen Team Blog, Real Estate News
Across Maricopa County, we in the housing industry, including lenders, title agents, builders and we Realtors, have great optimism for 2015. It is still very early in the year, but that hasn’t stopped those of us who pay attention to the market from looking for the smallest of evidences to substantiate our hopes.
One of those small evidences we have notices is an increase in the number of houses currently in escrow compared with this time last year. Theoretically this should represent an increase of demand, which is really the one thing our housing economy lacks right now. This increase is not yet great enough to warrant any amount real celebration but is still worth noting.
If we look at the amount of dollar volume sold in Maricopa County last December compared with December 2013, we see a small decrease. Now December is never a strong month for sales in Arizona, and January is usually worse, so it is possible to make too much of it, but still, it keeps us from breathing easy just yet.
You may know that here in the Valley of the Sun, the high season for Real Estate is really March through July. Already we are seeing that people are coming out of the woodwork to buy and sell. Our listing inventory is low right now, having sold most all our listings, but we have already three or four that should be coming to the market soon. We assume that other Realtors are experiencing the same.
To be fair, it probably will not be until late February or March until we will see substantial signs of 2015 being any better than 2014. Over all 2014 was a flat year, but we’re confident of a better 2015. Until then we’re thankful that we have a market more in balance – more or less.
All data referenced courtesy of CromfordReport.com, in our opinion, the very best source of accurate Real Estate and housing data for Arizona.
by MICHAEL BODEEN | Jan 19, 2015 | Bodeen Team Blog, Real Estate News, Selling a Home
Few things in modern life can be as frustrating as having a home on the sales market week after week and month after month without it selling. We are currently in a real estate market that’s neither hot nor cold, but bordering on a buyer’s market. The average market time for a Phoenix Metro area single family detached home that has not sold is 134 days.
In Part 1 of our home sales series, we discussed the importance of timing the listing to go on the market. We made mention that timing may be different based on the type and location of the neighborhood and the amount of buyers that are typically drawn to it.
Last week we learned that correct home pricing trumps all marketing and home preparation. This week we will learn the importance of condition and staging to get the best selling price in the shortest amount of time possible.
There are many good articles and HGTV programming that extol the benefits of staging a home to sell. Indeed many companies and services have sprouted in the past 10 years for just this purpose. How needful, how helpful is it to have your home staged? Much, but it may not be as difficult as you think.
In my 35 PLUS years of experience I can boil down staging advice to a half dozen “its” in the order of importance.
1) Clear it.
2) Clean it.
3) Fix it.
4) Lighten it.
5) Appeal it.
6) Stage it.
1) Clear it: We are a nation of stuffers. Ideally, this step should be taken well in advance of your listing period. One of the (albeit few) advantages of moving is the golden opportunity to get rid of stuff. E-Bay or relatives for the good stuff, Garage sales or Goodwill for the rest. If you’re selling everything, you may want to consider going the “estate sale” route. You won’t make a ton of money but you get rid of everything in one fell swoop. And there is a lot to say for that. With a few exceptions, remove all clutter including family photos and wall posters. Clean and organize closets. Pack everything you’re not using. You’ll have to pack it soon anyway.
2) Clean it: If you’re not one that knows how to or wants to thoroughly clean a home, hire a professional to clean all the nooks and crannies. Believe me, people notice, appreciate, and mention cleanliness when they see it. Make the kitchen, bathrooms, and hard surfaced floors shine. Find and eliminate all odors. Ask someone who doesn’t live in the home to give it their nose test. We’re too use to these smells but someone from the outside will notice. If there are pet or smoking odors, get rid of them, even if you have to remove and replace carpet and pad. As the old commercial puts it, “You can pay me now or pay me later. In experience, strong negative odors will prevent, or at best delay, a home sale. Some buyers will ask to leave right away. What about odor masking such as scented candles? It may help, but it’s not the best. Masking is often a red flag for people to wonder what the sellers are hiding. Some owners have loaned out their pets to friends or family members while the home is on the market. And clean the windows – yes, inside and out! The bottom line is that many buyers will judge the condition of your whole house by its cleanliness.
3) Fix it: The Arizona residential purchase contracts stipulate that all the mechanicals (moving components) be in working condition prior to close of escrow. Plumbing (including leaks), electrical, appliances, heating and AC, and pool cleaning apparatus needs to be repaired if not in working order. Replace all burnt out bulbs and make sure the doorbell is operative. Repair any fences/gates and give them a fresh coat of paint or stain if necessary. Though not a requirement in the contract, having a roof that’s in good order is a huge help come inspection time. Replace any cracked windows or broken screens. Repair caulking in tubs and showers.
4) Lighten it: Natural light is a huge feature in a home. Whatever we can do to increase it, will help our sales efforts. Often times it’s as simple as having window coverings open. Painting walls can have the dual benefit of a positive fresh scent and lightening up a dark room. And always have lights on when the home is being shown.
5) Appeal it: Curb appeal is talked about a lot by us Realtors, and for very good reason. It helps us get potential buyers into your home and you can’t sell your home unless buyers take the time to go see it! Many buyers do “drive-byes” and if a house looks great from the outside, there’s a good chance they will want to go see it – and vice versa. All buyers typically view online photos and the quality of those photos is perhaps the most important reason why a buyer may or may not see a home. So a fresh coat of exterior paint, always trimmed and mowed lawns, and a clean yard will help bring those buyers into your home. Make sure all debris, toys and lawn equipment are removed. Trim shrubs and eliminate dead trees and branches.
6) Stage it: The tough part is already done including, clearing, cleaning, painting, fixing. Now the question, should we stage it? Maybe yes, maybe no. This is where a Realtor professional’s experience can be a big time help. Once all the above has occurred, you may not need to stage, but in most cases some staging advice is important. We provide the services of a professional interior designer who literally goes room to room suggesting what can be done to enhance the show-appeal. She may recommend painting (and which colors to use), item removal, cleaning if necessary, and item addition (if important). (In this staging section, it may be possible that your home could benefit by doing some updating, which falls under remodeling. This is an entirely separate issue and article that we’ll address soon)
Bottom line? Prepare well and your home will sell well!
by MICHAEL BODEEN | Jan 12, 2015 | Bodeen Team Blog, Real Estate News, Selling a Home
In last week’s blog, we discussed the importance of timing the listing to go on the market. We made mention that timing may be different based on the type and location of the neighborhood and the amount of buyers that are typically drawn to it.
This week we want to look at the MOST IMPORTANT part of the property listing. Pricing.
Without argument, the most important part of the home sale process is the home’s pricing. As important as timing, staging, and property conditioning are, they will not trump bad pricing. One of the most important responsibilities of the Realtor professional is to provide an accurate market analysis of the property’s value. The other part of this equation is the seller being on board with the right price. Trust in your Realtor professional’s price opinion will go a long way toward a successful and timely transaction.
In determining the right listing price, the Realtor professional needs to show the homeowner not only the neighborhood comparable sales during the past six months, but also the current “Pendings” and “Actives.” If the market is feverish (either rising or falling) then sales should only go back 3 months. If it’s a slow, plodding market, with little price change, we can look at sales longer than 6 months, but lenders may not.
Why do we look at Pendings and Actives? Well, for one, Appraisers look at them, because lenders want to know what’s going on in the overall market. Pending sales can be the MOST accurate gauge of CURRENT sales activity and values, but since they may not close and we may not know the closing price yet, best practices would dictate using only closed sales.
Active listings are used to help determine the competition. If for example a similar floorplan has been for sale for 6 months and has not sold, we will want to compare that listing with our listing to ask why hasn’t this listing sold? Usually, nothing less than a phone call to this other Realtor is in order. This is where Realtor experience and savvy could be the difference in getting top dollars.
So now comes the time for structuring the listed price. If the recent comparable sales dictate a $375,000 sales price, should you price it at $375K? This is where knowing the current market trends is key. In a normal market we would probably advise a price slightly about 3% above the sold pricing. In a slumping market, we would probably want to price it no higher than comps. And vice versa in a strong appreciating market, pricing slightly more than that may be in order. Either way, if we have priced the property correctly, we’re pretty much assured that a sale won’t get “kicked out” of escrow down the line by the buyer’s lender but will close as scheduled.
And in the end, closing is the goal right?
Next week, we will look at what should take place in property preparing the home for sale.
by MICHAEL BODEEN | Jan 6, 2015 | Bodeen Team Blog, Real Estate News, Selling a Home
The holidays are over and you’ve sworn you’ll never have ALL the family over for Christmas dinner again, at least not uncle, “Lampshade” Louie. Discussion has once again turned to, “Should we put the house on the market?”
The all too common spousal back and forth banter takes place, but this time, you’re both in agreement. Though we may love it, we’re going to list it!
But when? Is there a best time to put the house on the market? Or does it even matter? Important question. Unfortunately sometimes there’s no choice about the “when” because your job transfer finally came through, or finances dictate the time to be NOW!
With few exceptions, more Phoenix-Scottsdale homes are under contract in April and May than any other month.
But if you had a choice, and you wanted to peg it according to the season that most buyers are looking, then yes, there is a statistical difference, but with caveats.
If you’re looking at pure statistics, and perhaps common sense, the ideal time to list your house in the Phoenix-Scottsdale metro area begins in March/April. With few exceptions, more Phoenix-Scottsdale homes are under contract in April and May than any other month. Of course if you live in a colder, snowier part of the country, then that timing will be delayed.
The best time to list should be when your curb appeal looks the very best. Green lawns, blooming flora, and a freshly painted exterior (if needed) will by themselves increase your house showings. In general, the more house showings, the quicker the sale and for the best price.
The other reason why spring is the better time to sell is that so families can be settled in their new home before school starts up again in August.
Now, having said all that, the choice of “when” will be different for the type of area you live in. If you live in an “Over 55” community, such as Sun City West, Trilogy in Vistancia, or McCormick Ranch, then you will want your house on the market as soon as you can following the holidays. This is when snowbirds who are renting and enjoying our mild winter desert temps, or out of town visitors, are going to be looking at homes for sale, especially seeking out Open Houses to go through.
Next week (Part Two) we’ll look at how best to prepare your Phoenix-Scottsdale home for sale and how much you should do, and not do.
by MICHAEL BODEEN | Jan 1, 2015 | Mike's "Real State" of the Market, Real Estate News
For sellers, the 2014 Phoenix Metro real estate market was a tough year. Not terrible or disastrous, but still not the greatest. It is however, in our opinion, a turning point.
For buyers, 2014 was (and still remains) a great year. Home values and mortgage rates stayed down, when most analysts expected both to rise, especially rates. Currently, mortgage rates are at an 18 month low!
For reasons we’ll explore, we’re expecting significant change ahead in 2015.
The greatest issue faced by sellers is the (still current) overarching lack of demand. There simply isn’t as many buyers looking for homes as experts had been anticipating. Why is this? There have been a number of reasons given and we aren’t at all sure which reasons bear the most weight, but here are the most common ones:
- Overly tight lending restrictions
- Generational differences in lifestyles (many more adults are living with roommates or family today than in the past)
- Large student loans keeping many from buying their first home
- Previous short sale or foreclosure defaults keeping buyers as renters (we call this the “penalty box”)
Fortunately, this lack of demand has not been totally disastrous. For one it has shown us that our market is healthy enough to remain balanced instead of tanking. Even after 12 months of relatively low sales valley-wide, prices have leveled, without much movement up or down. This is a huge plus for prospective buyers. Once demand begins to increase again, which we believe will happen by the 2nd quarter of 2015, prices will again rise.
As we have said before our current market is actually looking more traditional in a lot of senses. Foreclosures and short sales are back down to very low historical levels, the majority of current buyers are seeking owner occupied homes rather than investments, and national polls are showing that most people DO want to buy a home, but they are not yet ready.
On top of that we have good reasons to be positive going into 2015. Among them:
- There has been traction within the federal government to loosen their restrictions in light of the national lack of demand. For instance, Fannie Mae just recently have come up with a 3% cash down conventional loan for first time homebuyers. Not having this available really hurt the high 200K to mid 300k range this year.
- 2015 will be the first year where a large portion of folks who lost their homes to short sale or foreclosures in 2008 will be able to start buying again. There is great optimism that as these folks come out of the “penalty box” they will start to buy again.
- Interest rates may still remain very low thanks to reduced inflation, and thanks to cheap oil.
Though it has been a discouraging year for many sellers (especially in the 300-400k range), many of whom have had their homes on the market for much longer than we as Realtors generally anticipate, all in all I don’t think the Real Estate market is doing badly.
We also can’t be overly positive, as many from our cloth tend to be. To sell your home in the market still means being willing to be aggressive with your presentation (clean home, staged if possible, great photos), exposure (have the home advertised well on the MLS and other home finder websites), and pricing. If you are not willing to be competitive with your pricing then there is not much hope.
by MICHAEL BODEEN | Dec 29, 2014 | Bodeen Team Blog, Buying a Home, Real Estate News, Selling a Home
Many buyers, especially first time homebuyers can get very uptight about buying a home, indeed, both buying and selling a home is stressful. I’ve heard it said that the degree of stress that buyers and sellers go through during the home buying/selling process is akin to the stress of losing a spouse. Now, that doesn’t mean that the two are related in terms of importance, but only how the human body metabolically responds to the stress.
Well, we can’t prevent clients from not having stress, but I will say that Arizona’s purchase contracts, which are decades in its evolutionary process, go a long way toward alleviating the stress load and in fact may be the very best consumer-centric real estate contract in all 50 states. Having worked in California for 18 years and using their forms, and then coming to Arizona, there is no comparison in terms of “User Friendliness.” In California, for example, we were told we could not explain to clients what a given clause meant as that would be practicing law, for which we are not licensed. The problem was in the legalese, the lack of clarity.
In Arizona our forms are crafted to be understood. Every few years a large, select group of industry officials including brokers, lenders, contractors, termite and home inspectors, Department of Real Estate, lawyers, to name just a few, meet to see which clauses are working and which aren’t. As Realtors, we have the chance to give our two cents worth prior to the group meeting. Out-dated stuff gets tossed, new legislation gets integrated, and best practices are utilized. I sadly contend that if a consumer will take one to two hours to carefully read our contracts, they might know as much (or more) than their agent about the agreement.
Perhaps the greatest tool in the hands of buyers, sellers, and Realtors, is the “Buyer Advisory” put out by the Arizona Association of Realtors. This contains links to virtually every aspect of house buying in Arizona. To view this form, go to: http://www.aaronline.com/wp-content/uploads/sample-forms/BuyerAdvisory.pdf
On top of the Buyer Advisory, we have our
“10 day Due Diligence”
period (aka inspection period). This is one of the most critical and valuable parts of the home buying process. For buyers, it’s the best opportunity to find out pretty much everything there is to know about the home they’re buying. If a buyer, in their 10 Day Due Diligence, determine there is something that they don’t like, they can withdraw from the agreement without forfeiture of deposit. Does the request need to be reasonable? Used to, but now it’s strictly up to the subjective opinion of the buyer. This takes the pressure off.
But what about the seller, how does it benefit them? It greatly benefits the seller. I feel it goes a long way to reducing ye old “Buyer Remorse.” If buyer, seller, Realtor all understand that the buyer pretty much has a ten day “free look” then once the buyer has gone past this period, they are “locked” into the deal with the exception of a financing contingency. If they back out during the first 10 days, it’s only 10 days, and then we can get the property back on the market. This means that following that 10 days, everyone can pretty much expect smooth sailing to closing.
(…and if you’ll buy that…)
by MICHAEL BODEEN | Dec 22, 2014 | Bodeen Team Blog, Real Estate News
Just in time for Christmas we have good news gifts for buyers, sellers and homeowners!
For Sellers, it’s looking much more positive thatpricing will start moving up in the next 6 months.Why? Well, everything we’re hearing lately seems to be all good news for housing, locally and nationally! Buyers take note, there has seldom been as good a time to buy as right now. Yes that sounds very “used car-like” but I would be remiss if I didn’t get the word out to you while you can still get such an incredible combination of market conditions which favor you.
The big gift this year is that the economy is starting to rock! Gas prices have plummeted which can only be good news for business and consumers as inflation is held in check. This should be an encouragement for more hiring throughout the economy creating greater consumer confidence. When consumers are confident, consumers buy! The stock market is currently giddy with the continued bull market run. This is having the affect of bolstering consumer confidence and increasing personal wealth.
Another big gift to 2015 Sellers and Buyers is that the local housing market will benefit from the release of more buyers who had been in the foreclosure and short sale “penalty box” not being able to buy as a result of a completed short sale or foreclosure.
For buyers, the “Millennials” are finally going to “get it” this next year and embrace the gift of affordable housing. Believe it or not, they will start buying homes again. Parents that could mean an extra room or two in the house, lower food and utility costs. As rentals remained tight, the average rent price increased 5% this past year. And with mortgage rates starting to dip below 4%, even they will realize what a gift this is.
New: First time homebuyers (only one needs to be a first time buyer) can now obtain a new mortgage for 3% cash down payment and up to $417,000. Do you realize that a 30 year fixed rate mortgage for $300,000 is a monthly payment (Principle and Interest or P&I) of $1432 (plus taxes and insurance)? And remember millennials, we still have the mortgage interest deduction which could effectively lower your monthly payments on that $300,000 by $240 per month, making that monthly payment of P&I under $1200!
Even the government has gotten into the gift giving mode as well. Just this past week, Congress, via a bill known as the Tax Increase Prevention Act of 2014, passed both houses of congress, and extended the Mortgage Debt Relief Act through the end of this year. If you recall, this Act had not been extended in 2013 which left many folks who recently completed a short sale wondering if IRS was going to tax them for “debt relief.” That’s now been settled through this year. The Act also allows a tax deduction for pre-paid mortgage insurance premiums if a buyer of a home in 2014 paid this. This is especially common for the FHA buyer. The bill provides for a retroactive one-year extension which expires on December 30th of this year and would be effective for those filing 2014 returns this year.
So folks, 2015 has the promise of being a wonderful gift for buyers and sellers. Are you ready? If so, let us know!
We wish you a Merry Christmas and terrific holidays for all of you!
by MICHAEL BODEEN | Dec 15, 2014 | Bodeen Team Blog, Buying a Home, Real Estate News
This past week, Fannie Mae announced a new loan product which is designed to help first time home buyers buy more home with less money. Does this ring a bell to anybody out there?
The new loan product is not really new however. It first made its’ debut in the early to mid 2000’s and was a precursor to what I like to call the “fogamere” mortgages. You remember, those loans in which anybody who could “fog a mirror” could qualify for a loan? This product however should not be compared with those (not yet anyway). With this loan, the buyer needs only a measly 3% as a cash down payment. That’s less than FHA’s 3.5% requirement! Some other parameters:
1) Only one of the borrowers needs to be a first time home-buyer
2) Fixed rate mortgage 30 years or less
3) Mortgage Insurance applies if loan to value exceeds 80% (This is required on FHA loans also)
4) Minimum Fico Score of 620 (similar to FHA standards)
Now this sounds as good as or better than an FHA loan, but is it? Well, in my opinion yes, because it partially plugs a lending gap that developed in January of 2014 when FHA reduced their maximum loans in Maricopa County to $271,050. Since that time buyers over that price range who could not put up the money for larger down payments did not have many options.
Before that happened FHA would loan up to $346,250, which on top of their 3.5% down payment would enable that borrower to qualify for a home near $360,000. So if you were a seller who had a home valued at between say $280,000 and $360,000 this year, you lost a large pool of prospective buyers for your home because they didn’t have low down payment financing.
The largest benefit of this new low down payment financing will be a resurgence in the 280k+ market, which had been suffering this year.
The other major benefit is the 620 FICO score that would seem to make this every bit as borrower friendly as an FHA loan.
So, the necessary caution between this loan and “fogamere” loans is to not go where the lenders went before, by offering high risk mortgages. These include zero down payment loans, piggy back loans (two loans totaling 100% but eliminating mortgage insurance which are back again), and then “cash back” lines of credit where the moment you close on your house loan, a $50,000 to $100,000 line of credit (or more) was immediately placed on your home for you to use for any purpose. This revved up the market so much that prices began soaring until…it was too late. Hence the crash.
My question is, “Why not make this loan available to all borrowers rather than just NEW home-buyers?”
This would further help an entire price range of homes that will move the economy further forward. Just keep the “fogameres” away
