by MICHAEL BODEEN | Jul 7, 2014 | Bodeen Team Blog, Real Estate News
You may recall that a recent blog discussed a home we have in escrow in the Desert Hills area of North Phoenix and that the VA (buyer’s lender) wanted a passing water quality test because it’s a private well. Well, (pun intended) we didn’t get the passing grade as this home had elevated arsenic levels. Come to find out that this was not uncommon in the North Phoenix areas serviced by private wells.
We then proceeded to find a company who could install a water purification system (Reverse Osmosis) that would reduce the arsenic to acceptable EPA levels. The problem was compounded when the buyer wanted to have the whole house treated, which could have cost tens of thousands of dollars, effectively killing the deal.
Further frustration ensued for us because no one from the buyer’s end was helping him to be reasonable. We couldn’t talk to the selling agents as this company’s system only allows for other Realtors (that would be me) to talk to the Transaction Manager, not the Realtors. This was a so called “Realtor Efficiency.”
So what did we do? I suggested that I and the Transaction Manager talk to the buyer directly on a conference call. This we did. I recommended that the buyer speak directly with the water company rep that I had spoken with so that the buyer would have confidence that by having one unit under his kitchen sink would provide him with excellent drinking water protection. He took our advice and contacted the rep and the rep was able to convince him that this was indeed the case. There were several companies that had R.O. systems that could likewise solve the problem, but in the end the buyer’s comfort level was with Kinetico’s brand.
So, did the deal finally get done? Well, the short answer is that the deal is ALMOST done, as we close on the 7th of July (sometime today), but the arsenic in the well water issue has been solved to the satisfaction of all parties.
by MICHAEL BODEEN | Jun 30, 2014 | Bodeen Team Blog, Real Estate News
With the sluggish Single Family (SF) market currently in place in the Phoenix Metro area, builders have slowed on SF construction and instead have been focusing on the Multi-Family market.
Michael Orr’s Cromford Report quotes the following:
“Multi-family permits were strong again in May 2014 with a total of 757 units for Maricopa and Pinal Counties. The permit numbers were confined to the 3 cities of Phoenix, Scottsdale and Tempe. The count of 757 is lower than the previous 3 months but the annual average has increased to 6,992 units. This is well up from the 4,792 we saw in May 2013. The “Blue Chip” consensus forecast for multi-family permits is currently 6,172, up from 5,906 three months ago. This is still looking too low and a 2014 total over 7,000 appears increasingly likely.
Phoenix (2,648), Scottsdale (1,933) and Tempe (1,698) are responsible for 6,279 (90%) of the total of 6,992 multi-family units permitted over the last 12 months. Chandler (446) is the only other city with a significant number of permits. All the other cities and county areas contributed less than 4% of the total.
Permits are reflecting a strong swing towards rental units and away from homes to purchase. This is also happening in the rest of the market so is unsurprising. The unknown question is how long this trend will continue.”
We’re seeing another market correction that attempts to fill the vacuum caused by the consequences of our hot rental/slow resale market. Rents will continue to increase, which landlords are thrilled about and renters not so much. This often gets the resale market in gear when people can actually see that home ownership is more cost effective than renting.
On that note, due to the continued sluggish economy, mortgage rates have been dropping again, now down in the low 4% range for the typical 30 year fixed rate product.
by MICHAEL BODEEN | Jun 23, 2014 | Bodeen Team Blog
A large local real estate team brought a buyer to one of my listings recently. The negotiations went well, the parties were very amicable, a deal was struck and escrow opened. The 10 day “Due Diligence” period began. Because the buyer was obtaining a VA loan, and since the property had a private well, the lender (VA) required a water quality test.
No problem, right? Wrong. Big problem! It turns out that the property’s water quality after lab testing had an unacceptably high amount of arsenic, per EPA guidelines.
Now, the good news is that a quality Reverse Osmosis (RO) system will reduce the arsenic levels in the water to more than acceptable limits. So recognizing that the seller had a problem, we needed to determine which company can best provide the solution affordably and quickly. The “we” in this case is “me.” The seller had just gone out to the east coast for two weeks to find and close on a house out there.
Now this is where it gets a little frustrating. The Bodeen Team was instructed by the buyer’s agent’s Transaction Manager (TM) to no longer contact the agent who wrote the contract, that we would need to deal directly with the TM. The other oddity is that we were told to change the MLS reporting for which agent actually sold the house. We put the gal who wrote the contract and negotiated the deal. “Wrong!” said the TM, the agent who gets the credit for selling the property is actually So and So, who’s name you may recognize as they use extensive radio and TV advertising getting their name out there.
Okay, no problem there. That is not uncommon for large Realtor teams.
Now, back to the story. The logical solution to this arsenic issue is to negotiate who fixes the problem. In this case, it’s pretty clear that my seller is on the hook, though not legally, just practically. And he agrees to correct it, within reason. We begin to research the issue which will be saved for a future blog. The short story is that we will need to install an RO system at the kitchen sink to handle the sink area and refrigerator water line and then re-test the water for the lender. Voila, problem solved, right? Wrong again! The buyer, like most people, does not like the word, “arsenic.” (And can you blame him?) And he’s heard all the bad stuff and more about arsenic, including that you can get skin cancer by coming into physical contact with the arsenic laden water. WRONG! Only ingested arsenic can cause a problem, not bodily contact.
And because of all the bad he’s heard, the buyer wants EVERY water outlet covered, or in other words, a whole house system. Under sink RO units that can take out arsenic can be installed for less than $500 up to almost $2000 for the best product on the market, supposedly. Whole house systems can run in the tens of thousands. We were quoted $30,000 for a top of the line unit.
Now, the buyer still wants to buy and the seller still wants to sell, so we need to determine if there is a reasonable middle ground solution.
Here’s the rub. Come to find out that it is the TM who is now negotiating. Whoa, what about the buyer’s agent who showed them the property and wrote the contract? “No, they are officially out of the loop,” said the TM. So the gal who has never met them and did not write the contract is now negotiating. But no one is talking sense to the buyer, trying to help the buyer see what is reasonable.
Did we get the deal done? As of this writing, not yet! Stay tuned!!
by MICHAEL BODEEN | Jun 20, 2014 | Mike's "Real State" of the Market, Real Estate News
OK you number junkies, check this out!
Now, I can’t swear to it exactly, but I would have to say (nay, repeat) that the Phoenix Metro area has some, if not the best real estate reporting in the nation from a variety of credible and intelligent – and dare I add, accurate, sources. And these sources are mostly from the private sector including our own Arizona Republic, ASU School of Real Estate and Business including Michael Orr’s Cromford Report. There is really no excuse for anyone, least of all Realtors, to not be on top of what’s happening in the local real estate numbers game. The key for Professionals is to be able to honestly cherry pick this information for our clients in a quick and painless way so that you “catch the drift” of what’s happening in our market.
There is really no excuse for anyone, least of all Realtors,
to not be on top of what’s happening in the local real estate market.
Why is this important you ask? If you can have the best available information on any given matter, you can (should) proceed wisely to make decisions, or certainly to help point others to an honest and credible source for this direction. An example would be in our current Phoenix Metro area market, that has continued to slow since last August – some have used the word “stalled.”
The Full report is available on our weekly blog which goes out every Monday morning. We call it “Mike’s Monday Morning Market Snapshot.”
In a Nutshell, Here are the Highlights of the data for Phoenix Metro:
1) Monthly Sales are down 21% from this time last year
2) Total inventory of homes for sale is up 46% from last year
3) 3.90 Month Supply of Available Homes for Sale – No change from last month
4) Average sales price up 4% over last year. Median sales price up 9.7% year over year
5) Median Sales Price Forecast from Pending Price Index for next month: No change.
6) Foreclosures Pending: Down 49% from one year ago
7) Average Days on Market: 83 vs. 66 last year
8) Purchase Applications: Phoenix ranks 38th out of 50 states for new loan applications. (Note: Michael Orr stated, “We have just seen the highest percentage of sales financed by loans since November 2008.”
by JONATHAN BODEEN | Jun 16, 2014 | Bodeen Team Blog, Real Estate News
We’ve shared over the past few weeks how a lack of buyer demand for purchasing a home in the Metro Phoenix area has led to a lethargic (read: S…L…O…W) sales market.
We wrote about a number of reasons why this is happening including student loan debt, (especially the “millennials”) an apprehension about getting “stuck” in a home and mortgage like their family or friends did, and the fact that many of the millennials aren’t leaving home so quickly – hey who doesn’t like “free?”
This rental demand is leading to a rental supply shortage than we’ve seen in a while. For example, in January of this year, the median priced rental listing in the valley was $1095 and the average market time was 48 days
.
This month has seen that median price move up to $1170 and a market time drop to 31 days.
This morning, Jonathan checked on 8 potential rental listings he was going to show a new out of area client today that the client had found on Trulia. Well, in checking the availability and arranging for showings, Jon found that 6 were already rented!
It’s interesting how the current rental market parallels a hot sales market. We find we’re recommending the very same things we do for house buyers:
1) Get pre-approved (check your current credit score and correct any mistakes)
2) Get a good reference letter from your current landlord (hopefully) praising you for what a great renter you were (these are powerful)
3) Be ready to jump on a deal. Don’t be too picky.
4) Get on an automated MLS search going, but check Craigslist, Trulia, Zillow, and word of mouth also. Call Jonathan directly (602-341-9490) to get you set up on an MLS search-no cost or obligation)
One final thought: We’ve been mentioning recently how affordable home ownership is compared to renting. That gulf seems to be getting wider. If you can qualify to buy a home now, it might be a REALLY good move, even if it’s not free.
by JONATHAN BODEEN | Jun 9, 2014 | Bodeen Team Blog
Let’s be honest, many potential and qualified home buyers are not presently shopping for a single family home. They seem to be content with non-home ownership. Renting, as some of them say allows for more freedom. They saw what happened to their parents or friends by getting into a situation they could not easily get out of. (i.e., underwater property, foreclosure) And they don’t like what they’ve seen.
Tough to argue with that one. But make no mistake, there is a downside risk for buyers not buying at this time, and quite honestly, many buyers may regret that they have not acted. Here are some risks:
1) Government Action: I’ll give you one real world example of a consequence for buyers who could have bought 6 months or a year ago and didn’t because the government adjusted downwards the maximum loan amount that would be loaned on an FHA in Maricopa County from $346,250.00 to $271,050. Now many can’t buy in a neighborhood they can afford because of needing a substantially greater down payment. (FHA will provide funding with just 3.5% cash down payment which means that a buyer could have bought a $355,000 home with a lot less cash than is required now with conventional financing. (i.e., 10% to 20% cash down)
2) Home Values Moving Up: The local market bottomed out during the fall of 2011. For 24 straight months, prices increased and have now leveled off. Have they stopped increasing? Well, it’s a risk, but consider that our market is still almost 30% below the peak we reached back in December 2008.
3) Further Mortgage Rate Increases: One year ago, mortgage rates were in the mid 3% range. Today they are averaging between 4.25% and 4.5%. Nuff said.
4) Selection of Homes Could Decrease: Right now there’s a healthy assortment of homes for sale. If sales begin to increase, inventory of available homes will fall, thereby decreasing buyer choice.
5) Rents Moving Up: Landlords are happy with this one. With so many renters, the demand for rentals has increased, thereby increasing average rents.
by MICHAEL BODEEN | Jun 1, 2014 | Bodeen Team Blog
One of the most asked questions I get in the Phoenix/Scottsdale area is, “When’s the best time to sell my home?
In general, if it’s a Seller’s market where inventory is low and buyers are plentiful – all months are good, but there are some months, that if you have a choice, it would be best to stay away from – the holidays for sure. Reasons being is that there are fewer buyers, and practically, it’s a stress that few homeowners want to endure. Plus, the best time of year, when most buyers are looking commences in February and by that time you will have accumulated added “days on the market” which will work against you.
Statistically, most “closings” occur in Spring, specifically, March and April. Therefore, most homes go “under contract” in February and March. Most buyers tend to look in the spring following the holiday season. So sellers, ideally, you will want to have your house on the market by February 1st – in Arizona that is.
Having said all that, having your house on the market during the holidays is not the end of the world, especially if you live in an “over 55” community like Sun City West for example. In that case being on the market during our winter months is a benefit as that has the most buyers for that particular market. Scottsdale also has plentiful buyers for second homes in the winter months.
And this next year, Arizona will have an immense amount of out of town visitors coming to the valley for the Super Bowl and Pro Bowl, not to mention all the other great winter attractions we have while the rest of the country is still digging out.
-Mike Bodeen
602.689.3100
by MICHAEL BODEEN | May 14, 2014 | Mike's "Real State" of the Market
Well, there’s no doubt about it, we’re in a Buyer’s Market and for the short term it will continue, but it’s not all that bad.
First of all, the facts: home sales of all types in the Phoenix Metro area are at their lowest level since August of 2009 – almost 5 years ago, indicating a huge drop in demand.
Second, there are more homes on the market now than there have been since June of 2011 – almost 3 years ago. We currently have 30,506 homes listed for sale, which is up from only 20,061 one year ago – a 52% increase in just one year.
We currently have a 4.6 month supply of total inventory, which is not that bad historically, and probably close to what we had in the early 2000’s. When compared to last couple of years however, it does not look to snappy, since it the highest level since May of 2011. But consider this, when comparing the amount of inventory to February of 2008, you’d find that we had 20.4 months of supply. Essentially, when looking at the short term, it looks a little grim, but when you stand back and look at the history of Real Estate and what a normal market should look like… We can say we’re doing alight!
Third, homes that are in currently in escrow have dropped 30% when compared to this time last year. It went from 11,502 to just 8,022. Most of us agree that this is due mostly to the investors have left Arizona for other parts of the country. In a way, that’s okay as they were the bottom feeders anyway.
And lastly, there is a huge disparity between the average price per square foot ($177 PSF) of homes on the market now to the prices that others are actually selling at ($135). Clearly many of the homes listed will need to drop in price if they want to be competitive in this buyer’s market.
There is however positive news in our market! The amount of homes currently in foreclosure is at its lowest level in 7 years, that’s right March of 2007 to be more precise.
Also, mortgage rates continue to hold their own, which most predict will not last very long, especially if the macro economy continues to improve.
So buyers, it’s time to get off the fence. There’s a good supply and low mortgage rates! Give us a call. 602-689-3100.
by JONATHAN BODEEN | May 14, 2014 | Buying a Home
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by MICHAEL BODEEN | May 12, 2014 | Bodeen Team Blog
But Student Loans are a Drag…
Demand for homes continues to stall according to the most recent report on mortgage applications from the Mortgage Bankers Association (MBA). Equity researcher Stephen Kim has released an in-depth report titled: The Return of the First-Time Buyer. In this report he cites three solid reasons why potential homebuyers could enter the market:
1) Job growth is reaching an important threshold for improved household formation. The cumulative number of jobs created over the past several years has now reached the point where each new job will drive greater household growth.
2) Credit Availability starting to loosen: Lenders’ willingness to extend credit to borrowers in the entry-level “sweet spot” of 600-700 FICOs is gaining momentum.
3) Affordability still favorable: Buying a home is still 20% cheaper than renting and affordability is unlikely ever to be better, given interest rate and home price trends.
There is a BIG negative out there as well, he writes. And that is that Student Debt is the thorniest problem for the mortgage (hence housing) industry. Kim predicts that this period of slower growth is consistent with the view that the housing market will recover back to normalized levels by 2016.
I would add one other market incentive to include the return of the Boomer Buyer — getting back into the real estate game following their short sale or foreclosure.
-Mike Bodeen
602.341.9490
