by JONATHAN BODEEN | Mar 9, 2015 | Bodeen Team Blog, Buying a Home, North Scottsdale News, Real Estate News
Last week my dad talked about the upward trends in the rental market. Well since then the numbers have been getting even crazier, almost to the point of jaw-dropping! What is especially interesting is the huge demand for traditional single family homes. Now be forewarned, we only can track rentals that are advertised through the MLS, which here in Maricopa County is probably less than half of all the rentals available. The rest are marketed through places like craigslist or rentals.com. Still, we can get a pretty good idea of what’s going on in the rental market by watching the MLS numbers.
This time last year there were 2,760 listings available. Today there are only 1,988. That’s almost a 30% drop in the available supply. On top of that, Rental prices are surging. The average rental price on MLS this time last year was $1,598. Today it is a whopping $1,971! That’s about a 20% increase in value!
Summary: Landlords be feeling good! Tenants… not so much.
What does this mean for homeowners and potential buyers? A lot. With only a 25 day supply of available rentals in the valley, increasing demand for single family homes to rent, and rental prices surging, it’s not difficult to imagine a whole host of would-be-renters drawn toward becoming a buyer. We have already seen an improvement in the residential for sale market in the last month, but we feel even better times may be ahead.
Sellers: The buyer drought seems to be over for now and it may be time for you to get back in the game.
Buyers. Increase in demand and decrease in supply makes for rising prices. Don’t forget that with an improving economy interest rates rise as well. It seems as though the best days of the buyer’s market may be nearing its’ end. You may want to think about making your move before the sellers’ market is in full swing and you have to start competing with other buyers again.
Thank you to Michael Orr and the Cromford Report for all the statistics used here in.
by MICHAEL BODEEN | Mar 2, 2015 | Bodeen Team Blog, Buying a Home, Real Estate News
Well, quite honestly it comes as no surprise that the continued strong demand for rentals in our Phoenix Metro area market has been diminishing rental supply and driving up lease prices.
In a recent blurb from Michael Orr and the Cromford Report, he reports that the single family rental supply has dropped to just under 2200 active listings, where we typically see 4000 to 5000 at this time of year.
On top of that, the average rent is now $1922 per month, up from $1773 last month and $1598 one year ago. If my math is correct, that amounts to an 8% rental increase in one month and just over 20% from one year ago. Sure is a good thing we got some cheap gas prices recently.
The condo market is not much better, he reports, as there are currently 974 condo units for rent compared with 1331 last year – a 27% drop in supply. And, the average rental price has risen from $1429 last year to $1575 at this time. This is a 10% increase.
These numbers validate our strong opinion that either one of two things are going to happen with “millennial” housing. Either they will realize that buying a home at 4% mortgage rates, gaining a tax advantage, and not having to worry about the landlord raising the rents, will trump renting. Or, it will drive them back to the folks’ house for permanent living.
Reminds me of a 70’s sitcom series that sounded like, “Welcome Back Squatter!”
by MICHAEL BODEEN | Feb 23, 2015 | Bodeen Team Blog, Buying a Home, Real Estate News
Let’s be honest, buying a home for most of us is fun, and enjoyable – most often a terrific experience. But make no mistake, don’t be deceived, buying a home is emotional and buyers need to recognize this or it can have serious repercussions.
Now you noticed that I said that buying a “home’” is emotional, not buying a house or duplex as an investment. These are two totally different animals and we approach them very differently. In an investment scenario, we should be considering everything having to do with the cost and ROI (return on investment). After all, it is a business.
Buying your “home” however is so very different. Yes, we are concerned about price, condition, and location, but a gorgeous remodeled kitchen, or a brand new model home dressed to the nine’s can quickly throw out reason and sensibility. When we’re shopping for OUR home, our personal and happy emoticons are envisioning us playing ball with the kids in the huge and grassy backyard, or entertaining friends in your open concept great room, showing off your HGTV cooking skills with a fine red cabbie happily in hand.
To avoid a buying bummer, I recommend a few things.
- First, and as we’ve preached in this blog before, get pre-approved from a reputable lender and know not just what the bank says you’ll qualify for, but just as important, if not more so, decide if their number is a comfortable fit for you? Sometimes, it’s not, whereas something less is. Then have your Realtor professional plug in those parameters before you start home shopping.
- Secondly, guard your emotions in front of the seller. Preferably the seller is not there when you’re viewing the home, but unfortunately, that’s not always the case. Over-the-top happy emotions may hinder your future negotiations with that seller.
- If at all possible, I recommend not bringing children to see the homes you’re viewing until after you’ve negotiated your deal. Too often, our kids can become a distraction for the parents. I remember to this very hour, the Realtor who showed my folks homes with myself and my younger brother Jim. His name was Dusty Pomquist. I was bored out of my gourd and I’m certain I was not a happy camper for my mom or Mr. Pomquist.
- Don’t take the negotiations personally, and again, check those emotions at the door. Ask your Realtor to prepare a market analysis to verify value. Agree on a negotiation strategy and go for it.
Finally, after all this advice about keeping emotions in check, I must now reverse my counsel for this last part: This is a home. You and perhaps other family members will be living in it for who knows how many years. Your day to day happiness is huge. In the end you do want the home you will enjoy so don’t allow a small percentage of the price or nominal terms to defeat you from getting that home. There may not be another one like it.
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 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
by JONATHAN BODEEN | Oct 22, 2014 | Bodeen Team Blog, Buying a Home, Real Estate News
Well Mike, the real Real Estate guru, is out of town for the weekend and early part of this week, so it falls to his son (me) and squire of the trade to formulate the weekly Real Estate Update. I hope dear readers, you will be forgiving in the absence of the master.
The world seems to be suffering one crisis after another. From civil wars in Iraq and Ukraine, to widespread epidemic in Africa, there is no lack of material for the News Networks. Anyone following the financial industry knows that the last couple weeks have not been good to investors at large, which generally speaking means bad things for economy at large.
Some blame all of the messes we are seeing around the world for a lack of confidence in the market more than others, but all believe it to be a factor. Some are saying it is a temporary lull, a natural correction within a bear market. Others are saying it is the beginning of longer downturn.
Well neither I nor my father are financial experts, though we follow those pundits with an interest equal to the amount that it effects the housing market, which is quite a lot. What is the connection between the financial industry and the housing market? Well there are many connections but the one in particular that I wanted to touch on today is the advantage to the buyer.
Baron Rothschild, a long dead British mega millionaire, once said“The time to buy is when there is blood in the streets.” As macabre as that sounds, it seems there is truth there.
Why? One reason is mortgage rates. Interestingly, when the economy is doing poorly, interest rates tend to go down. We have seen that in the last week or two especially and today mortgage rates are the lowest they have been since June of 2013 at around 3.75%, something nobody was predicting early this year. Analysts were saying that by this time, interest rates would be as high as 5 or 6%.
Prices have begun to take a slight downturn in most areas of the Valley, mortgage rates are very low, inventory is high, and sellers are getting desperate. These are the times when buying is the most profitable. A buyer right now can expect a great selection, the upper hand in negotiations, a great mortgage rate, and ultimately a nice little discount off where prices peaked in November of last year.
For how long will this be? Well as Realtors we hope not too long, ideally you never want to see the balance swerve too far towards buyers or sellers. (Ok to be honest most homeowners love super seller markets, but the problem is those never last)
So if you are hoping to buy a home soon, like my wife and are, everyone else’s bad news is good news for you today!
Now I know it was just about a month ago that we reported things were looking up for sellers, and indeed they were. Inventory was shrinking and the fine balance between seller and buyer advantage was inching back towards sellers. Well the trend has stopped and has again been sliding back towards buyers.
Ultimately though today we are really still in a balanced state. The advantage, definitely to buyers in my opinion, but not wildly.
