by MICHAEL BODEEN | Mar 20, 2015 | Buying a Home, Mike's "Real State" of the Market, Real Estate News, Selling a Home
First things first, we welcome a new team member, Barbara Anderson, to the Bodeen Team and the HomeSmart Elite group. Though new to our group, Barb is not a novice to real estate. She is however getting back into the game after a prolonged absence in the education field. Barb and hubby Bruce just celebrated their 44th wedding anniversary.
Barb joined us yesterday for her first HomeSmart Elite monthly meeting. It was indeed timely as our keynote speaker, Director Michael Orr of ASU’s W.P. Carey School of Business presented the Elite Group with encouraging homeowner data and trends indicating that change is already afoot in our local real estate market. You will be hearing about this starting now in the local news.
The Bodeen Team subscribes to Mr. Orr’s market data which we view in real-time each day. Our subscription grants us permission to reproduce his information to you. I would say that there are few, if any entities in the country that have the amazing statistical data that Orr does. He starts each meeting with the caveat that his background is mathematics, and his passion is real estate trends and numbers.
And I should clarify that the news was positive for homeowners but not so much for buyers who are still on the sidelines, unless they decide to become a homeowner sooner rather than later. That to me was the important take-away from this meeting yesterday.
Michael provided us with a whimsical chart (see below) showing us his “Market Cycles.” As you can see, he believes we are re-entering a period of “Optimism” which last occurred 12 years ago in 2003. This period historically preceded the Three E’s: Enthusiasm, Exhilaration, Euphoria. This is when sales and appreciation happened at dizzying intensity. It was an exciting time, but it wasn’t fun.
Another very interesting chart shows the annual rate for U.S. Household Formation. According to this chart, the number of newly formed households radically spiked in the last quarter of 2014. This, among other issues (see Summary below) could create huge demand.
There are a number of reasons why Orr is so Seller Bullish
- Supply is well below normal (83% of normal)
- Demand is low but growing (95% of normal)
- AZ loan delinquency below normal at 4.5%
- Foreclosures below long term average
- Lending rules starting to loosen
- Entry market heating up
- High end market cooling down
- Economy and jobs continue to improve
- Time to change from relief to optimism
He also didn’t see any slowdown for single family detached rental demand as he points out that we have only a 25 day amount of rental inventory available. And, he adds, is in the higher priced end. The supply for home rentals priced between $900 and $1200 per month is down 50% from a year ago.
So there we have it. In the words first memorialized in song by Bob Dylan, ‘The times they are a changin.’ Hang on.
by MICHAEL BODEEN | Mar 16, 2015 | Bodeen Team Blog, Real Estate News
“Buyers are certainly not in trouble, but they need to keep an eye on supply. If that starts falling early this year, we could see the re-emergence of multiple offer situations.” This is Michael Orr’s and the Cromford Report quote in last month’s Bodeen-Team Newsletter. And adding to that the market appears to be strengthening in favor of sellers on a number of different fronts. Just a few weeks ago, we were reporting that our market had achieved balance. Well, the balance didn’t last long. Consider:
The Cromford Market Index is now at 117.1. This may not mean too much to you, only to say that a balanced market, deemed to be 100, is where we were just weeks ago but is now rising into the sellers’ market realm. For those of you who have not been market followers this past year, that’s okay because the market was asleep right along with you. It could very well be that the alarm has again gone off, but buyers are no longer pressing the snooze button.
The Cromford Supply Index is rising, meaning that the supply of available homes to purchase is decreasing. The Cromford Demand Index which has been at best lackluster this past year is now growing again and headed towards a Seller’s Market as well. This looks like buyers are beginning to re-enter the race.
Good news for Sellers – not so much for Buyers! But hey, we’ve been warning buyers all this past year to get in the game.
In other market evidence, Pending sales back in December totaled an awful 5516 – a low point such as we’ve not seen since January of 2008 – 7 years! However, March’s pending’s are now at 7228, an increase of 31% since December and a 20% rise in just this last month.
The “Months of Supply” index dropped a full month from 5.5 months to 4.5 currently. This is a large drop in a very short time amount of time. Sales increased by 19% this month (6038) compared to last month (5060) and by 9% over this time last year.
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 | Feb 16, 2015 | Bodeen Team Blog, Real Estate News
Pending Listings and the average sales Price per SqFt (psf) have moved upwards this past week when compared to one year and one month ago. At the street level, we’ve also noticed increased activity including multiple offers and quicker sales. Granted, this is the time of year when sales start to take off which is why we want to look beyond this last month’s increase and look at the same period of time compared to one year ago.
Pending Listings (those listings under contract) currently stand at 6,689 compared to 5,047 one month ago. This is a 33% increase. It is also an increase of 5% from this time last year.
The annual average sales price of $130 psf is now at the highest level since December of 2008 – almost 7 years ago. What was the peak? The peak was $190 psf set back in June 2006 which was $190 psf, almost a third higher than we’re at now. Active listings have increased over last month (24,084 vs 23,620) but are lower than the supply of one year ago (26,555).
Keep in mind that ALL REAL ESTATE IS LOCAL. What we’re showing you today are numbers based on the entire Phoenix Metro area and include all residential housing types, including single family detached, condominiums, and mobile homes. The market where you live or are looking to buy in can be and probably is different; hotter, or slower, richer, or poorer – well you get the point. The value of viewing the overall larger market provides a look at trends and on a large basis is pretty accurate.
When we provide a market analysis for a client for a home they’re buying or selling, we’re essentially performing an appraisal such as a professional appraiser would do, and therefore look at the micro rather than the macro. Ideally, we’re pulling sales in the same community as the subject property, but sometimes have to go outside a community up to a mile away. It depends on the number of good comparable sales we can come up with.
Once again we urge those millennial buyers to consider getting pre-qualified/approved with a reputable local lender and strongly consider getting off the fence. With the possibility of continued home price increases, rent increases, and still way low mortgage rates, it might just make a lot of sense for you to move forward now on finding that home. And if you need professionals with a combined experience level of over 40 years, give Jon or I a call today!
