February and March seems to be the time of year when the real estate industry of our fair city of Phoenix is at its most active. This is true both for the most amount of listings coming on the market as well as the time when the most buyers are out and about scurrying to find their dream home. But who does this advantage the most, buyers or sellers? Does this mean we are in a buyers’ market or sellers’ market?
Well that can depend. Ultimately whether we find ourselves in a seller’s or buyers’ market seems to vary from year to year rather than from season to season, albeit with minor bumps up and down throughout the year. Most of 2015, for example was a seller’s market overall for much of the valley, where as 2014 leaned much more toward buyers.
Around this time, we usually see a burst of homes going under contract and higher volume of real estate transactions overall. Many would think this would bode worst for buyers with the increase of competition over homes with other buyers. However, if the increase in new listings, which also rise in the spring, outpace the buyer push, well then seller’s do not necessarily gain the advantage.
What about right now though? According to Michael Orr, a locally renowned real estate statistician whose assessments we follow diligently, the Phoenix Metro Area has already hit its peak for new listings arriving on the market in most areas. This is good news for most currently trying to sell, as competition begins to dwindle, while buyers remain out in force.
Not all sellers can say this however, with some of the more upscale areas continuing to outpace buyer demand with increasing supply. Paradise Valley and Scottsdale for example, are both very balanced markets right now, with no decided advantage for buyers or sellers either way. These areas and a few others are trending toward a buyers’ market.
Always remember that we are forced to speak in generalities in these short little updates. Markets vary from different prices ranges, types of homes, areas, and even from neighborhood to neighborhood.
What we saw in toward the end of the third quarter, as I mentioned before, is a drop in supply that helped us get back to a balanced market, not favoring sellers or buyers. It seems however that we should not get too excited as there are many factors that are still counting against sellers right now.
It appears that even though there have not been a whole lot of new listings, in fact very few, demand has also begun to weaken a little from the low it was already at. The amount of listings that are pending right now has dropped nearly 6% from last month, indicating a drop in demand. The total inventory or supply of listings is up 2%, conversely indicating an ever so slight increase in supply.
Market experts are predicting an increase in listings until Thanksgiving, at which point it is expected to drop down again. What does this all mean for sellers? Well it’s a tough road right now, which means we have to be competitive in price, the best presentation possible, and a little bit of patience… ok, maybe a lot of patience.
As professional Realtors, we often tread the fine line of staying optimistic, but also reporting negative facts taking place on the ground. Thankfully, we can remain optimistic because we enjoy where we live and life is good, except when it’s not – and that’s life. If I am a person who really enjoys my home and the memories it affords me, then I’m not that concerned about what the local real estate market is doing. Least of all week to week or month to month.
I do however confess to having a penchant for being a market observer, and the main reason for that is that 90% of the time when I see a client, even casually apart from biz, they inevitably ask, “Mike, how’s the market?” I’d like to be able to intelligently answer them something other than, “I dunno.”
So when we find ourselves in the languid real estate market that we are, we need to come up with the right spin, and in this case, currently, there is an honest spin that works. Here it goes: Fence sitters, your time has come, get your financial house in order, and get ready to buy a house shortly, because there’s going to be some great buys between now and the end of the year. “I dunno Mike, sounds like Realtor hype to me.”
The truth is that we’re seeing (literally) hundreds upon hundreds of price reductions weekly. If you combine that with very low mortgage rates, and a jobs economy that’s turning around, it may very well result in a booming market. When that happens, just as in our not too distant past, prices escalate rapidly and then, in the words of Carole King, “it’s too late baby, now it’s too late…”
– Mike Bodeen
When setting up property search parameters for our buyers on the MLS (Arizona’s Real Estate Listing Service), we are sometimes asked to filter out HOAs (Home Owner Associations). Conversely, every once in a while we’re also asked to make sure that the property includes an HOA. Virtually every time when requested, it’s due to the prior negative experience of the buyer.
I’ve experienced both sides personally and professionally. And you know what? Even though folks feel strongly about HOAs one way or another, they’re not right or wrong — it’s simply a choice that each of us has. The most important thing is to know what you’re getting into and the potential downside.
This week we’ll cover the benefits of an HOA. Next week, we’ll look at the drawbacks. And finally, in the last installment I’ll cover what a buyer should know about the HOA from the perspective of the purchase contract. Just knowing what you’re agreeing to in a purchase contract can save or cost you hundreds of dollars
Benefits of an HOA!
As I see it, the benefits on an HOA are many. Homeowners within a given community pool their funds to pay for a few or many amenities, privileges or restrictions. The minimum responsibility that I’ve seen in an HOA community is for rules enforcement only. Typically the cost of this limited type HOA is $30 to $40 per month.
If for example, your next door neighbor (whether owner or renters) does not maintain their home, doesn’t maintain the lawn or weeds, or leaves a jacked up car in the driveway – all the time, then there is a process to get that taken care of. In some communities, hired HOA staff actually drive the neighborhood daily to look for these rule violations. I’ve heard the term “Gestapo Tactics” when related to this type of oversight. Strict enforcement may be a pain in the you-know-what, but guess what? That community is probably kept pristine. For many, there’s nothing more frustrating than having visual blight in the neighborhood that you see day after day.
The next minimum step up in HOA services and fees is for “common Area Maintenance.” This is where the HOA keeps up with the appearance of the neighborhood by cutting front lawns, keeping trees trimmed and trash picked up.
I can tell you from a buyer perspective when driving through “the hood,” that if there are unsightly yards or houses, or too numerous vehicles around, that is often a turn off, or more appropriately, a turnaround, where I turnaround the car and head to the next home. Just having these community rules alone can be very valuable.
Townhouse/Condo HOA’s are especially important because of the close proximity that people live near each other. Often these HOA’s are more costly because they may also include a monthly water, sewer, trash fee and cable charged by the association besides the maintenance of the community pool and the community gate or guard gate. Yes, you will pay for someone to keep the pool and spa clean and heated in winter even though you don’t use it, but many folks enjoy the fact that they have access to these amenities year round and don’t have to pay for it on their own property.
Don’t like the way the community is being run? Well, you can make your voice heard at a monthly HOA meeting, and you can even run for a position on the HOA board. Warning though, this is not for the faint of heart.
(Click Here for Part 2)
– Mike Bodeen