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Metro Phoenix Real Estate Market Update January 2019

(Published on - 2/1/2019 7:19:28 PM)

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As we enter the new year, the market continues to favor sellers.  Not nearly as much as it did at the beginning of 2018, but it is still considered a seller’s market. Supply is about the same as last year, 34% below what is considered normal. The difference is that BUYER demand has decreased, mostly due to the rise in home prices. Affordability has become the main complaint of potential buyers. Buyer demand is still 13% lower then where it should be.

Single family homes appreciated 8.1% in 2018. The cost of renting also increased, by 8.6%!

We expect prices to continue to rise, at least through the first part of the year, at a slower rate than 2018.  Interest rates seem to have stabilized, (keep in mind rates dropped as low as the beginning of last year 2 weeks ago), but will continue to slowly increase.

What this means for sellers is that it’s still a good time to sell. There is still more demand than supply and depending on the price point, it is still a good seller’s market.

For buyers moving from a rental, owning a home with a fixed rate mortgage will stabilize monthly housing costs. There is less demand this year than last, and chances are you won’t have to compete with other buyers. It’s still a good time to buy.

If you’re thinking about making a move, please speak with your trusted advisor, and that’s me, Denise van den Bossche with Realty Executives in Scottsdale! Call me at 602.980.0737 for stats in your specific price point or area of town! We can provide a no-obligation home evaluation within 24 hours!

Jan2019CromfordInfographic


Nature’s wrath is affecting home costs as homeowners look to Arizona

(Published on - 1/8/2019 8:16:39 PM)

Nature’s wrath (and the resulting insurance hikes finally announced) is affecting home affordability and encouraging homebuyers to consider states like Arizona!

The United States is realizing a new paradigm shift in the home insurance industry that greatly impacts homeownership costs in states experiencing severe weather conditions.  The tremendous losses incurred over the last decade has finally caught up with insurers, and homeowners, especially luxury homes in coastline states, are being notified of hefty premium adjustments.  Some are being declined entirely.

A new article was released late last year by the insurance industry addressing the escalating costs and volume of claims that have negatively hit the industry’s bottom line.  It has become a foregone conclusion the insurance industry will need to increase premiums in those states rocked by mother nature’s wrath.  

 

States with more notorious weather conditions such as Florida and California will especially see rising premiums and costs.  Meanwhile, less impacted States such as Arizona and Nevada will see the benefit as the population seeking warm weather climates with favorable tax implications look at alternatives.

 

What does this mean for Arizona Sellers?  The importance of reaching these consumers has never been as important. Make sure you hire an Agent backed by a large network, like Realty Executives International, one of the largest residential franchises worldwide, and founded right here in Scottsdale back in 1965.  

What does that mean for Buyers considering a warm climate?  Arizona will most likely see an influx of homebuyers in the coming years.   If you are thinking of buying real estate in Arizona, now it is the time to act in Arizona Real Estate’s market before the demand outstrips the supply and prices soar.

CALL Denise FOR MORE INFO 602.980.0737 or email Denise@DutchGirlHomes.com

 


December 8, 2018 Greater Phoenix Residential Real Estate Update

(Published on - 12/13/2018 11:53:59 PM)

To read the news you would think that the housing market was having a really hard time. But we need to remember that the housing market has been growing steadily between 2015 and 2018.

 

So a slowdown is inevitable at some point. When we speak specifically about the Greater Phoenix, we are having a slowdown. It has been expected for at least a year.

 

It is quite a modest slowdown, the least dramatic in the last 20 years. But it is still the worst slowdown in years, because it is the ONLY slowdown since 2014.  The 2014 slowdown was much more severe, and Sales prices did NOT decline when the market slowed down. They merely stabilized for a while before resuming an upward trajectory.

 

So far there is no sign that sales prices will decline due to the current market shift.

 

 

To give you some idea of how benign the current slowdown is, we look at the average price per square foot for listings under contract,  a leading indicator of future sales pricing... and we are showing a strong rise in prices for homes in escrow over the past 2 months. What this means is that we can expect prices to continue to rise.

 

If buyers are going on strike, waiting for prices to come down or interest rates to drop (or both), then they are likely to be disappointed. It is more likely that prices will rise (and you know what interest rates are doing).

 

If you have specific questions about the market or about your specific needs, please give me a call 602.980.07637 Denise@DutchGirlHomes.com

Cromford Dec 8 2018 infographic

For Buyers:
Remember when you would not eat your dinner as a kid and your parents would serve it to you for breakfast or lunch until it was gone?  Okay even if you can’t relate, you can imagine a kid’s disappointment in having to see the same thing day after day until they reluctantly eat it. Buyers may be feeling the same way this month as existing inventory has gotten stale and very little new inventory has been added in the first weeks of December. It’s down a whopping 26% from last December with nearly every price range under $1.5M participating in the decline.  This reluctance to list in December has offset the 16% decline in listings under contract and the market has managed to maintain a seller market, albeit a weaker one.  In the meantime, existing sellers are dressing up their leftovers with incentives.  Seller-assisted closing costs have risen on sales between $175K-$300K and price reductions were up 25% in the first week of December compared to last year.

For Sellers:
Seasonally, this is the calm before the storm in terms of buyer activity.  Every year, listings under contract drop sharply in the latter half of December before reaching their lowest point on January 1st.  Conversely, between January and April buyer contract activity will sharply accelerate.  How much it will increase this year remains to be seen depending on interest rates and other lending factors. The past 3 years has seen contracts rise roughly between 70-90%  in the first 4 months.  Despite this expectation, sellers need to be prepared to compete more in 2019 than they had to this year. The first 4 months are also typically strong for new listings to enter the market.  Even though 2019 looks like it will start off with a seller’s advantage, it will be much weaker than last year.  The market appears to be resisting higher prices for homes that don’t live up to buyers’ expectation of value for their money.


Arcadia: Scottsdale 85251 & Phoenix 85018: Voted Best Neighborhood

(Published on - 11/25/2018 11:05:12 PM)

The Arcadia neighborhood straddles Phoenix 85018 and Scottsdale 85251. This “front-porch” community is family friendly and the very best place to take the kids trick-or-treating (parents are out too, typically with wine glasses). Wide streets and mature shade trees beckon runners, dog-walkers, bicycles and children.

 

The boundaries are 44th Street to 68th Street and Indian School to Camelback Roads. The area is also includes a  canal, very popular with runners and walkers. Old Town Scottsdale is an easy walk, and within blocks you can find groceries, restaurants and coffee shops. There is no HOA (with the exception of a couple newer in-fills) which adds to Arcadia's charm. The homes range from 1950 ranch style on quarter acre lots , to 10,000 square foot new-builds on several acres.

 

Arcadia was originally citrus groves and there is still irrigation to many of the properties.  It is only 15 minutes from Sky Harbor Airport and minutes from Scottsdale Fashion Square, Kierland and Scottsdale Quarter shopping. Arcadia borders the multi-million dollar Paradise Valley Township homes to the North, and the extremely popular (family focused) Arizona Country Club to the South. The Villages Raquet Club and Spa is also very close by.

 

As one of the Valley’s more established communities, Arcadia has retained its popularity with those who grew up in the Arcadia schools, and continue to return to raise their own children. There is a constant activity of bikes, walkers, runners and children.  The public schools are part of what is known as the Scottsdale “3-Cs,”  schools which typically have long wait lists due to Open Enrollment policies.

 

The neighborhood is frequently called the “safest place to go for a jog in 100 degree weather,” due to the numerous medical physicians who live here. The access to downtown medical facilities is equally as accessible as the proximity to the 101 and the East Valley.

 

The price per square foot is one of the highest in the State, as Arcadia is listed as one of the top places to live in Phoenix. Celebrities who have lived here include Alice Cooper and Glen Campbell, as well as many executives and CEOs. Exeter is the premier street. The neighborhood has become so popular that the terms "Arcadia-lite" and "Arcadia-Proper" are commonly used to describe the infills and remodels in surrounding neighborhoods.

 


Waiting to Buy a Home may be Costly, Despite Rising Interest Rates

(Published on - 10/23/2018 12:23:25 AM)

September-October 2018. This month's market update is based on the effect of Interest Rates on  Real Estate Sales. Charts and audio referenced are located at the link which follows.

 

DO YOU REALLY THINK HOME PRICES ARE GOING TO DECREASE:  Doubtful. Prices in the Phoenix Valley, like most other parts of the U.S., have continued to rise. Overall, prices continue to increase at a rate of 6-7% per year. Leading economists are saying we might hit a recession in the next couple of years, but they are predicting that this will lead to a slowdown of growth, NOT a reversal of prices.

 

The Phoenix area does have some seasonality in sales. If we look at a 3- month rolling average of sales price-per-square-foot we can see a pattern: Each year between June and September we experience a predictable, yet minor, price drop.  And prices then recover fairly quickly. (see slide)

 

And waiting for prices to drop can be a very long wait. Interest rates continue to threaten to go up in the near future.  Combine higher prices with higher interest rates means it will only get more expensive to own a home.

A few things to consider:

Rates are still historically low. The chart shown from Freddie Mac demonstrates the average 30 year interest rate was 6.04% as recently as November 20, 2008. In fact, rates have not averaged below 6% the past four decades!

 

The amount of money borrowed, property taxes, and HOA fees typically have a much greater impact to monthly payment than an increase in mortgage interest like those we have recently experienced.  Example: $300,000 @ 30-year fixed mortgage (Monthly Principal + Interest):  6.25% interest rate payment is $1,542;   5.000% interest rate is $1,610 =   Payment Difference of just $68/mo.

 

The purchase market is healthy! According to Tina Tamboer of the Cromford Report, prices are projected to continue to rise over the next 3 – 6 months.

The Cromford Report also notes that buyers typically have the most “buying power” in the 4th quarter of the year. 

 

The economy continues its nine-year expansion, with an unemployment rate now at 3.7 percent, the lowest since 1969, according to data released most recently by the Department of Labor.

Consumer confidence hits 138.4 in September, vs. 132 estimates

September's index is near the all-time high of 144.7 reached in 2000, the Conference Board said recently.  "These historically high confidence levels should continue to support healthy consumer spending and should be welcome news for retailers as they begin gearing up for the holiday season," says Lynn Franco, director of economic indicators at the Conference Board.

 

Inflation: Federal Reserve Chairman Jerome Powell spoke recently in Boston before the National Association for Business Economics, stating that he sees the economy’s outlook as “remarkably positive,” but warned that the central bank remains alert for rising prices that often accompany low unemployment. Inflation has remained steadily near the Fed's 2 percent goal, despite increased employment. The Fed also recently revised up its forecast for economic growth in 2018, which, if it holds true, would give President Trump a major victory.

See the Charts and audio that accompany this blog at Why Waiting to Buy a Home may be Expensive

 

 


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