Gilbert and East Valley Real Estate News & Market Trends

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

June 10, 2024

Monday Real Estate Update June 10th 2024

 

Real Estate Trends:

Navigating the Changing Market Landscape

 

The average change in Cromford Market Index (CMI)* over the past month is -2.1%, down from -0.8% last week and continuing the downward trend that started three weeks ago. The market is deteriorating a little faster now for sellers. Price reductions are increasing in both size and frequency.

 

 

On a brighter note, seven cities have shown an increase in their Cromford® Market Index over the past month, while ten have declined. 

Fountain Hills is easily the biggest movers in favor of sellers. Glendale and Gilbert are once again the primary locations moving in favor of buyers. 

Despite the deterioration, 11 out of 17 cities are still seller's markets. Three cities (Goodyear, Cave Creek, and Surprise) are balanced, while the remaining three are buyer's markets. 

 

Buckeye and Maricopa swapped places at the bottom of the table. Both have a large inventory of for-sale homes, which gives buyers an advantage in negotiations.

 

 

*Cromford Market Index™ provides a short-term forecast for the balance of the market. It is derived from the pending, active, and sold listings trends compared with historical data over the previous four years. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market.

 

 

Current Lending Guidelines for Using Rental Income

 

When qualifying for a mortgage, borrowers with rental income can use this income to help meet the necessary debt-to-income (DTI) ratios. However, different agencies have guidelines for how rental income can be used and what documentation is required. This article outlines the current lending guidelines for using rental income from Fannie Mae and the Federal Housing Administration (FHA), focusing on existing rental properties, newly converted rental properties, and departing primary residences.

 

Fannie Mae Guidelines

 

Existing Rental Properties

 

  1. Documentation Required:
    • A copy of the current lease agreement.
    • Proof of receipt of rental income, typically through tax returns (Schedule E of IRS Form 1040).
    • If rental income is not reported on tax returns, Fannie Mae requires bank statements or canceled checks showing receipt of rental income in addition to the current lease agreement.
  2. Income Calculation:
    • Using the tax returns, we calculate the net rental income on Schedule E.
    • Fannie Mae allows lenders to use 75% of the rental income showing on the lease agreement from the property as qualifying income if they are not using tax returns, and we can document a qualifying exception to not using the returns.

Newly Converted Rental Properties

 

  1. Documentation Required:
    • A copy of the new lease agreement.
    • Proof of security deposit and first month’s rent receipt.
    • An appraisal or a comparable rent schedule (Form 1007 or Form 1025) uses market rents.
  2. Income Calculation:
    • Like existing rental properties, 75% of the market rent can be used for qualification purposes.

 

Departing Primary Residence

  1. Documentation Required:
    • Evidence of the lease agreement for the property.
    • Proof of receipt of the security deposit and first month’s rent.
    • An appraisal of the market rent is used for qualification.
  2. Income Calculation:
    • 75% of the market rent can be used as qualifying income. The property must have sufficient equity (typically at least 30%) to ensure the borrower is adequately leveraged.

 

FHA Guidelines

Existing Rental Properties

 

  1. Documentation Required:
    • The most recent tax returns (Schedule E of IRS Form 1040).
    • Current lease agreement, if applicable.
    • Proof of receipt of rental income, such as bank statements or canceled checks.
  2. Income Calculation:
      • FHA allows 75% of the gross rental income, reducing it to property-related expenses.

 

Newly Converted Rental Properties

  1. Documentation Required:
    • New lease agreement.
    • Evidence of security deposit and first month’s rent receipt.
    • An appraisal or a comparable rent schedule (Form 1007 or Form 1025).
  2. Income Calculation: FHA uses 75% of the market rent for income calculations, reducing property-related expenses.

 

Key Considerations

  • Equity Requirements: Fannie Mae and FHA require the departing primary residence to have significant equity. This requirement mitigates the risk of the borrower being overly leveraged, which could impact their ability to repay the new mortgage.
  • Documentation: Consistent documentation is essential across both Fannie Mae and FHA guidelines. This includes lease agreements, proof of rent receipts, and sometimes appraisals to establish market rent.
  • Income Stability: Lenders will typically look for a history of stable rental income, which is often demonstrated through tax returns and bank statements.

 

Understanding these guidelines helps borrowers prepare the necessary documentation and clarifies how rental income will be calculated for mortgage qualification purposes. By adhering to these guidelines, borrowers can effectively leverage their rental income to meet the required DTI ratios and improve their chances of mortgage approval.

 

Markets in a Minute

 

 

Housing Market

  • Construction spending fell unexpectedly for a 2nd month in April, though investment in single-family home building improved.
  • Total mortgage application volume fell 5.2% last week. Purchase apps dropped 4% for the week and 16% year over year.
  • Home price gains cooled for the 2nd consecutive month in April, according to an ICE Mortgage Technology report.

 

Economy

  • The services sector snapped back into growth mode in May after a short-lived April contraction, improving by the most in 3 years.
  • Private employers added the fewest jobs last month since January, and small businesses shed jobs for the first time in 6 months.
  • The ISM Manufacturing Index hinted at a stalled economy in May. Based on lower anticipated demand, the index fell to a three-month low.

 

Real Estate Weekly Tip

 

With the early summer season upon us in Arizona, it's the perfect time to tackle some home repair and cleaning tasks to ensure your home remains in top condition during the hotter months. Here’s a practical checklist to get your home summer-ready:

 

Indoor Checklist

1. Air Conditioning Service: Schedule a professional service for your air conditioning unit to ensure it’s running efficiently. Clean or replace the filters to improve air quality and efficiency.

2. Ceiling Fans: Dust off ceiling fans and check that they function correctly. Ensure they are set to rotate counter-clockwise to push cool air down.

3. Window Seals and Weather-Stripping: Check and replace any worn seals or weather-stripping to keep cool air in and hot air out.

4. Deep Clean: Thoroughly clean your home, including dusting, vacuuming under furniture, and cleaning window interiors to remove allergens.

5. Inspect and Clean Vents: Clean all air vents and registers to ensure unobstructed airflow.

6. Check Detectors: Test and replace batteries in your smoke and carbon monoxide detectors to ensure they function correctly.

 

Outdoor Checklist

1. Roof Inspection: Check your roof for any signs of damage or wear that could lead to leaks during monsoon season. If you are unsure, consider a professional inspection.

2. Landscaping: Trim trees and bushes away from your home to prevent damage and reduce debris.

3. Pool Maintenance: Prepare your pool for regular use by checking the chemical balance, cleaning the filters, and ensuring the pump operates correctly.

4. Exterior Walls: Check for cracks or signs of wear in your home’s exterior. If necessary, apply a fresh coat of paint or sealant to protect against heat and sun damage.

5. Pest Control: Inspect for signs of pests that can be more active during warmer months. Consider scheduling a professional pest control service to prevent infestations.

 

Special Considerations for Arizona

- Sun Exposure: Consider installing sun shades or awnings on windows facing direct sunlight to reduce cooling costs.

- Water Efficiency: Check for leaks in your irrigation system and consider drought-resistant landscaping to conserve water.

 

Performing these tasks can improve the comfort and safety of your home and help prevent costly repairs in the future. Stay calm and enjoy the summer!

 

 

June 3, 2024

Monday Real Estate Update June 3rd 2024

Market Dynamics: 

Decoding the Downturn in

Today's Real Estate Landscape

 

The real estate market has shown a cooling trend, primarily in the re-sale sector, as we observe an ongoing rise in supply against a backdrop of subdued demand. A clear indicator of this shift is the contract ratio, which measures the number of active listings without a contract against those currently under contract. Across all areas and types, this ratio has decreased significantly by 15%, falling from 54.5 to 46.1 over the past month. This decline starkly contrasts the 77.0 recorded on June 1 last year, signaling a move towards a balanced market. The current reading suggests buyers have a more comprehensive array of options, while sellers face increased competition, more so than at any point in the last decade. The contract ratio is a valuable tool for assessing market dynamics, especially in specific segments that may be of interest.

 

Despite the strong pricing observed in the first five months of this year, the outlook remains uncertain as we approach the summer months. Evidence is mounting that the average price per square foot pricing is stabilizing, following an unexpectedly high peak on May 8. This stabilization indicates the broader market cooling, aligning with the shifts noted in the Cromford® Market Index

(CMI)*. Over the past month, the CMI has experienced a significant downturn, declining by -0.8% from last week's +0.1%. This continued decrease initiated two weeks ago, signals a deteriorating market environment that is particularly disadvantageous for sellers. The increasing supply alongside markedly weak demand sets the stage for sellers to potentially increase both the magnitude and frequency of price reductions, which may be necessary to attract buyers in the current market conditions.

 

 

Regarding geographical market dynamics, it's worth noting that only five cities have reported an increase in their CMI, consistent with last week's data, while twelve have observed declines. This shift in market conditions is exciting in Paradise Valley, Fountain Hills, and Goodyear, which are emerging as the most favorable markets for sellers. Conversely, Glendale and Gilbert are trending towards more buyer-friendly conditions, indicating potential opportunities for buyers in these areas.

Fountain Hills is on a trajectory to surpass Chandler at the pinnacle of the market index, although there is still a considerable gap to bridge.

 

Despite the overall market pullback, 11 of the 17 cities assessed still classify as seller's markets. Goodyear and Surprise maintain a balanced market stance, whereas the other four are firmly categorized as buyer's markets.

 

Cromford Market Index™ is a value that provides a short-term forecast for the balance of the market. It is derived from the past four years pending, active, and sold listings trends compared with historical data. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market.

 

 

 

Economic and Financial News Update: Week of May 20, 2024

 

The Benefits of Setting Up a Trust and Your Largest Asset – Your Home

For most of us, our home is our most significant asset. Establishing a trust and transferring the title of your home into that trust is a strategic financial move that offers numerous benefits. This approach is increasingly popular among homeowners looking to protect their assets and maximize their estate planning. Below, we explore the key advantages of setting up a family trust and titling your home into that trust, focusing on protection and tax benefits.

 

Asset Protection

 

  1. Shielding from Creditors:

 

    • Protection from Lawsuits: Placing your home in a trust can help protect it from potential creditors and lawsuits. If your assets are held in a trust, they are generally considered separate from your personal property, making it more difficult for creditors to claim against them.
    • Financial Security: This added layer of protection can provide peace of mind, knowing that your home is safeguarded against unexpected financial liabilities.

 

  1. Avoiding Probate:

 

    • Efficient Asset Transfer: One of the most significant benefits of a family trust is the ability to bypass the probate process. Probate can be time-consuming and often delays the distribution of assets to beneficiaries.
    • Privacy Preservation: Unlike probate, which is a public process, the transfer of assets through a trust is private. This can help maintain the confidentiality of your estate and its distribution. 

 

Tax Benefits

 

  1. Estate Tax Reduction:

 

    • Minimizing Estate Taxes: Placing your home in a trust can reduce your beneficiaries' estate taxes. Trusts can be structured to take advantage of various tax exemptions and deductions.
    • Strategic Planning: Trusts allow for more strategic estate planning, helping minimize your estate's overall tax burden.
  1. Income Tax Considerations:

 

    • Income Splitting: In some cases, a family trust can facilitate income splitting among beneficiaries, potentially lowering the overall tax rate to the income generated by the trust assets.
    • Capital Gains Tax: If your home appreciates, a family trust can help manage capital gains taxes more effectively, ensuring that more of the home's value is preserved for your beneficiaries. 

 

Control and Flexibility

 

  1. Tailored Distribution:

 

    • Specific Instructions: A trust allows you to specify precisely how and when your assets are distributed. This can be particularly beneficial for managing the inheritance of young children or individuals with special needs.
    • Ongoing Management: Trusts can be managed by a trustee according to your wishes, providing continuity and oversight for your assets even after passing.

 

  1. Avoiding Family Disputes:
    • Clear Guidelines: Establishing clear guidelines and instructions within the trust can help prevent misunderstandings and disputes among family members regarding the distribution of your estate.
    • Professional Management: Appointing a professional trustee can ensure impartial and effective management of the trust, further reducing the potential for conflicts. 

 

Steps to Set Up a Trust

 

  1. Consult with an Attorney: Seek advice from an estate planning attorney to understand the best type of trust for your situation and to ensure all legal requirements are met.
  2. Create the Trust Document: Draft the trust document, specifying the terms, beneficiaries, and trustee(s).
  3. Transfer the Home Title: You can transfer the title of your home into the trust. This typically involves a deed transfer, which a professional should handle to ensure accuracy and compliance with state laws.
  4. Manage and Maintain the Trust: Review and update the trust regularly to reflect changes in your family situation or financial status. 

In conclusion, setting up a trust and titling your home into that trust offers substantial benefits regarding asset protection, tax advantages, and control over your estate. By taking these steps, you can ensure that your home and other valuable assets are managed and distributed according to your wishes, providing security and peace of mind for you and your family. Side note: this is not meant to be legal advice. Please consult with an estate planning attorney for more specifics and discussion on how to set this up best for your situation. Please let me know if you would like a referral of someone who can help.

 

 

Economy

 

  • According to minutes from last month's Fed meeting, officials believe current policy is restrictive enough to bring inflation down further. 
  • May's PMI measure of private sector economic health topped estimates to hit its highest level since April 2022, led by the services segment.
  • New claims for unemployment benefits fell last week as labor market strength continued to support the economy.

 

Housing Market

 

  • Sales of previously owned homes fell 1.9% from March to April and at the same rate year over year. 
  • In April, first-time buyers accounted for 33% of sales, up from 29% a year ago. Cash buyers represented 28% of transactions.
  • At the end of April, total housing inventory was up 9% month over month and 16% year over year, but it was still at just a 3.5-month supply.

 

With the early summer season upon us in Arizona, it's the perfect time to tackle some home repair and cleaning tasks to ensure your home remains in top condition during the hotter months. Here's a practical checklist to get your home summer-ready:

 

 

Indoor Checklist

 

1. Air Conditioning Service: Schedule a professional service for your air conditioning unit to ensure it's running efficiently. Clean or replace the filters to improve air quality and efficiency.

2. Ceiling Fans: Dust off ceiling fans and check that they function correctly. Ensure they are set to rotate counter-clockwise to push cool air down.

3. Window Seals and Weather-Stripping: Check and replace any worn seals or weather-stripping to keep cool air in and hot air out.

4. Deep Clean: Thoroughly clean your home, including dusting, vacuuming under furniture, and cleaning window interiors to remove allergens.

5. Inspect and Clean Vents: Clean all air vents and registers to ensure unobstructed airflow.

6. Check Detectors: Test and replace batteries in your smoke and carbon monoxide detectors to ensure they function correctly.

 

Outdoor Checklist

 

1. Roof Inspection: Check your roof for any signs of damage or wear that could lead to leaks during monsoon season. If you need more clarification, consider a professional inspection.

2. Landscaping: Trim trees and bushes away from your home to prevent damage and reduce debris.

3. Pool Maintenance: Prepare your pool for regular use by checking the chemical balance, cleaning the filters, and ensuring the pump operates correctly.

4. Exterior Walls: Check for cracks or signs of wear in your home's exterior. If necessary, apply a fresh coat of paint or sealant to protect against heat and sun damage.

5. Pest Control: Inspect for signs of pests that can be more active during warmer months. Consider scheduling a professional pest control service to prevent infestations.

 

Special Considerations for Arizona

 

- Sun Exposure: Consider installing sun shades or awnings on windows facing direct sunlight to reduce cooling costs.

- Water Efficiency: Check for leaks in your irrigation system and consider drought-resistant landscaping to conserve water.

 

Performing these tasks can improve the comfort and safety of your home and help prevent costly repairs in the future. Stay calm and enjoy the summer!

 

 

 

 

May 28, 2024

Tuesday Morning Real Estate Update May 28th

Market Shift: Decline in Cromford Market Index and Emerging Buyer Favor in Key Cities

Over the past month, the Cromford® Market Index has experienced a significant shift, with the average change dropping from +0.8 to +0.1, continuing the downward trend from last week.

 

Only five cities have shown an increase in their Cromford® Market Index over the past month, while 12 have declined. This is also less positive than last week.

 

Paradise Valley, Fountain Hills, and Goodyear have emerged as the frontrunners, strongly favoring sellers. On the other hand, Tempe, Glendale, Gilbert, and Maricopa are the primary locations where buyers gain the upper hand.

 

Now that Chandler is losing steam, Fountain Hills can replace it at the top of the table.

 

11 out of 17 cities are seller's markets. Two cities (Goodyear and Surprise) are balanced, while four are buyer's markets.

 

Economic and Financial News Update: Week of May 28, 2024

 

Just a quick look at the latest economic and financial news and how it impacts mortgage interest rates. 

 

Economic Growth and Employment

The U.S. economy is resilient despite tighter monetary conditions and various global challenges. According to the latest OECD Economic Outlook, global economic growth remains steady, with the U.S. showing robust performance. The U.S. GDP is projected to grow 2.4% in 2024, supported by strong private sector confidence and easing supply chain pressures.

 

Employment data for April 2024 reveals that the U.S. labor market remains robust. Non-farm payroll employment increased by 175,000 jobs, with notable gains in health care, social assistance, and transportation sectors. The unemployment rate remained relatively stable at 3.9%, indicating a solid labor market despite fluctuations.

 

Inflation Trends

Inflation has been on a downward trajectory, contributing to improving economic stability. The Consumer Price Index (CPI) for April 2024 showed a 0.3% increase on a seasonally adjusted basis and a 3.4% rise over the past 12 months. Core inflation, which excludes food and energy prices, increased by 0.3% in April and 3.6% year-over-year. This decline in inflation rates reflects the impacts of restrictive monetary policies and easing supply chain issues.

 

Federal Reserve Policies and Mortgage Rates

The Federal Reserve has maintained a cautious approach towards monetary policy. In its latest Federal Open Market Committee (FOMC) statement, the Fed acknowledged the solid pace of economic activity and the ongoing improvements in the labor market. However, it also highlighted that inflation, while easing, remains above target levels. The Fed's commitment to achieving maximum employment and price stability suggests carefully monitoring economic indicators before making significant policy shifts.

Due to these economic conditions and the Fed's monetary stance, mortgage interest rates have fluctuated. The easing of inflation has relieved the housing market, with mortgage rates stabilizing slightly after a period of volatility. However, the trend remains dependent on future economic data and Fed policies. Lower inflation and strong employment numbers typically support lower mortgage rates, but sudden economic changes could alter this outlook.

 

In Summary

The week of May 20, 2024, has seen positive developments in the U.S. economy, with strong employment figures and a continued decline in inflation. These factors have contributed to a more stable outlook for mortgage interest rates.  While there is optimism for rate reductions, significant drops are not anticipated until 2024. Projections suggest that the 30-year fixed-rate mortgage could fall to around 6.4% by the end of the year, down from the current highs.  I’ll keep you updated on news and factors moving mortgage rates.

 

Economy

  • According to minutes from last month's Fed meeting, officials believe current policy is restrictive enough to bring inflation down further. 

  • May's PMI measure of private sector economic health topped estimates to hit its highest level since April 2022, led by the services segment.

  • New claims for unemployment benefits fell last week as labor market strength continued to support the economy.

     

Housing Market

  • Sales of previously owned homes fell 1.9% from March to April and at the same rate year over year. 

  • In April, first-time buyers accounted for 33% of sales, up from 29% a year ago. Cash buyers represented 28% of transactions.

  • At the end of April, total housing inventory was up 9% month over month and 16% year over year, but it was still at just a 3.5-month supply.

May 20, 2024

Monday Morning Real Estate Update 5-20-2024

 

Market Shift: Cromford® Market Index Growth Slows, 11 Cities See Declines as Trends Reverse

 

The average change in Cromford® Market Index (CMI)* over the past month is +0.8%, down from +1.8 last week and reversing the trend that started six weeks ago.

 

Only six cities have shown an increase in their Cromford® Market Index over the past month, while 11 have declined. This is significantly less positive than last week.

 

Paradise Valley, Peoria, Fountain Hills, and Goodyear are the biggest moves in favor of sellers. Tempe, Queen Creek, and Maricopa are the primary locations moving in favor of buyers. Buckeye has been improving for sellers and is no longer at the bottom of the table. Having been replaced by Maricopa, it is likely to take its place. Chandler is still far out in front at the top, but Fountain Hills is now the primary

challenger.

 

 

Current Market Conditions: 11 out of 17 cities are seller's markets, indicating a favorable environment for sellers. Two cities (Goodyear and Surprise) are balanced, suggesting a more even market. Four cities are buyer's markets, presenting opportunities for buyers. 

 

Why Buying a Home is Still a Better Option than Renting:

A Response to the Recent NY Times Article

I was going to write about something else this week: However, the NY Times changed that with the article they sent out to their subscribers this past week, relaunching their Rent vs Buy Calculator and arguing that renting is better than buying in the long run.  By their estimate, the long run is ten years.  Using the numbers the numbers they set up and used for their argument, renting is supposed to save you $133,000 over the next ten years. 

 

However, this argument must be revised based on the data they used to produce this result.  Here’s a quick recap of some of the flaws:

 

·For starters, they compare a $500,000 home purchase to a $2,000 monthly rent.  The median rent in the Phoenix metro area is $2,400. 

·They are using a 3% appreciation rate for home values when we have been averaging over 4% in Maricopa County.

·They’re assuming a 3% rent growth rate annually when the national averages are closer to 4.5%. 

·The calculation assumes your closing costs on a $500,000 purchase are $20,000. 

 

Aside from the other minor errors they make, like assuming very high property taxes, home insurance, and astronomical annual maintenance costs, the biggest flaw is the assumption that all this supposed money you’re going to save renting will be invested or saved.  Which, if we’re being honest with each other, isn’t going to be the case.  Yes, some will be saved or invested, but not all. 

 

Before adjusting the calculator for more realistic numbers and numbers in line with Maricopa County, let’s bullet point the overall benefits of owning.

 

· Building Equity and Wealth - One of the most compelling reasons to buy a home is the opportunity to build equity. Unlike rent payments, which vanish into a landlord's pocket, mortgage payments gradually increase your ownership stake in your property. Over time, this equity can serve as a substantial financial asset. According to the National Association of Realtors, homeowners typically have a net worth that is 40 times greater than that of renters. This wealth accumulation is a significant advantage that renting simply cannot match.

·Stability and Predictability - Homeownership offers stability that renting cannot. While rents can increase annually, often outpacing inflation and wage growth, a fixed-rate mortgage provides predictable monthly payments. This financial predictability allows homeowners to budget more effectively and avoid the stress of sudden rent hikes. A fixed mortgage can be advantageous during high inflation, insulating homeowners from rising housing costs.

·Personalization and Control - Homeownership allows personalizing and renovating your living space to suit your needs and tastes. Unlike renters, homeowners do not need permission to change their property. This ability to modify and improve your home can increase its value over time, further enhancing your investment. Additionally, homeowners have more control over their living environment, from pet policies to landscaping, which can significantly improve quality of life.

·Forced Savings Mechanism—A mortgage acts as a forced savings mechanism. Each monthly payment contributes to building equity, ensuring homeowners save money through property investment. This is a significant advantage, particularly for those struggling to save money independently.

·Hedge Against Inflation - Real estate is often considered a good hedge against inflation. As the cost of living rises, property values typically increase as well. This means that homeowners can benefit from appreciating their property, which can protect against the eroding value of money over time. On the other hand, renters are vulnerable to rent increases that may outpace their income growth.

·Long-Term Cost Efficiency - While it’s true that the upfront costs of buying a home can be higher than renting, over the long term, owning a home is often more cost-efficient. Mortgage payments can eventually end, whereas rent payments continue indefinitely. Once the mortgage is paid off, homeowners live "rent-free," paying only property taxes, maintenance, and insurance. This long-term cost efficiency makes homeownership an intelligent financial decision for those who plan to stay in their home for many years​

 

So here’s what I plugged into the calculator to put it more in line with the actual data and numbers:

 

·Adjusted the median rent for the Phoenix metro area to $2,400.

·Adjusted the home value appreciation and rent growth rates to align with what we see.

· Adjusted the annual property taxes, home insurance, and maintenance costs. 

·I cut the closing costs in half for purchasing to $10,000.  Even that is a bit high, based on my experience with a $500,000 home purchase. 

·Lastly, I adjusted the amount saved or invested to a more realistic number for the average household. 

 

When we do all of this in their calculator, we go from renting being better by $133,000 in 10 years to buying being better by $167,000 in the same period.  That’s a significant swing when you plug in actual data.  One important point to bring up in these results is the interest rate on the mortgage.  In both the NY Times calculation and mine, there is the assumption that you will be at the same rate (about 7%) for the next ten years.  When adjusting for the possibility of refinancing to a lower rate, the benefit gap between owning and renting gets significantly more prominent.   

 

While the New York Times article validates the immediate financial benefits of renting (lower upfront costs), it overlooks the significant long-term advantages of homeownership. While renting may offer short-term financial relief, the long-term benefits of buying a home make it a better investment for those looking to build wealth, achieve stability, and control their living environment.  If you want to run the numbers and calculations specific to your situation, please don’t hesitate to contact me.

 

Refresh Your Home: The Ultimate Guide to Perfect Paint Finishes for Every Room

 

An easy way to update your home is with a fresh coat of paint. When you're redecorating, knowing which paint finishes work best for each room can significantly affect your walls' appearance and durability. Here's a handy guide to help you select the perfect finish for your home:

 

Satin Finish: Ideal for children's rooms and high-traffic areas. Satin finishes are durable, easy to clean, and have a slight sheen that adds a subtle touch of elegance without being too glossy.

Flat or Matte Finish: Best for adult bedrooms and low-traffic areas. This finish has no shine, providing a smooth, rich color. It’s great for hiding imperfections on walls but can be more challenging to clean.

Eggshell Finish: This finish is perfect for living rooms and dining rooms. It offers a soft, velvety appearance with more durability than flat finishes. It can handle occasional cleaning and still looks refined.

Semi-Gloss Finish: This finish is excellent for kitchens, bathrooms, and trim. It is moisture-resistant and easy to clean, making it ideal for areas that experience more wear and tear. Its shiny finish also highlights architectural details.

High-Gloss Finish: Best for doors, cabinets, and furniture. High-gloss paint is exceptionally durable and washable, offering a sleek, polished look. However, it’s less forgiving when it comes to surface imperfections.

 

Save this paint GLOSSary for all your future home improvement projects, and you'll always have the right finish for every room!

 

 

This week, lower mortgage rates were as easy as 1–2–3! A string of bond-friendly data releases (BLS jobs, retail sales, CPI inflation) propelled average 30-year mortgage rates below 7%. If this can hold, it should boost transaction volumes (existing & new homes) in the coming months.

 

Slower job growth. This happened last week, but to remind you: April employment grew by 174K, much lower than the 240K expected. The unemployment rate also rose from 3.8% 3.9%. [BLS]

 

Flat means down. April retail sales were flat month-over-month (MoM), and the growth in March was revised down from +0.9% to +0.6%. Keep in mind that the retail sales figure is not adjusted for prices. Why is retail sales so important? Because consumer spending drives the US economy. Slower GDP growth ahead? [Census Bureau]

 

Cooler inflation. The “core” (ex-food & fuel) Consumer Price Index for April rose 0.3% Month over Month and +3.6% Year over Year (down from +3.8% YoY in March). Nearly ALL of the increase in the index came from two items: Shelter costs and car insurance. [BLS]

 

Have a wonderful week! - Brad

May 17, 2024

The Weekender May 17th 2024

Posted in Community News
May 13, 2024

Monday Morning Real Estate Update 5-13-2024

 

Unveiling the Trends: 

Maricopa County's Real Estate Rollercoaster in May 2024

 

We're exploring the latest local real estate market trends, providing sellers and buyers with crucial insights into recent developments.

 

Once again, we are witnessing a significant and promising improvement for sellers in specific sub-markets. The Cromford Market Index (CMI)*, a reliable gauge of market conditions, has risen by +1.8% over the past month. This marks a continuation of a positive trend that began five weeks ago and indicates the market's direction. This improvement is seen across ten cities, each showing an increase in their CMI, signaling a shift toward seller's markets in these areas. Notably, Paradise Valley, Peoria, Fountain Hills, Goodyear, and Avondale are leading this upward movement.

 

On the other side, seven cities have seen a decline in their market index, a slight dip from last week's more favorable numbers. Tempe, Queen Creek, Maricopa, and Cave Creek are trending towards buyer-friendly conditions, with Maricopa poised to replace Buckeye at the bottom. Despite these mixed signals, the overall landscape remains predominantly advantageous for sellers, with 11 out of 17 cities classified as seller's markets.

 

 

Adding to the excitement, the monthly average price per square foot for closed listings in all areas and types within the ARMLS database has set a new record, topping at $308.01. This milestone underscores the resilience of our market, standing strong despite ongoing predictions of significant price drops by various online commentators. These pundits, forecasting a market crash since 2018, continue to be proven wrong, as evidenced by their diminishing confidence.

 

It's important to remember that market dynamics are influenced by more than just demand. The last half of 2022 illustrated this vividly when iBuyers, who had acquired homes at peak prices, were forced to offload inventory at reduced costs due to rising interest rates. This action inadvertently created a temporary supply surge and a price drop. This period has passed, and with the excess inventory cleared, prices have stabilized and are trending upwards.

 

As we look ahead, we might anticipate the usual seasonal decline in average price per square foot during the third quarter. However, for now, the market deserves recognition for its durability, and sellers can celebrate reaching new highs.

 

Stay tuned for more updates as we continue monitoring these trends and their implications for buyers and sellers in our vibrant real estate market.

 

*Cromford Market Index™ provides a short-term forecast for the balance of the market. It is derived from the pending, active, and sold listings trends compared with historical data over the previous four years. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market.

 

 

Understanding Private Mortgage Insurance (PMI) Rates for Conventional Loans

 

Private Mortgage Insurance (PMI) is a critical component for many homebuyers using conventional loans, particularly those unable or not interested in putting at least 20% down.  PMI protects lenders by covering a portion of the loan balance in case of default, allowing buyers to secure financing with lower down payments. Let’s delve into how PMI rates are determined and explore the various types of PMI, highlighting how each can enhance mortgage affordability.

 

How PMI Rates Are Set

 

Several key factors influence PMI rates for conventional loans:

  1. Loan-to-Value Ratio (LTV):

    • The LTV ratio is a primary determinant of PMI rates. It is calculated by dividing the loan amount by the home's appraised value or purchase price. Higher LTV ratios, indicating a smaller down payment, typically result in higher PMI rates because the lender assumes greater risk.

  2. Credit Score:

    • Borrowers' credit scores significantly impact PMI rates. Higher credit scores usually qualify for lower PMI rates, reflecting the borrower’s lower risk of default. Conversely, lower credit scores may lead to higher PMI premiums.

  3. Debt-to-Income Ratio (DTI):

    • Lenders consider the borrower’s DTI ratio, which measures monthly debt payments against gross monthly income. A lower DTI ratio indicates better financial stability, potentially leading to lower PMI rates.

  4. Property Type:

    • Property type (e.g., single-family home, condominium) can influence PMI rates. Some property types may pose higher risks, affecting the cost of insurance.

  5. Coverage Requirements:

    • The level of PMI coverage required by the lender impacts the premium. Higher coverage percentages, offering more protection to the lender, typically result in higher PMI rates.

 

Types of PMI

 

There are several types of PMI, each with unique features that can be leveraged to improve affordability:

  1. Monthly PMI:

    • Description: The most common type, monthly PMI, involves paying the insurance premium as part of the monthly mortgage payment.

    • Affordability Impact: While it increases the monthly payment, it avoids upfront costs, making it easier for buyers with limited initial funds.

  2. Single Premium PMI:

    • Description: Single premium PMI requires a one-time upfront payment at closing, covering the entire insurance cost.

    • Affordability Impact: This option eliminates ongoing monthly premiums, potentially lowering the monthly mortgage payment. A seller credit can also cover or pay for this one-time closing cost.

  3. Lender-Paid PMI (LPMI):

    • Description: In LPMI, the lender covers the PMI premium, typically in exchange for a higher interest rate on the mortgage.

    • Affordability Impact: This method removes PMI from the monthly payment, potentially making the mortgage more affordable in the short term. However, the higher interest rate means overall borrowing costs may be higher over the loan term.

  4. Split PMI:

    • Description: Split PMI combines elements of monthly and single premium PMI. A portion is paid upfront at closing; the remainder is included in monthly payments.

    • Affordability Impact: This approach balances the benefits of both types, reducing the size of the monthly payment while avoiding a large upfront cost.

 

Enhancing Affordability with PMI Options

 

Selecting the right type of PMI can significantly impact the affordability of a mortgage:

  • Monthly PMI is ideal for buyers looking to minimize upfront costs, spreading the insurance cost over the loan’s life.

  • Single Premium PMI benefits those who can afford a larger upfront payment or can get it covered by a seller credit, reducing monthly payments.

  • Lender-Paid PMI suits buyers prioritizing lower monthly payments despite the trade-off of a higher interest rate.

  • Split PMI offers a middle ground, decreasing monthly premiums without requiring a substantial upfront expense.

 

Conclusion

 

Understanding the factors that influence PMI rates and the various PMI options available is important for homebuyers to know when discussing loan options with their mortgage pro. By carefully considering their financial situation and long-term plans, buyers can choose the PMI type that best enhances their mortgage affordability, making homeownership more attainable despite the challenges of higher housing costs and interest rates.

 

Effective utilization of PMI options allows buyers to tailor their mortgage payments to their financial capabilities, providing flexibility and support in achieving the goal of homeownership.

 

Understanding and Preparing for Home Closing Costs: A Guide for Buyers 

 

What Are Closing Costs?

 

Closing costs are the fees and expenses buyers and sellers incur during the real estate purchase. These costs vary widely based on factors such as the property location, the type of property being purchased, and the type of loan involved.

 

Typical Closing Costs Include:

1. Loan Origination Fees: The lender charges this fee for processing the mortgage application. This fee often covers underwriting and funding the loan.

2. Title Insurance protects the buyer and the lender against losses incurred from disputes over property ownership. It ensures the title is free and clear of issues.

3. Appraisal Fee: Paid to the appraisal company to confirm the home's fair market value.

4. Escrow Fees: The company handling the escrow process, which acts as a neutral party in the transaction, charges these fees.

5. Credit Report Fees: Though usually minor, these fees cover the cost of checking the buyer’s credit rating.

6. Prepaid Interest is interest that accrues on the mortgage between the closing date and the end of the month.

7. Property Taxes: Buyers typically pay two months of county property taxes at the closing.

8. Insurance Costs: Depending on the location, this may include homeowners insurance and, potentially, flood or earthquake insurance.

9. Recording Fees: Paid to a city or county in exchange for recording the new land records.

 

Estimating Your Closing Costs

Typically, closing costs range between 2% to 5% of the home’s purchase price. For example, if you purchase a home for $300,000, you can expect to pay between $6,000 to $15,000 in closing costs. While this range serves as a standard guideline, the exact amount can vary significantly based on the specific details of your transaction.

 

Planning for Closing Costs

Estimating closing costs early in the home-buying process is crucial to avoid surprises. Your lender will provide a Loan Estimate form, which includes projected closing costs, within three days of receiving your loan application. Before you close on the home, you will receive the Closing Disclosure form, which includes final costs, typically at least three days before the transaction is completed.

 

Saving for Closing Costs

Considering these costs in advance can ease the financial stress often associated with buying a home. Some buyers save specifically for closing costs alongside their down payment fund. Additionally, some negotiate with the seller to cover some or all of the closing costs as part of the sale agreement.

 

By thoroughly understanding and preparing for these costs, you can ensure a smoother, more predictable home-buying experience. Remember, these expenses are a standard part of purchasing a home and planning for them should be integrated into your overall home-buying strategy.

 

Market in a Minute

Housing...

  • Rates dipped last week, causing refinance apps to increase 5% for the week. Purchase apps rose 2% but were 17% lower than a year ago.

  • NAR reports home prices trended up in 205 of 221 metro areas during the first quarter, with 30% experiencing double-digit gains.

  • According to the New York Fed, renters' probability of owning a home is at a record low of 40.1%, down from 44.4% a year ago.

Economy...

  • The DJIA extended its winning streak to six straight sessions this week, closing above 39K points for the first time in five weeks.

  • This year, Consumers will borrow an estimated $334 billion through "buy now, pay later" loans, often not reported to credit agencies.

  • The May jobs report showed 175K new jobs in April, a six-month low. Labor market declines could lead to the Fed cutting rates sooner in 2024.

 

 

 

May 6, 2024

Monday Morning Real Estate Update 5-6-2024

Unveiling the Trends: Maricopa County's Real Estate Rollercoaster in April 2024

 

As we delve into the intricacies of Maricopa County's real estate landscape, the affidavits of value paint a picture of dynamic shifts and subtle nuances in the market. Let's break down the key findings for April 2024:

 

1. Closed Transactions:

  • There were 7,248 closed transactions, marking a 6% increase from April 2023's figures of 6,840.
  • Notably, closed re-sale transactions surged by 7% from April 2023, totaling 5,818, representing a significant 9% uptick from March's numbers.

2. New Homes Performance:

  • While closed new home transactions saw a marginal increase of less than 1% from April 2023, totaling 1,430, they experienced an 8% decline compared to March's statistics.
  • The median sales price for new homes in April stood at $515,279, a slight increase of 0.4% from April 2023 and March.

3. Re-sale Transactions:

  • Closed re-sale transactions demonstrated robust performance, increasing by 7% from April 2023 to 5,818.
  • The median sales price for re-sale homes experienced a notable uptick, reaching $465,000, showcasing a 6.9% increase from April 2023 and a 1.3% rise from March.

4. Median Sales Price:

  • The overall median sales price for April 2024 reached $476,545, indicating a noteworthy 4.7% escalation from April 2023 and a modest 0.3% increase from March.

5. Market Dynamics:

  • April 2024 boasted 10% more working days than April 2023, potentially contributing to the stronger closing counts observed for resale transactions.
  • However, the market share of new homes declined to 19.7%, marking its lowest percentage since July 2022.

6. Cromford® Market Index (CMI)*:

  • The average change in CMI over the past month witnessed a positive trajectory, standing at +1.7%, reflecting an upward trend that has persisted for the past four weeks.
  • 11 cities in Maricopa County showcased an increase in their CMI over the past month, signifying favorable conditions for sellers. Notable movements were observed in Paradise Valley, Peoria, and Goodyear.

7. Seller's Markets and Buyer's Markets:

  • With 11 out of 17 cities categorized as seller's markets, the real estate landscape exhibits strength in certain sub-markets.
  • Noteworthy shifts include Paradise Valley joining the seller's market group, while Queen Creek, Maricopa, and Cave Creek show movement toward buyer-friendly conditions.

 

In conclusion, while the Maricopa County real estate market for April 2024 demonstrates resilience and signs of improvement, it's essential to navigate these fluctuations with a keen understanding of localized dynamics. Sellers in select sub-markets can capitalize on favorable conditions, while buyers may find opportunities in areas exhibiting buyer-friendly trends.

 

Understanding these nuances empowers buyers and sellers to make informed decisions in this dynamic real estate landscape.

 

Navigating Home Inspections: 

Why Buyer Representation is Essential

 

Ready to buy your new home? It's an exhilarating journey, but there's more to it than meets the eye. Amidst the excitement of finding your dream home, it's crucial to recognize inspections' pivotal role. Here's why having buyer representation is indispensable, especially when it comes to inspections and inspection timelines:

Ready to buy your new home? It's an exhilarating journey, but there's more to it than meets the eye. Amidst the excitement of finding your dream home, it's crucial to recognize inspections' pivotal role. Here's why having buyer representation is indispensable, especially when it comes to inspections and inspection timelines:

 

1. Protecting Your Investment with Timely Inspections:

  • Negotiating a sufficient inspection period is paramount to ensuring you have ample time to schedule all necessary inspections. This timeframe allows you to delve deep into the property's condition, uncovering any hidden issues that could impact your decision to purchase.
  • Equally crucial is responding promptly within the specified timeframe. Failure to do so can leave you at risk of committing to a property needing repairs or forfeiting your earnest money. Additionally, after requesting repairs from the seller, adhering to set response and decision deadlines is imperative to avoid costly complications. 

 

2. The Importance of Comprehensive Inspections:

They're essential for uncovering any hidden issues with the property. A buyer's agent will assist you in setting up inspections. Depending on the home's age and features, you may need more than a general and pest inspection. Additional inspections could include:

    • Sewer Scope
    • Roof Inspection
    • HVAC Inspection
    • Pool Inspection
    • Solar Inspection
    • Well Inspection
    • Septic Inspection
    • ...and more. 
      Ensuring all necessary inspections are conducted can save you from costly surprises down the road.
       

3. Strategic Decision-Making Post-Inspection:

  • Armed with inspection findings, the next step is crucial: deciding how to proceed. Do you request repairs, negotiate a credit at closing, request a price reduction, ask for repairs and a partial credit, or cancel the contract altogether? A buyer's agent provides invaluable guidance, helping you confidently navigate these decisions.
  • Moreover, understanding your lender's guidelines regarding credits at closing is essential. Your agent can offer insights into allowable credits, helping you negotiate terms in your best interest. 

In conclusion, buyer representation is indispensable when navigating home inspections and their timelines. With a dedicated agent, you gain peace of mind knowing that your interests are safeguarded every step. Before embarking on your home-buying journey, consider partnering with us. We'll be your trusted guides, ensuring you make informed decisions and secure the home of your dreams. As highlighted by Realtor.com, 9 out of 10 buyers seek buyer representation when purchasing their next home, recognizing the invaluable support and guidance it provides. 

 

Brad Daniels is committed to excellence, and client satisfaction is unwavering. According to feedback from our past clients, a staggering 10 out of 10 would choose us to represent them on their next purchase. This resounding vote of confidence speaks volumes about our client's trust and satisfaction with my services.

 

 

Housing...

  • The FHFA House Price Index climbed at a faster-than-expected 1.2% rate in February, reversing a 0.1% decline in January.
  • Construction spending fell unexpectedly in March, though the acute housing shortage supports continuing activity.
  • The share of ARM applications in mortgage demand rose to 7.8% last week. Purchase apps fell 2% for the week and 14% from a year ago.

Economy...

  • The Fed kept its policy rate unchanged at this week's FOMC meeting, keeping alive hopes for at least one rate cut this year.
  • Job openings fell to a 3-year low in March, and fewer people quit. Declining labor market conditions could be good for rates.
  • Consumer confidence dropped to a 21-month low in April, falling for the 3rd straight month amid concerns about the cost of food and gas.

Have a great week!!!

 

April 29, 2024

Monday Morning Real Estate Update 4-29-2024

Emerging Seller Advantages:

Positive Shifts in Key Sub-Market Trends

We are starting to see few signs of improvement in the market for sellers, at least in certain sub-markets.

 

The average change in Cromford® Market Index (CMI)* over the past month is +1.4%, up from +1.1% last week and continuing a trend that started three weeks ago.

 

Ten cities have increased CMI over the past month, while seven have declined. This is also better than last week.

 

Goodyear and Paradise Valley are the biggest moves in favor of sellers, followed by Chandler. Queen Creek, Cave Creek, and Maricopa are the primary locations moving in favor of buyers. Buckeye remains adrift at the bottom of the table, while Chandler is still way out in front at the top. Queen Creek is now well below 80, while Maricopa has joined Buckeye below the 70 level. Buyers have strong negotiating power at these three locations. Ten out of 17 cities are seller's markets. Two cities are balanced, while five are buyer's markets. Paradise Valley looks set to become a seller's market by next week. It is much easier to create new supply in the outlying areas, but as we move towards the valley's center, supply gets tighter, and the market increasingly favors sellers.

 

*Cromford Market Index™ provides a short-term forecast for the balance of the market. It is derived from the pending, active, and sold listings trends compared with historical data over the previous four years. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market.

 

 

Understanding How Inquiries

Affect Your Credit Score

 

Understanding the impact of inquiries is crucial when managing your credit. Each time you apply for credit, whether a credit card, a car loan, or a mortgage, the lender requests your credit report from one or more of the three major credit bureaus—Experian, Equifax, and TransUnion. This request is recorded as an "inquiry" on your credit report. It's essential to know how these inquiries can affect your credit score and what constitutes an excessive number of inquiries.

 

Types of Inquiries

There are two main types of inquiries: hard inquiries and soft inquiries. Hard inquiries occur when a financial institution checks your credit report as part of a lending decision. These are common when you apply for a mortgage, a car loan, or a credit card. On the other hand, soft inquiries happen when your credit is checked for non-lending purposes, such as when you check your credit score or when a company pre-approves you for a credit offer without your initiation. Soft inquiries do not affect your credit score.

 

Impact of Hard Inquiries on Your Credit Score

Hard inquiries can lower your credit score slightly, typically by a few points. However, the impact is usually minor unless you have a concise credit history or few accounts. The rationale is that seeking new credit can represent greater credit risk. However, the impact of hard inquiries fades over time. They only affect your credit score for 12 months and will stay on your credit report for up to two years.

 

Excessive Inquiries and Their Consequences

Having excessive hard inquiries in a short period can be problematic. This might signal to lenders that you are desperately seeking credit or trying to take on more debt than you can handle. This perception can make it more difficult for you to obtain credit, especially if many inquiries are made within a short timeframe.

 

Rate Shopping: A Special Consideration

It's important to note that not all inquiries are treated equally. For instance, when shopping for the best mortgage, car loan, or student loan rates, multiple inquiries for the same type of loan within a short period (typically 14 to 45 days) are usually treated as a single inquiry. This consolidation is designed to allow you to shop around for the best rates without worrying about the impact of multiple hard inquiries on your credit score. The specific time frame can vary depending on the scoring model used, but FICO models usually have a 45-day window, while some newer models use 14 days.

 

Recommendations for Managing Inquiries

  1. Limit Applications: Only apply for new credit when necessary.
  2. Rate Shopping: When shopping for loans, try to do so within a designated short period to minimize the impact of hard inquiries.
  3. Monitor Your Credit: Regularly check your credit reports to understand how inquiries affect your credit score. Through the official AnnualCreditReport.com website, you can request a free credit report annually from each of the three major credit bureaus.
  4. Pre-Qualification: Consider seeking pre-qualification options, which generally result in a soft inquiry that won't affect your credit score.

Conclusion

 

While inquiries can influence your credit score, their impact should not deter you from seeking credit when needed. By understanding the different types of inquiries and how they affect your credit score, you can make more informed decisions about when and how to apply for credit. Remember, managing your credit responsibly over time is the key to maintaining a strong credit score.

 

 

 

 

 

 

 

 

 

Securing Your Investment:

The Crucial Role of Real Estate Agents

in Protecting Earnest Money

 

Navigating real estate transactions requires a deep understanding of complex purchase contracts and timelines, particularly when it concerns earnest money—a significant and sensitive part of buying a home. Here are a few critical reasons a knowledgeable real estate agent is crucial:

 

  • Mastery of Contract Details: A skilled agent comprehends all aspects of purchase contracts, ensuring terms are clear and beneficial. They help manage negotiations and meet contractual obligations, protecting their client's interests. 
  • Timely Management of Deadlines: Real estate deals are governed by strict timelines. A proficient agent ensures that key deadlines, such as those for inspections and mortgage approvals, are met to secure the deal and safeguard the earnest money. 
  • Earnest Money Protection: The loss of earnest money can be financially devastating. Just last week, a situation unfolded where an agent representing a buyer has put $50,000 of earnest money at risk. The AZ Purchase contract stipulated that the buyer must have final loan approval three days before the close of escrow, which is set for today. Unfortunately, final approval was not obtained on Friday, and a cure notice was issued on Saturday, giving the buyer until tomorrow to remedy the default. The buyer now needs an appraisal, making it impossible to meet the Tuesday deadline. A vigilant agent would have secured an addendum to extend the closing date, allowing more time for final loan approval, or canceled the contract on Friday to protect the earnest money.

 

Choosing the Right Agent

 

Selecting an agent should be based on their knowledge of local market dynamics, understanding of real estate contract law, and a proven track record. The right agent is a facilitator and a crucial protector of your financial and legal interests in real estate transactions.

 

In essence, the expertise of a real estate agent is critical in managing the complexities of purchase contracts and timelines, ensuring every financial aspect, like earnest money, is meticulously handled. In the intricate world of real estate, a seasoned professional is beneficial and essential.

 

Valley Weather

 

 

 

April 22, 2024

Monday Morning Real Estate Update 4-22-24

Unlocking Market Insights:

Navigating Inflation and Real Estate Trends in Greater Phoenix.

 

 

For Buyers: Understanding Inflation and Homeownership

Inflation remains a crucial topic of discussion, especially among investors exploring strategies to hedge against it. Traditional options include gold, commodities, and even cryptocurrency. However, for many young adults, transitioning from renting to owning a home is the gateway to mitigating inflation. Why is this significant? The Consumer Price Index (CPI), a primary measure of inflation, heavily weighs shelter costs at 36%, focusing specifically on rental costs.

Interestingly, the CPI does not consider the purchase price of homes. This exclusion is pivotal because owning a home (whether through cash purchase or a fixed mortgage) stabilizes one of life's significant expenses. As of June 2022, the CPI noted a 5.4% increase; however, excluding shelter costs, this rise is a mere 2.1%. For homeowners, particularly in Maricopa County, where 64% of households own residences, this represents a substantially lower inflation rate than renters.

 

 

For Sellers: Navigating a Shifting Market

It’s the peak Spring buying season in Greater Phoenix, although it may not feel like it for some sellers. The housing market has begun to drift towards another balanced state over the past four weeks, resulting from an accumulation of supply as demand remains weak. Listings under contract are only down 6% compared to last year, but active listings are up 26%. Days before an accepted contract would generally be three weeks at this time of year, but current conditions add an extra week for sellers.

Word on the street is that resale homes needing to be remodeled or updated are sitting a bit longer as builders ramp up permits for new homes. Single-family permit activity is up 125% year over year for January and February, and new home sales are up 16%, surpassing 2021 (the previous 10-year high mark). The competition isn’t just for the sub $500K market either. Luxury new home sales over $3M are up 79% this year and up 28% between $1M-$3M.

 

The struggle for resale listings that need paint, carpet, or significant changes is that fewer traditional buyers can finance a remodeling project with current rates, or they may not be able to visualize the space any other way, or they may think the cost and time for basic renovations is more significant than it is. As far as investor purchases go, wholesale offers will get uglier with increased holding costs, stagnating monthly appreciation, and smaller returns. Flip sales are down 74% from 2 years ago and at a level comparable to 2015.

 

Whether it’s getting quotes for work, renditions to help with visualization, or advising the seller on the most critical updates to make before listing, it’s markets like this where professional representation and feedback make a difference for both sellers and buyers. Despite current challenges, sellers are averaging 97.8% of their last list price at the close of escrow so far this month. Seller-paid closing-cost assistance is down 2% to 44% of sales, and the median sales price increased to $444,900, up 6% from last year.

 

 

*Cromford Market Index™ is a value that provides a short-term forecast for the balance of the market. It is derived from the past four years pending, active, and sold listings trends compared with historical data. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market

 

Making an Offer on Your Dream Home

 

Ready to make an offer on your dream home? This pivotal step requires strategy and careful planning to ensure success. Here’s how you can position your offer to stand out. 

1. Be Flexible with Your Offer: Flexibility can be crucial in a competitive market. Consider aspects like closing times or waiving certain contingencies if you're comfortable, and it’s safe to do so.

2. Do Your Homework: Understand the local market trends in Maricopa and Pima counties. I can provide insights into recent sales and current listings to help you make an informed offer.

3. Get Pre-approved: This step helps speed up the buying process and strengthens your offer, showing sellers that you are serious and financially ready.

4. Work with a Professional: As your real estate agent, I am here to guide you through each step and ensure that every decision is based on solid data and market analysis.

5. Be Logical, Not Emotional: Getting attached is easy when you find your dream home. However, making decisions based on emotions can lead to complications. We’ll focus on making a logical, well-considered offer.

6. Make a Serious Offer: Your offer should reflect the home's value and your readiness to proceed. A strong, serious offer goes a long way in showing your commitment to the process.

 

With these strategies, we’ll enhance your chances of success. Let’s navigate this exciting journey together and turn your dream into an address!

 

Feel free to reach out if you’re ready to take the next step or have any questions. Together, we can navigate this exciting journey.

 

7-Day Weather Forcast

 

Go D-Backs!!!

 

 

Go Suns!

 

 

Have a great week

April 15, 2024

Monday Morning Real Estate Update 4-15-2024

 

2024 Housing Trends: Navigating the Rising Supply and Shifting Dynamics in Phoenix's Real Estate Market

 

 

The average change in the Cromford Market Index (CMI) over the past month is +0.3%, up from zero last week. The picture is remarkably mixed, with some locations improving sharply for sellers over the last months and others deteriorating badly.

 

Ten cities have shown an increase in their Cromford® Market Index over the past month, while seven have declined—the same as last week.

For sellers, the biggest moves are Tempe, Goodyear, and Paradise Valley, followed by Avondale and Scottsdale. On the other hand, Fountain Hills, Queen Creek, Cave Creek, and Buckeye are the primary locations moving in favor of buyers, with Peoria just behind. This information is tailored to your specific interests as real estate professionals, investors, and potential homebuyers in Phoenix.

 

Ten out of 17 cities are seller's markets, three are balanced, and four are buyer's markets. This mix is unchanged from last week.

 

*Cromford Market Index™ provides a short-term forecast for the balance of the market. It is derived from the past four years' pending, active, and sold listings trends compared with historical data. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market.

 

 

 

It’s getting hot!!!