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!
Mesa is the latest city to crack down on its short-term rental market after a push by the Arizona Legislature and rental companies to stop the rentals from being public nuisances in local communities.
"[The new ordinance] gives specific requirements for property owners and spells out the penalties for those who allow parties, parking issues, and other code violations that get out of hand,” Mayor John Giles said.
The ordinance, set to take effect on Feb. 1, outlines numerous new requirements for short-term rental owners, including:
Mesa joins other Valley cities, including Glendale, Scottsdale, and Paradise Valley, in issuing short-term rental ordinances after Gov. Doug Ducey signed a new state law in July giving cities the power to do so.
Rental companies have also instituted new policies to discourage parties from happening at their properties. Airbnb, for instance, banned 6,000 people last year for breaking the new rules. However, that didn't seem to slow bookings in the Valley.
The good news for buyers, the number of closings with seller-paid closing costs rose 27% in July compared to June, equating to 7% of all closings for the month. That may not sound like much, but that’s the highest it’s been since March 2021. Before 2020, the established baseline for seller-paid closing cost assistance averaged 25-28% of MLS sales, and over the past 15 months, the average has been just 3-4.5%. The increase is expected to continue as large cash-based investors have pulled back their acquisitions, leaving many sellers to cater to normal buyers once again.
For most of 2021 and the first part of 2022, buyers had very little time to decide on a property before it went under contract. Last May, half of all homes that went under contract were on the market for only 7 days or less. This month homes are on the market a median of 21 days before an accepted contract, giving buyers more breathing room for a second showing and less pressure to decide on the spot.
More evidence of a growing buyer’s advantage, the percentage of properties closing over list price has declined from 58% in April to 24% August-to-date and continues to decline. The median amount over list has also declined from $20,000 to $7,000. As the current balanced market continues, expect to see this measure drop to just 10%-15%, closing over list.
The last week in July saw 4,172 price reductions on Greater Phoenix listings, equating to 26% of active supply for that week. The median price reduction was $15,000, and 78% were over $5,000.
The peak of price for 2022 so far was May; since then, the median sales price has declined 6.25% from $480K to $450K. That’s an average of 2% per month* thus far; however, the downward trend has not been consistent across all price ranges, a detail not reflected in the median sale price measure. To analyze the price response by sales price range, we use the sales price per square foot. In May, the peak sales price per square foot overall was $305.99, August-to-date is $289.89, a 5.3% drop averaging 1.8% per month*. This is a similar result to the change in the median sale price, but by price range, the distribution looks like this:
The table shows that properties between $1M-$1.5M have seen the most substantial decline than any other price point since May, with an average decline of 3.2% per month. This is the only price range above the overall average decline of 1.8%. The runner-up is the $500K-$800K, with an average decline of 1.2% per month. All other price points are within 0.6% of May’s average 3 months ago as of August 9th.
The commentary was written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2022 Cromford Associates LLC and Tamboer Consulting LLC
Be sure to call if you have any questions about this report or about how the market is performing.
Would you like to know what is happening in your neighborhood?
Would you like to know the value of your home?
Do you need help deciding whether to sell or not, or would you like to know if now is the right time to buy?
I would be very happy to get you that information.
I have a bunch of economic news on the docket this week.
Case Shiller and FHFA’s announcements on home appreciation both come out on Tuesday, 7/26. The Case Shiller data was released as I was writing this update.
In May, Homes appreciated 19.7% Year Over Year compared to 20.6% for April.
On Wednesday, we will have the FED policy announcement. The markets usually know what is going to happen before the announcement, and it’s been leaked that the FED will raise the Federal Funds rate by .75%. I don’t expect this to have major movement on the market outside of the FED commentary, as this is the number most were expecting.
On Thursday, Quarter 2 GDP will be released, and experts are predicting Gross Domestic Product shrinking 1.6%. This will be two quarters in a row of negative GDP. While not technically the definition of a Recession, there have never been two quarters in a row with negative GDP that hasn’t eventually been ruled a Recession. I expect the National Bureau of Economics to designate the U.S. in a Recession by the end of 2022.
HOW TO GET INTO A HOME WITH $0 DOWN
For 1.5 years, buyers that wanted to finance with a Down Payment Assistance Loan, FHA Loan, or VA Loan were almost always passed by for cash or conventional financing.
These are the buyers that should look to take advantage of the current housing market.
Let’s discuss Down Payment Assistance for a moment. Number one, it’s a common misconception that you have to be a first-time homebuyer to qualify. This is not true for most programs nationally.
Down Payment Assistance is typically structured as a first mortgage at 95 to 97% of the home purchase price. We then bridge the 3 to 5% down payment gap with a silent or payback 2nd mortgage.
If a customer used a 5% down payment assistance 2nd – they would still have to come to the table with funds of around $3,000 to $4,000 to account for closing costs and prepaids
With Seller Concessions common right now, we can structure the concessions to pay for all costs and prepaids getting the client into a home for $0 down. This means that a client can often get their earnest money back at closing, and the only costs they pay for are inspections.
These are the clients that should take advantage of the current market.
There are a lot of buyers that qualify with credit/income but don’t have the down payment. Please reach out if we can help you or your clients get into a home with $0 down.
I realize that not all my readers are in Maricopa County, but we like to share this as Maricopa County, AZ, has historically led housing trends that eventually moved across the U.S.
The I-Buyer statistics are quite eye-popping at the moment.
Currently, Open Door has 1,682 active listings and 9.6% of the whole market’s supply.
The under-contract stats are only 1.7%.
The Cromford Report estimates that Open Door still has over 400 homes not yet listed.
The expectation is that I-buyers will likely slow their buying to avoid adding more homes to
their large inventory.
In Maricopa County, there are currently 13,674 homes available for sale. Of the 13,674, approximately 51% of those homes are currently vacant.
Brad Daniels, REALTOR®. Hague Partners / 72SOLD. Get 12% more for your home.