July 2018 Market Report – Cost of Waiting to Buy Means Less Closet Space or Higher Payment

 

Cost of Waiting to Buy Means Less Closet Space or Higher Payment
More New Homes Sell in Low $200’s This Year

For Buyers:
Hearing cries for more affordable housing supply, developers have sold more new homes in the low $200’s this year; selling 35% more than they did last year within the same time frame. However, the under $200,000 market remains neglected for additional supply.  As of May 2018, only 6% of new homes sold were under $200,000, 37% were between $200,000 and $300,000 and 41% were between $300,000 and $500,000. This means that properties under $200,000 will continue to appreciate faster than any other price point and homes sold in this price range are only getting smaller.  The annual average home size sold between $100K -$200K, new and resale combined, is currently 1,390sf compared to 1,454sf last year.  That’s a loss of 64sf and roughly the size of a couple of closets.  Since 2014, the annual average home size sold has consistently hovered around 1,975sf.  Those buyers who didn’t want to sacrifice living space paid an average of $22,000 more for a 1,975sf home in the past year.

For Sellers:
Greater Phoenix is officially in the seasonal summer slowdown and contracts in escrow are expected to continue declining overall until the end of the year.  The peak of the market for contract activity usually hits at the end of April, as it did both this year and last year.  So far levels have dropped 17% from the peak, which is closely following last year’s drop of 18% between April and July.  If the 2018 market follows last year and previous years, we can expect contracts in escrow to drop about 4% per month until the end of the year.  This would be considered perfectly normal, anything more could indicate a non-seasonal drop in demand.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2018 Cromford Associates LLC and Tamboer Consulting LLC


Posted on July 9, 2018 at 3:26 pm
Eric Karlene | Posted in Market Updates - Cromford Reports | Tagged , , , , , , , , , , , , ,

4 Reasons to Sell this Summer


Posted on June 26, 2018 at 5:02 pm
Eric Karlene | Posted in Info | Tagged , , , , , , , ,

Dollar Per SQFT Rant

The reality of “Price per Square Foot”…

  • It has become common lingo among many agents, title reps, and marketing firms.
  • The stat itself, does not tell the whole story of the property value
  • It easily becomes a “debatable” statistic that prevents a great “selling conversation”
  • Typically, agents who are not skilled in pricing have a greater tendency to use this formula.

Where Price per Square Foot is great:

  • Construction purposes
  • Commercial real estate, where emotion is less influential
  • The words “price per square foot” does not mean the same as “value”

Posted on June 21, 2018 at 11:08 pm
Eric Karlene | Posted in Info |

Is Greater Phoenix “Overvalued”?

Is Greater Phoenix “Overvalued”?
Mortgage Payments Are Lower Than They Were 13 Years Ago

For Buyers:
Interest rates have been increasing along with the inflation rate as of late, which has spawned a string of headlines about affordability. While the rate hike has knocked some buyers out of the market without a doubt, general affordability hasn’t taken a big hit yet.  According to the National Association of Home Builders and Wells Fargo, buyers making the median family income could still afford 65% of what sold in the Valley last quarter.  A measure between 60-75% is considered normal.

Let’s look at the historical cost of a 1,900sf home in Greater Phoenix, for example.  In March 2005, a home that size would run $281K on average.  Today that same home would be $309K, $28,000 more (+10%).  However, the interest rate back then was 5.9% compared to 4.5% today, meaning that the principal and interest payment has dropped nearly $100 from where it was 13 years ago for the same home.  At the same time, the median family income rose from $58K to $69K according to HUD (+19%).  Which is why despite recent increases in interest rates, the affordability of real estate in the Valley is still considered very good.

For Sellers:
Last April CoreLogic released a report ranking the Greater Phoenix area as “overvalued”. In fact, they placed 37% of our nation’s top 100 metropolitan areas in that category.  As of May, after 6 years of higher-than-normal appreciation rates, the monthly average sales price per square foot has finally reached its place along the long-term 3% appreciation line established between 2000-2003 before the 2005 bubble and 2008 crash.  Meaning that if we had fallen asleep in 2003, and the last 15 years were just a long horrible dream, we would have woken up today and not known anything had happened.  Prices are where they would have been had the market followed the average long-term rate of inflation.  That brings to light that current appreciation rates of 6% or more are no longer sustainable in the long term.  However that doesn’t mean that prices will “peak” or “crash” anytime soon.  Most likely as demand slowly wanes, prices will go flat and hang out until they once again fall in line with the rate of inflation, but don’t expect that to happen in 2018.  Supply and demand measures today indicate another 3-6 months of positive appreciation for the majority of homes priced below $400K.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2018 Cromford Associates LLC and Tamboer Consulting LLC


Posted on June 14, 2018 at 4:49 am
Eric Karlene | Posted in Market Updates - Cromford Reports | Tagged , , , , , , ,

When is the Phoenix Housing Market Going to Slow Down?

 

  • Even though median prices are within 98% of the peak, the fact that interest rates are so much lower today means that homes are still affordable.
  • The median family income has risen $11,000 since 2005, indication there is room for families to bear the increase in price.
  • Despite appreciation rates higher than the rate of inflation over the past 7 years, families making the median income could afford 65% of what sold in Greater Phoenix last quarter.
  • Overall Greater Phoenix home prices have finally reached where they are supposed to be historically and it’s expected to continue rising through the end of 2018.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2018 Cromford Associates LLC and Tamboer Consulting LLC

 


Posted on June 8, 2018 at 4:07 am
Eric Karlene | Posted in Uncategorized | Tagged , , , , , , , , , , ,

Tempe Townhome – Coming Soon – $238,800

3 Bedrooms, 2.5 Bathrooms, 1712 SQFT, New Kitchen, Bathrooms, New Granite, New Paint, New Carpet, New Stainless Appliances.

CALL NOW FOR MORE DETAILS!

602.492.2897


Posted on May 15, 2018 at 11:18 pm
Eric Karlene | Posted in Uncategorized | Tagged

May 2018 Market Report – Good time to List Luxury Properties

Supply between $175K-$200K dropped 18% in 3 Weeks
Summer is a good time to List Luxury Properties over $500K

For Buyers:
Supply under $200K has continued to drop rapidly, but the $175K-$200K range has accelerated its decline over the past month far more dramatically than any other price range. After being consistently 30-35% below last year, the active supply level dropped a whopping 18% in a 3-week period putting the current count for this group 44% below last year. Single family homes only make up 41% of active listings under $200K, but they account for 69% of actives between $175K-$200K. As more buyers are looking to condos and townhouses for affordable housing, supply for attached homes under $200K has dropped 33% over the last year. However, condo supply between $200K-$300K has actually risen 10% while single family homes in the same price point have dropped 15%.

For Sellers:
We are officially at the peak of the market seasonally for listings in escrow. Over the next few weeks, especially as temperatures reach over 100 degrees in the Valley, expect to see a gradual decline in buyer contracts that will continue through the end of the year. This is a seasonal trend that consistently happens every year and in every price point, even the frenzy market under $200K. The one exception is the luxury market over $500K. While it’s typical to see a decline at the beginning of Summer like everyone else, escrow counts tend to drop for a couple months and then go flat until the end of the year. In fact, luxury supply drops more than buyer activity does in the Summer making it a great time to list luxury property for those willing to brave the heat between June and September.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2018 Cromford Associates LLC and Tamboer Consulting LLC


Posted on May 15, 2018 at 10:11 pm
Eric Karlene | Posted in Market Updates - Cromford Reports | Tagged , , , , , , , , , , , ,

Why are the Experts saying “BUY NOW!!!!”?

Are you trying to decide whether to buy now or wait? Well here is what’s going on in our market today. Per the chart below, Mortgage rates are climbing above a 5 year high. The experts are claiming they are going to continue to climb as well. Some say that that they are expected to peak around 6.0% which we have not seen since 2008. With the increase in home prices, this will be pushing some of the Sub $200k buyer’s out of the market for some of the most affordable homes in Phoenix Metro. These home will most likely appreciate around 5% due to the lack of inventory. It will also greatly reduce your buying power at all of the price points. So, if you are sitting on the fence in trying to decide what to you, the data may be that little extra push you need to get into the market and buy today.

 

Here is the current market trend in Dollars per Square Foot:


Posted on April 26, 2018 at 6:08 pm
Eric Karlene | Posted in Uncategorized | Tagged , ,

April 2018 – Market Update – MLS Sales Outperform non-MLS Sales in Frenzy Market

MLS Sales Outperform non-MLS Sales in Frenzy Market
Supply Under $200K Down 36% Over Last Year

For Buyers:
Greater Phoenix ended the 1st Quarter 13% lower in supply, which was not helped by a 2% decline in new listings entering the market. All price ranges are below last year’s level of supply with the exception of the $1M+ market, which is up 1.5%. On the opposite end of the spectrum, supply under $200K is down 36% from last year and all prices in between are down 10%. Buyer competition is typically at it’s strongest at this time of year and is expected to begin tapering off seasonally in May or June.

For Sellers:
Despite the highly competitive, fast appreciating environment in the $100K-$200K market, more sellers decided not to list their home on the MLS and many chose to sell to an investor instead. This is ironic considering MLS sales in that price range sell for 12% more per square foot on average compared to normal non-MLS sales, which could equate to a $12,000-$22,000 gap. Additionally, the annual average sales price per square foot rose faster for MLS sales in this range at 7.9% while non-MLS sales rose only 6.0% over the last year.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2018 Cromford Associates LLC and Tamboer Consulting LLC


Posted on April 15, 2018 at 10:18 pm
Eric Karlene | Posted in Market Updates - Cromford Reports | Tagged , , , , , ,

April 2018 Market Update – MLS Sales Outperform non-MLS Sales in Frenzy Market

MLS Sales Outperform non-MLS Sales in Frenzy Market
Supply Under $200K Down 36% Over Last Year

For Buyers:
Greater Phoenix ended the 1st Quarter 13% lower in supply, which was not helped by a 2% decline in new listings entering the market. All price ranges are below last year’s level of supply with the exception of the $1M+ market, which is up 1.5%. On the opposite end of the spectrum, supply under $200K is down 36% from last year and all prices in between are down 10%. Buyer competition is typically at it’s strongest at this time of year and is expected to begin tapering off seasonally in May or June.

For Sellers:
Despite the highly competitive, fast appreciating environment in the $100K-$200K market, more sellers decided not to list their home on the MLS and many chose to sell to an investor instead. This is ironic considering MLS sales in that price range sell for 12% more per square foot on average compared to normal non-MLS sales, which could equate to a $12,000-$22,000 gap. Additionally, the annual average sales price per square foot rose faster for MLS sales in this range at 7.9% while non-MLS sales rose only 6.0% over the last year.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2018 Cromford Associates LLC and Tamboer Consulting LLC


Posted on April 12, 2018 at 8:53 pm
Eric Karlene | Posted in Market Updates - Cromford Reports | Tagged , , , , , ,