No one could of imagined that during a world-wide pandemic our housing market would turn white-hot but that’s exactly what happened. Let’s begin with home prices. Historically, home prices rise during our home selling season, February through May, and then taper off the second half of the year. We’ve only seen three times in our history where the change in the median sales price was greater the second half of the year than the first. This occurred in 2009 with the federal first-time homebuyer tax credit, in 2011 when the market made a strong move upward after having been pushed to the bottom in the aftermath of the housing bubble, and again in 2020 as we emerged from the COVID recession. We saw the median sales price rise 9.18% in the last half of 2020 followed by a 20.09% increase in the first half of this year. The increase in the median sales price for the first half of 2021 was the third highest in our history, eclipsed only by 2005 and 2012. In 2005 the bubble was forming due to lax lending requirements, in 2012 we were seeing the market bounce from its 2011 bottom.

The run up in sales prices has been fueled by a scarcity of for-sale homes, historically low interest rates and a major shortage of housing supply relative to our growing population. A major contributing factor, from 2010-2019 was that we had the lowest amount of homes built than in any decade since the 1960’s. Supply hit its low water mark in March of this year and has gradually improved over the last four months; however, our inventory is still 22% lower than last year at this time. What’s the end result? Multiple offers and bidding wars. Beginning in February of this year, both the median sales price and the average sales price exceeded the asking price. Those numbers peaked in June and now we are seeing those numbers decline signaling a new trend as high prices are likely deterring increasing numbers of prospective buyers, especially first time and low-income buyers. The current average sales price is $507,938.

Over the last decade we’ve seen lower sales volume in the second half of the year compared to the first half and we’ve seen the median sales price wobble between July and December. As mentioned, neither of these things occurred last year. Most experts in the industry expect the 2nd half of 2021 to return to more “normal” and price increases to slow with lower year over year sales volume.

If you have any questions or want to find out more about your local market please contact me at [email protected] or 602.818.0533. Referrals are also GREATLY appreciated.

The housing market in Phoenix is having an extraordinary start in 2021. It is difficult to avoid hearing or reading about it. The tremendous growth in value of homes is nationwide, but in February, Phoenix was ranked number one for growth in value.  Here is a breakdown of the first quarter and what many expect to happen next, as monthly appreciation levels have hit recent record highs and year-over-year growth is higher than any time since 2006.

The two key factors for the sudden drive up in values across America are that interest rates have been extremely low and inventory (houses for sale) have also been extremely low. Those two things have caused homes to move quickly, often well above list price due to bidding wars then selling for more than over the appraised value. In the first quarter nationwide, homes typically stayed on the market for 18 days before a seller had an accepted offer — that’s eight days less than the first quarter of last year. In Phoenix, for-sale inventory declined in February by 25% over the same month a year ago setting a record low. Annual (year-to-date) home value appreciation has averaged 11% across the valley but as high as 18% in some areas!

Some wonder – are we in another bubble? Most experts in the industry would say, no, but we should expect to see the market normalize when inventory increases, which some believe could happen soon. While demand for homes should remain strong, we should see more homes come onto the market due to the mortgage and eviction forbearance expirations (now set for June 30, 2021) and simply because people who were not thinking of selling are doing so now because of the recent spike in value.

In times like these, it is imperative to choose a realtor who is well-experienced and exceptionally well-informed to help navigate the home buying and/or selling process. Please give me a call or text me today at 602.818.0533.

At the beginning of each year, I summarize what leading experts are saying about the greater Phoenix residential real estate market and where they believe it is headed over the next 12 months. Experts unanimously agree; the outlook for 2021… is good!

Home values are expected to continue to rise in Phoenix, Scottsdale, and surrounding areas. According to Zillow, Phoenix home values have gone up 12.6% and are expected to rise by another 8.5% in 2021. Further, ASU’s W. P. Carey School of Business predicts the Valley’s home sales volume will increase 11.4% in 2021 from 2020. In fact, there is not one reputable source that suggests 2021 will be a year where we see the residential real estate market cycle (dip) in either value or volume. The housing Market Recovery Index from Realtor.com pointed out that the Phoenix metro area is coming back from the unavoidable decline in the early part of last year when the pandemic was declared. Phoenix is now ranked by many sources as a city with one of the largest expected increases among the top 100 metro areas in the United States and ranking it one of the hottest housing markets in the nation for 2021! One large factor driving these forecasts is that the population growth has, and is expected to, continue to out-pace homes available for sale – meaning demand is exceeding supply.

One factor that could eventually slow or apply pressure to the market is affordability. Undoubtedly, this year’s record-low interest rates were a contributing factor in the real estate market, and they continue to help boost sales volume. However, lenders may require higher credit scores if there are any upcoming economic uncertainties. Also, the Mortgage Bankers Association predicts that interest rates will creep up to 3.3% by December 2021. More stringent lending requirements, coupled with slightly higher rates, could have an impact on affordability.

But all-in-all, things are looking good for greater Phoenix in the new year ahead. Of course, having an experienced realtor makes all the difference in this competitive marketplace. If you are looking to purchase a home this year allow me to help you find and secure the right property for you. Further, hiring a professional to sell your home, who knows the latest numbers and consumer trends, is incredibly important to yield you the most return on your investment. I am always available to text or talk at 602.818.0533.

Ask your real estate agent to see if they can find out about the seller’s real wants and needs so you can position an offer accordingly. If you can accommodate relatively simple asks – such as their wish to keep their appliances or not replace the 15-year-old carpet or have a specific close of escrow date – your offer becomes much more attractive. Working these accommodations into the offer to give the seller more of what they want can help you win you the deal.

Real estate investors know this trick, and it’s one that home buyers can also use to their benefit if you can afford it. A cash offer eliminates the need for an appraisal and bank approval for a loan, contingencies most home buyers are required to include in an offer. A cash offer shows the seller you are serious about the house and ready to buy it today.

If you have room in your budget to increase your offer, ask your real estate agent for guidance about an appropriate amount for your counteroffer. Remember, this new, higher amount will increase your mortgage payments for the term of the loan. Be careful to keep your counter offer within your budget. 

Most of the time, real estate agents will tell you not to remove contingencies, but this tactic can possibly help you beat out another offer. Contingencies protect you from issues involving the home’s structure, systems, and safety likely to be identified during a home inspection, as well as discrepancies in value that affect your mortgage terms. If you want to come out on top in a bidding war, you should eliminate as many contingencies as possible. However, the more contingencies you eliminate effectively takes risk off the home seller (which is why it’s attractive to them) and puts it instead on you, the home buyer.

Another tip in the offer arsenal is to include an escalation clause to tell the seller how much you are willing to raise your offer if competing bids come in. The escalation clause would set a cut-off price that you won’t exceed. Real estate agents don’t typically recommend this, since it tips your hand for future negotiation, but it can help you cut to the chase in an extremely competitive market. 

An experienced, reputable agent like myself can help you gain the upper hand as you navigate a bidding war. An agent with a track record of helping other home buyers win bidding wars can be your best offense. My real estate background almost extends 20 years experience, which enables me to understand all the angles, and it can help you consider options that will be win-win. 

Flexibility around specific details in a real estate deal is nearly as good as coming to the table with cash. If you don’t need to move by a specific date or can give the seller more time to fix repairs, being flexible on a closing date can be as attractive to the seller as a higher offer. It can especially work in your favor if the competing offers come in with hard deadlines. 

If the bidding war heats up and you can’t increase your offer amount, perhaps you can increase your down payment or the amount you put down in earnest money. This shows the seller you are very serious, and your lender will not need to approve you for a higher loan amount. This tactic can put you ahead of other home buyers who may appear less serious about buying the home.

There are times when your sincere expression of how much you appreciate the house, and how you can see you and your family living there happily for many years can tip the scales with the seller. In a bidding war, when you can genuinely align with the seller’s feelings and even their family history living in the home, a personal real estate offer letter could earn you enough goodwill to move you to the front of the pack.

While the pandemic certainly has changed how we live our daily lives, it is interesting to see how it has affected the residential housing market. There has been an increase in demand for home ownership. There has also been a surge in re-financing (REFIS), renovation loans and home improvement projects which are often done together – so the project can be paid off and you can get reimbursed for the costs, plus some.

As you can expect, this is all happening because of low interest rates – the lowest in American history. Since the shelter-in-place orders have been lifted, home sales activity spiked sharply. Recorded home sales increased 44% in May compared to April. As an example of how the home improvement and renovation of residential properties has gone, Lowe’s sales increased by 12.3% in the first quarter of 2020. Since many sellers removed their homes for sale during the shelter-in-place orders and are still hesitant to have potential buyers going through their homes, inventory (homes for sale) is even lower than it was before the pandemic. In June, the number of homes listed for sale was down 38.6% from June 2019! This has caused bidding wars on homes and values to increase from January through June 2020, with the largest swing happening in the latter part of the months and into July.

If you are looking to buy a home, you absolutely need a full-time realtor. You also need someone to construct your offers in an appealing way so that you stand out to the seller. I am here to help and can provide the experience and personal protection equipment needed for the process. If you ware wanting to sell your house, I can help you do it in the safest and quickest way possible by creating a customized sales strategy just for you. If you are wanting to complete a residential renovation, I can also steer you in the right direction with that as well, including funding and getting a return on your investment.

Please send me an e-mail or call or text me at 602.818.0533. Stay safe and healthy!