The later part of this summer has shown an increase in demand for real estate in the greater Phoenix area! The absorption rate, inventory and days on market has trended downward to early 2018 levels when the market was red hot. Demand has been fueled by outrageously low interest rates and they won’t be going away anytime soon. The Federal Reserve recently decided to cut interest rates by 25 basis points. In this update I want to focus on that – the low interest rates and the opportunities they present whether you are buying a home, or not.

Obviously, if you are buying a home low rates make it more affordable and you can get “more house” for your money. A 30-year fixed mortgage rate is now just 0.5% higher from the all-time low it reached in 2012! This is good for Arizonans because the median price index for a home in recent years outpaced wage growth – so affordability is easing.

For those who already own a home and don’t plan on moving anytime soon, this may be a good time to refinance to lower your payment, especially if you are paying private mortgage insurance (PMI). You may be in the position to eliminate PMI since values have increased in the last few years which shifts your loan to value (LTV). Refinancingalso allows you to add more cash/equity into the home or the opposite – get cash out.Today’s low interest rates make it sensible to liquidate a portion of your home’s equity for things like home improvements that increase the value of your home, paying off bad debt or as leverage to purchase an investment property.Besides refinancing, you may consider second mortgages or home equity lines of credit (HELOCs). I personally refinanced an investment property and received a 4% investor rate! I am also in the process of obtaining a HELOC on another property to have on stand-by for future projects. 

Feel free to contact me about anything real estate related. I have been involved with almost every aspect of realty for almost 20 years and have “skin in the game,” which is a little different than a realtor who simply buys or sells homes for others.  If I can’t answer your questions, I know someone who can.

Hopefully your summer is off to a good start and you have an exciting trip or two planned to escape the summer heat.  While temperatures are rising, this is typically the time when our local real estate market cools off; however, this summer is likely to be a bit busier than usual for the metro-Phoenix market.

While we thought there would be consistency in the increase of mortgage rates at the beginning of 2019, we saw two large dips in the 10 Year Treasury Yield in Quarters 1 and 2 causing mortgage rates to plummet back to where they were in 2017!  This, along with the consumer sentiment index being at its highest in 15 years, has created more demand for buying a home.  As I’ve mentioned in earlier updates, the new tax laws that went into effect this year makes Arizona very desirable for real estate investors, not to mention Arizona was ranked 5^th in the United States for the fastest growth in rental rates in 2018.  It is no wonder 17% of all current pre-qualified home buyers are looking for an investment property versus primary residence.

If an investment property or a new personal residence is something you are considering, now is the time to buy before interest rates start rising again – they can’t get much lower!  If you by chance also need to sell a home, you might find this time to be the perfect storm, because while interest rates have gone down property values have gone up. You might be able to make a substantial upgrade. Please give me a call. I would be happy to provide a free, accurate assessment of your home’s value or talk to you more about the advantages today holds for purchasing a new home or investment property.

Is a first-time home purchase a new year’s resolution for you in 2019?  If so, now would be a great time to do it, here are some reasons why.

Purchasing a home is likely the biggest investment someone will make in their life, which could also create fear and anxiety.  Don’t let it!  While home ownership may seem a bit scary, buying a home is a smart thing to do for your financial future and it should be an exciting time. 

According to a recent Trulia report, “buying is cheaper than renting in 100 of the largest metro areas by an average of 38%,” with Phoenix, AZ being one of them.  In addition, it is a wise investment for a person’s financial future.  Here are some reasons why. First, mortgage payments can be fixed while rents usually only go up. If that doesn’t calm the nerves, maybe this will… if you ever run into a financial crisis, you can be late on a mortgage payment, or two.  You can’t be late on your rent – you’ll be evicted.  Second, equity in your home can be a financial resource for your future.  Whether it be for a college education, retirement or simply savings, the money you put into your home eventually comes back to you or can be leveraged while you live there in the form of a home equity loan.  In the end, facing a financial crisis becomes less and less likely in your lifetime.  Further, when you do sell your home, you can build a substantial amount of wealth without paying capital gains.  If you own a home as your personal residence for two years or more you can sell it and take any gains – TAX FREE!

Even if the home you chose hasn’t appreciated very much during the time you’ve owned it, a mortgage acts as a forced savings account. With every payment you make a portion of it goes towards the principal balance of the home.  Once you sell the home you get all of the money you put into it, back.  You don’t get any of your money back when paying rent, which is why it is often referred to as “one-way money.” In a survey done by Ralph McLaughlin, Trulia’s Chief Economist, he found a typical homeowner’s net worth was $195,400, while a renter’s was $5,400. 

In addition to the financial benefits, home ownership improves your quality of life. You decide when to move and what you can or cannot do, within reason, especially if you do not have an HOA. It’s no wonder academic studies have shown that homeowners are healthier and happier! This result arises from a better sense of self-control and self-worth among homeowners versus people who rent.  It’s no wonder in a recent survey found that 87% of people said owning a home is part of their American dream.

Let me help owning a home become a reality.  Call me to start the conversation about your new year’s resolution and fulfilling the American dream of home ownership!

With the new year just beginning, here are some real estate predictions for 2019 that several industry experts agree on. Hopefully you will find this information interesting and beneficial.

Affordability Should Remain the Same
In 2019 interest rates for mortgages are expected to continue to rise, just not as much as they did this year. In 2018 mortgage rates went up roughly 1.25% and have hit a 7-year high. Due to the increasing interest rates, it may seem logical to conclude that buyers will be able to afford “less house;” however, we are seeing more price reductions on homes listed for sale, and in certain sub-markets of the greater Phoenix area, a decrease in overall home values. Additionally, The Federal Housing Finance Agency (FHFA) recently announced the 2019 maximum conforming loan limit on Conventional loans for single family homes will be $484,350, an increase from $453,100 in 2018. So, anyone looking to buy a home soon shouldn’t panic. With these combined factors the affordability one has today should remain relatively the same over the next 12 months.

The Sellers’ Market Will Be Only Luke Warm
Recently, in the greater Phoenix area, we had a red-hot sellers’ market, especially in the downtown area where certain subdivisions, mostly historic homes, realized a 15% spike in appreciation while Phoenix as a whole was closer to 9%. This was caused by low levels of supply and a spike in demand – buyers looking to purchase a home before the interest rates started rising. The most recent data shows the number of buyers entering into the market is now tapering off and the median sales price of a home in the greater Phoenix area has leveled off at an uncomfortable (for Phoenicians) $259,000 – that’s almost a 20% increase over 2017’s year-end figure. As mentioned early, price reductions are quite common now because buyers are pushing back on price and they are also demanding quality. Almost 35% of the homes on the market right now have had at least one price reduction and only the homes in pristine condition are moving quickly, at full price, without concessions. The low inventory of homes for sale we’ve had is expected to remain the same, low, as we move into the new year. The red-hot market is over and “luke-warm” is probably a better descriptor. While some sub-markets may still see an increase in value, the additional increase in 2019 for Phoenix overall will be modest, some estimate 2.5%, at best. That said, if you are selling a home in 2019 it’s not a bad time; however, investing in the property’s condition before listing may be necessary, as well as choosing an experienced, full-time realtor who will invest enough marketing dollars to sell the home.

If buying or selling real estate is on the horizons for the new year for you or someone you know, I am here to help. Happy New Year!