Many of you have been following our “How’s the Market?” monthly reports that detail pertinent numbers for the West Valley cities, but I am hoping to enlighten you with even more… “Whats up with this Market!?!” Looking at the numbers doesn’t always tell you what the market is actually experiencing. There is still a “Market of the Moment” and that is something active real estate agents experience by following the patterns in their own experiences and transactions and masterminding with other agents and lenders to figure out these patterns.
So thats exactly what I have been doing, not just following but feeling the market and seeing what other agents are feeling as well. So here are the top 5 things we are experiencing and things you should know if you are thinking of buying or selling.
First lets recap the number trends for the year in the West Valley. One of the most pertinent numbers we look at is the Months of Inventory. This number indicates supply, real estate is still a commodity so supply and demand still have a tremendous effect on the values. Lower supply, greater demand, drives values in a positive direction. Maricopa County has been in extremely low supply of homes on the market. We have held steady with low inventory all year, some cities much lower than others. Now this isn’t because buyers are not buying of sellers are not listing, the past few months, the number remains steadily low, because we seem to sell nearly the same amount of homes each month that were newly listed, while others sit on the market increasing the average days on market.
So that leads me to our first trend we are seeing with the Home Buyers in the market. First of all, there has been a phrase coined by the Lending institutions “Boomer-rang Buyer.” These are the homeowners that lost homes during the real estate market BUST. Many people lost homes either to foreclosure or short sale, and those folks are now through their waiting period and back in the looking for homes. Realty Tract estimates nearly 3.5 million Americans will be eligibles to buy over the next 3 years and we are seeing our fair share in the market already. My best description of this buyer is “Once bitten, twice shy,” they are not willing to over pay, get into a bidding war or willing to settle for less. Therefore, they will wait, and wait and wait, until the right house, at the right price becomes available. So we are not seeing bidding wars like we did in 2003-2006, its just not happening. We are seeing Multiple offers, yes, but 10, 15, 20,0000 over asking price, not happening. This is also due to stricter regulations on the appraisal industry. Government guidelines put in place have help to suppress property values from sky-rocketing, instead we are maintaining steady increasing home values that fall in line with the economy, job wages and affordability, creating stability for the Market and securing the American Dream of Home ownership.
To further back the above mentioned, is the first time home buyer. We have lots of loan programs, grant money and affordable financing programs available for first time home buyers. We are seeing a lot of first time home buyers. Perhaps not as many as we could use, we will discuss this later, but the typical first time home buyer in todays market, was greatly impacting by the real estate housing crash too. They either saw their parents loose their home, someone in their family or an immediate friend. They are very aware of the repercussions of paying too much for a home and to me, they are some of the most conservative first time home buyers we have ever seen enter the market. They seem to stick more to a budget of that feel the are comfortable paying even though the lender may have qualified them for more.
Next trend we see is what I call the “contingency train,” which is where a sale of a home is contingent upon the sale of that buyers home. This is very common in todays market. In fact, just on our team this month we saw this contingency train go 3-4 houses deep. Which was why I said we need first time home buyers in the market place more than ever. We are currently working a transaction that depicts the real estate cycle of life beautifully. First time home buyer purchases a 1400sq ft home using county Bond program for down payment assistance. Those folks selling that have now out grown that home are moving to a much larger home, using the equity to put 20% down on a 3000sq ft home for their growing family. The current sellers of that home are now empty nesters and looking to down size, the use their 20% down equity to move to a smaller home 1800sq ft and enjoy their retirement years. These are trickier transactions for the agents involved, but we track all the homes through out the escrow process and aline up the closings and everyone moves in and continues the American Dream.
PRICE IT RIGHT
Third trend, and you may have already figured where this is headed, PRICE IT RIGHT. We are seeing overpriced homes come on the market everyday. By over priced, I mean the home is so far out of comps, it wont even appraise. Its obvious that the sellers have read the news “Sellers Market LOW Inventory” and flashed back to 2005 when homes were jumping 10-30-50K for each new listing. Well these homes are sitting and we see price reduction after price reduction, and many eventually just cancel or expire. Watching the market month after month, so many homes are selling in the first week or two of being listed, we list and sell almost the same amount each month, yet average days on market in Maricopa is 67 days. I ran several searches and in any given city in the West Valley, a quarter of the homes in that area had been listed over 90 days. The new listing sell quickly are averaging out those days on market. So if you want to sell, Price it Right.
STAGE TO SELL
Fourth, and this goes hand in hand with the aforementioned, Stage to Sell. In todays market staging has never been more important. In fact, my favorite part of listing a home is staging it to sell. I have always staged our properties, using the homeowners items, this was always a complimentary service I offered to my sellers. However in todays market it has been such a pivotal part of selling, I recently obtained my ASP® Accredited Staging Professional to further my knowledge and be able to help clients whom want to complete more in depth staging and remodeling projects. We are definitely seeing a large return on investment when a home is staged to sell. We are seeing a tremendous decrease in sold price on homes that were not staged to sell. Here are a couple samples:
MARKET GOING TO TANK
Last but not least the fifth thing I am hearing quite often from buyers, “Well I think the market is going to tank again, and thats what I am waiting for!” I am not sure what is driving this thought in the consumers head, but nothing in the data, Arizona economic state or the Federal Reserve reports would lead this to be true. The real estate market collapsed, basically for many reasons, but to put it in a nut shell, we had to low of regulations with home loans, putting a surplus of buyers in the market, cause the demand to increase and the values started skyrocketing, even passing up inflation. The bubble that was created needed to burst, the economic balance in our country was way out of balance. As previously mentioned, now that we have a more structured appraisal industry, and home loans require more than “breathing on a mirror” and pick a number any number and tells us how much you make, the market is much more secure and stable now. Market trends are right back on track with were we should have been on a normal 30 year trajectory, had we not have had that BLURP in the market. Market values are steadily increasing, so todays home prices will be much less than next years home prices.
If you have questions or if we can help you buy or sell please contact us.