February 2019 Market Update

Price Reductions up 24% in Greater Phoenix

Sellers:  Stop Trying to Time the Market

February 2019 Market Update

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For Buyers:

A weak 4th quarter for sales in 2018 has resulted in 11,874 price reductions in the first 5 weeks of 2019. That’s 24% higher than this same time last year. Price reductions on listings between $200K-$500K specifically are up 40%. The most notable price range with a 42% increase is $200K-$250K.  This may come as a surprise to some because this price range is below the median sales price of $263K.  However, this area is currently a battleground of competition between traditional sellers, flip investors and new construction as inventory is up 26% and contracts are down 10%. Flip investors acquire and sell over 50% of their inventory in this price range. New home builders increased their sales by 22% in this range last year. Traditional sellers are now under more pressure to improve the condition of their home and provide incentives for buyers in order to compete.

For Sellers:

This isn’t a good time for sellers to get caught up in timing the market so as to sell their home at the ideal “peak of price”. While it’s understandable for sellers not to want to leave any money on the table, the reality is that price peaks don’t happen in seller markets. They occur in balanced markets. Balanced markets are fine to sell in, but they’re not as fun or profitable for sellers as they expect; especially if their property is hard to sell due to condition or location. As the seller market continues to weaken, it’s more important than ever for sellers to list their property while they still have the advantage of low competition, price it competitively and don’t spit on the first contract.  Buyer activity, while lower, will continue to accelerate through May.  This is go time.

Contact the real estate experts at NextHome Valleywide in Chandler, AZ at 480-621-6828 for more information.  If you are currently looking to Buy or Sell a home in the Phoenix metro , Scottsdale or East Valley area and are not sure where to turn we can help! Search for homes at ChandlerAreaHomeSearch.com where you can find single family homes, golf and lakefront properties, 55+ communities, townhomes and much more. Visit our blog at NextHome Valleywide for a monthly Phoenix Market Update.

What’s Ahead in 2019?

what's ahead for 2019?

As we begin another year, everyone wants to know: “What’s ahead in 2019?”

It’s not only buyers, sellers, and homeowners who are impacted. The real estate market plays an integral role in the overall U.S. economy.  Fortunately, key indicators point toward a stable housing market in 2019 with signs of modest growth. However, shifting conditions could impact you if you plan to buy, sell, or refinance this year.

HOME VALUES WILL INCREASE

The value of real estate will continue to rise. Freddie Mac predicts housing prices will increase by 4.3 percent in 2019.1  While the rapid price appreciation we witnessed earlier in the decade has slowed, the combination of a strong economy, low unemployment, and a lack of inventory in many market segments continues to push prices higher.

“Ninety percent of markets are experiencing price gains while very few are experiencing consistent price declines,” according to National Association of Realtors (NAR) Chief Economist Lawrence Yun.2

Yun predicts that the national median existing-home price will increase to around $266,800 in 2019 and $274,000 in 2020. “Home price appreciation will slow down—the days of easy price gains are coming to an end—but prices will continue to rise.”

What does it mean for you? If you’re in the market to buy a home, act fast. Prices will continue to go up, so you’ll pay more the longer you wait. If you’re a current homeowner, real estate has proven once again to be a solid investment over the long term. In fact, the equity level of American homeowners reached an all-time high in 2018, topping $6 trillion.3

SALES LEVELS WILL STABILIZE

In 2018, we saw a decline in sales, primarily driven by rising mortgage rates and a lack of affordable inventory. However, Yun isn’t alarmed. “2017 was the best year for home sales in ten years, and 2018 is only down 1.5 percent year to date. Statistically, it is a mild twinge in the data and a very mild adjustment compared to the long-term growth we’ve been experiencing over the past few years.”2

Yun and other economists expect home sales to remain relatively flat over the next couple of years. Freddie Mac forecasts homes sales will increase 1 percent to 6.08 million in 2019 and 2 percent to 6.20 million in 2020.1

“The medium and long-term prospects for housing are good because demographics are going to continue to support demand,” explains Tendayi Kapfidze, chief economist for LendingTree. “With a slower price appreciation, incomes have an opportunity to catch up. With slower sales, inventory has an opportunity to normalize. A slowdown in 2019 creates a healthier housing market going forward.”4

What does it mean for you? If you’ve been scared off by reports of a market slowdown, it’s important to keep things in perspective. A cooldown can prevent a hot market from becoming overheated. A gradual and sustainable pace of growth is preferable for long-term economic stability.

MORTGAGE RATES WILL RISE

The Mortgage Bankers Association predicts the Federal Reserve will raise interest rates three times this year, resulting in a rise in mortgage rates.5 While no one can predict future mortgage rates with certainty, Realtor.com Chief Economist Danielle Hale estimates that the rate for a 30-year mortgage will reach 5.5 percent by the end of 2019, up from around 4.62 percent at the end of 2018.6

While mortgage rates above 5 percent may seem high to today’s buyers, it’s not out of line with historical standards. According to Hale, “The average mortgage rate in the 1990s was 8.1 percent, and rates didn’t fall below 5 percent until 2009. So for buyers who can make the math work, buying a home is likely still an investment worth making.”7

What does it mean for you? If you’re in the market to buy a house or refinance an existing mortgage, you may want to act quickly before mortgage rates rise. To qualify for the lowest rate available, take steps to improve your credit score, pay down existing debt, and save up for a larger down payment.

AFFORDABILITY ISSUES WILL PERSIST

Although the desire to own a home remains strong, the combination of higher home prices and rising mortgage rates will make it increasingly difficult for many first-time buyers to afford one.

“Buyers who are able to stay in the market will find less competition as more buyers are priced out but feel an increased sense of urgency to close before it gets even more expensive,” according to Hale. “Although the number of homes for sale is increasing, which is an improvement for buyers, the majority of new inventory is focused in the mid-to-higher-end price tier, not entry-level.”6

What does it mean for you? Unfortunately, market factors make it difficult for many first-time buyers to afford a home. However, as move-up buyers take advantage of new high-end inventory, we could see an increase in starter homes hitting the market.

MILLENNIALS WILL MAKE UP LARGEST SEGMENT OF BUYERS

“The housing market in 2019 will be characterized by continued rising mortgage rates and surging millennial demand,” according to Odeta Kushi, senior economist for First American. “Rising rates, by making housing less affordable, will likely deter certain potential homebuyers from the market. On the other hand, the largest cohort of millennials will be turning 29 next year, entering peak household formation and home-buying age, and contributing to the increase in first-time buyer demand.”4

Danielle Hale, chief economist for Realtor.com, predicts the trend will continue. “Millennials are also likely to make up the largest share of home buyers for the next decade as their housing needs adjust over time.”6

What does it mean for you? If you’re in the market for a starter home, prepare to compete for the best listings. And if you plan to sell a home in 2019, be sure to work with an agent who knows how to reach millennial buyers by utilizing the latest online marketing techniques.

WE’RE HERE TO GUIDE YOU

While national real estate numbers and predictions can provide a “big picture” outlook for the year, real estate is local. And as local market experts, we can guide you through the ins and outs of our market and the local issues that are likely to drive home values in your particular neighborhood.

If you’re considering buying or selling a home in 2019, contact us now to schedule a free consultation. We’ll work with you to develop an action plan to meet your real estate goals this year.

START PREPARING TODAY

If you plan to BUY this year:

  1. Get pre-approved for a mortgage. If you plan to finance part of your home purchase, getting pre-approved for a mortgage will give you a jump-start on the paperwork and provide an advantage over other buyers in a competitive market. The added bonus: you will find out how much you can afford to borrow and budget accordingly.
  2. Create your wish list. How many bedrooms and bathrooms do you need? How far are you willing to commute to work? What’s most important to you in a home? We can set up a customized search that meets your criteria to help you find the perfect home for you.
  3. Come to our office. The buying process can be tricky. We’d love to guide you through it. We can help you find a home that fits your needs and budget, all at no cost to you. Give us a call to schedule an appointment today!

If you plan to SELL this year:

  1. Call us for a FREE Comparative Market Analysis. A CMA not only gives you the current market value of your home, it will also show how your home compares to others in the area. This will help us determine which repairs and upgrades may be required to get top dollar for your property, and it will help us price your home correctly once you’re ready to list.
  2. Prep your home for the market. Most buyers want a home they can move into right away, without having to make extensive repairs and upgrades. We can help you determine which ones are worth the time and expense to deliver maximum results.
  3. Start decluttering. Help your buyers see themselves in your home by packing up personal items and things you don’t use regularly and storing them in an attic or storage locker. This will make your home appear larger, make it easier to stage … and get you one step closer to moving when the time comes!

Sources:

    1. Freddie Mac Economic & Housing Research Forecast –
      http://www.freddiemac.com/research/pdf/201811-Forecast-04.pdf
    2. National Association of Realtors 2019 Forecast –  
      https://www.nar.realtor/newsroom/2019-forecast-existing-home-sales-to-stabilize-and-price-growth-to-continue
    3. Bankrate 2018 Year in Review –
      https://www.bankrate.com/mortgages/year-in-review-for-housing-market/
    4. Forbes 2019 Real Estate Forecast –
      https://www.forbes.com/sites/alyyale/2018/12/06/2019-real-estate-forecast-what-home-buyers-sellers-and-investors-can-expect/#a98b80a70d9a
    5. Mortgage Bankers Association Forecast –
      https://www.mba.org/2018-press-releases/october/mba-forecast-purchase-originations-to-increase-to-12-trillion-in-2019
    6. Realtors.com 2019 National Housing Forecast –
      https://www.realtor.com/research/2019-national-housing-forecast/
    7. FOX Business –
      https://www.foxbusiness.com/personal-finance/where-mortgage-rates-are-headed-in-2019

January 2019 Market Update

Greater Phoenix Buyer Contracts Down 15%

It’s Still a Good Time to Sell . . . For Now

January 2019 market update

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For Buyers:

The monthly average interest rate rose to 4.64% in December 2018, up 0.69% from the previous December’s 3.95%. For buyers who will purchase at the current median sales price of $260,000, that equates to approximately $100 added to their monthly payment compared to last year. Buyers averaged 1,845 square feet at this price; nearly 100 square feet smaller than if they had purchased last year. It doesn’t help matters by renting either. As single family homes appreciated 8.1% per square foot, single family lease payments also rose 8.6% during the same time frame. With that, buying is still a good option over renting if only to stabilize one’s monthly housing expense. Sale prices will continue rising in the first half of 2019, but at a slower rate and they’re not expected to decline at this juncture. Instead, buyers may see a little more flexibility from sellers in the form of repairs, closing costs, and possibly interest rate buy-downs in the higher price ranges.

For Sellers:

The market continues to favor sellers entering into 2019, but not nearly as much as it did at the beginning of 2018. Supply is still 34% below normal compared to 36% below normal this time last year. It’s buyer demand that has shifted as buyers grapple with affordability and concerns about an overvalued market. Demand at this time last year was measured 1% above normal; today it’s 13% below normal. While it may feel like a buyers market compared to the last four years, it is far from one. Greater Phoenix is still in a seller’s market, however it’s weaker out of the gate. This means there is still more demand than supply, but multiple offers will not be as common, there will be fewer sales overall and scenarios will vary widely depending on price range. Demand could change in either direction depending on interest rates, however for the time being buyers and sellers have to play the hand they’ve been dealt.  For those wondering if it’s still a good time to sell, the answer is “yes” for now.

Contact the real estate experts at NextHome Valleywide in Chandler, AZ at 480-621-6828 for more information.  If you are currently looking to Buy or Sell a home in the Phoenix metro , Scottsdale or East Valley area and are not sure where to turn we can help! Search for homes at ChandlerAreaHomeSearch.com where you can find single family homes, golf and lakefront properties, 55+ communities, townhomes and much more. Visit our blog at NextHome Valleywide for a monthly Phoenix Market Update.

9 Ways to Share–and Extend–the Season

share the season

As the 2019 Holiday season begins to wind down, some of us are still looking for fun and creative ways to share the joy!

But there’s no need to stop at your front door or when the all the Holiday decorations are finally put away.  Let the spirit of the season radiate outward from your house into your community. 

Not sure where to start? Check out these 9 inspirational ideas for spreading cheer far and near this season and into 2019!

Host a Neighborhood Party

Hosting a neighborhood party is a great way to reconnect with old friends and welcome new families to the community. And it doesn’t necessarily require a huge investment of time or money. Plan a potluck dinner and ask your guests to bring a dish or drink to share. Or host a holiday cookie exchange and ask everyone to bring a couple dozen of their favorite cookie to swap with other guests. Hot cocoa and caroling is another great way to bring neighbors together to celebrate the season.

If you have a neighbor who you’ve been at odds with in the past, consider extending them an invitation, as well. It could be the perfect opportunity to make peace in the new year.

Help a Neighbor in Need

The holiday season is the perfect time to offer help to a neighbor in need. Next time you head out to rake your leaves, take care of an elderly neighbor’s, as well. Or drop off dinner for a friend who is recovering from surgery.

If you know of someone in your community with a larger need, consider setting up a Care Calendar through a site like CareCalendar.org. Then share the link with other neighbors who may be interested in helping, too. Users can sign up to run errands, cook a meal, babysit, wash laundry, clean the house, mow the lawn, or complete other household tasks depending on the individual’s needs. Even a small gesture of kindness can make someone’s holiday extra jolly.

Treat Your Mail and Package Carriers

Extend comfort and joy from your own front porch during your postal and package carriers’ busiest time of year.1 While many of us love the convenience of shopping online for holiday gifts, the boom in e-commerce has exponentially increased the workload for our postal and package carriers, some of whom work up to 70 hours a week during the holiday season.2

You can help brighten their day by leaving a goody and note of gratitude in your mailbox or a basket of water and snacks by your front door. Attach a sign that says: “Thank you for working hard to deliver our holiday packages. Please take a treat to enjoy on your route!”

Overtip

Don’t be a Grinch when it comes to tipping at the holidays or anytime.  Your waiter, your Uber driver, and your hairdresser will all appreciate an extra-generous tip this time of year.

International etiquette expert Sharon Schweitzer recommends that you start by setting a budget for holiday tips and prioritizing those you most want to thank.3 Place those who help you most frequently at the top of your list—such as your trusted housekeeper, nanny, or daycare provider. For those you regularly tip at the time service, consider frequency and length of the relationship to determine an appropriate amount.

Everyone could use a little extra cash around the holidays. If you can afford it, share a bit of your abundance with others.

Thank Those Who Don’t Get a Holiday

Santa isn’t the only one working on Christmas. Emergency workers, hospital staff, airline employees, toll booth attendants, movie theater staff, and many others will be working to make your holiday safe and bright.

Say “thank you” by bringing breakfast to the firehouse or police station on Christmas morning or by dropping off a tray of goodies for the hard-working hospital staff on New Year’s Eve. Keep a stash of treats or coffee-shop gift cards on hand to pass out to those you encounter working over the holidays. And, if appropriate, a generous tip is always appreciated!

Fill Stockings for the Homeless

Not everyone gets to go “home for the holidays.” You can bring a little cheer and comfort to a homeless person this year with a care kit.

Pick up some inexpensive Christmas stockings from a craft store–or after the Holidays just use a Ziplock bag–and fill them with a variety of useful items, such as:

  • Applesauce cup (and plastic spoon)
  • Baby wipes
  • Bandages
  • Bottled water
  • Beef jerky
  • Cereal or granola bar
  • Cheese or peanut butter crackers
  • Deodorant
  • Gloves
  • Lip balm
  • Lotion
  • Nail clippers
  • Socks
  • Tissues
  • Toothbrush and toothpaste
  • Tuna and crackers
  • Trail mix

As an added touch, include a sweet treat and a handwritten note. Hand them out at a shelter or keep a stash in your car so you can offer one when you encounter someone in need.

Offer Warmth on a Cold Day

As temperatures drop, some members of our community will be left out in the cold. Our local homeless population is especially vulnerable this time of year, but so are many families living in poverty. Health experts warn that a two-degree drop in body temperature can result in reduced heart rate, lack of coordination, and confusion, making it difficult for adults to work and children to learn.4

You can help by bringing your old but gently-used coats to a collection site. Leave a note in the pocket wishing the recipient a warm and happy holiday. Or tie a scarf around a tree and attach a sign that says: “I am not lost. If you need this to stay warm, please take it!”

Check with local homeless shelters to find out if they accept donations of old blankets. Well-worn blankets and towels can often be donated to an animal shelter to help keep four-legged friends warm this winter, as well.

Pay Off a Stranger’s Layaway

Some large retailers offer layaway options during the holidays so that shoppers can pay for their purchases a little at a time. Media stories often surface this time of year about anonymous donors who pay off a stranger’s layaway account to the surprise and delight of the recipient.

This is a great way to help a family that may not qualify for charitable assistance but is on a limited budget for holiday gifts. If you have a particular interest in helping kids, you can ask to pay off an account that consists primarily of children’s items.

You don’t have to drop a bundle to become a family’s “Secret Santa.” Ask the layaway attendant to search for accounts with balances that fit within your budget. To make a bigger impact, ask friends and family members if they want to pitch in to help, too! 

Donate Toys to a Tot

One of the most popular ways to give back during the holidays is to participate in a toy drive. There are a number of great charities that collect toys for children of low-income families.

Before you shop, find out if the organization has a wish list of preferred items or guidelines for wrapping and labeling the gift. And check the drop-off deadline to ensure your gift will reach its intended recipient in time.

If you have children, involve them in the process of selecting and purchasing the gift so they can experience the joy of giving to those less fortunate, too.

One more easy way to support the community this year? Shop local! From locally-owned stores to service providers, please consider spending your holiday dollars here at home. We have an extensive network of local businesses and would love to recommend some of our favorites. Give us a call, and let us know how we can help!

With these inspirational ideas we can end the Holiday season strong and continue to spread the joy into 2019!

Sources:

  1. NASDAQ –
    https://www.nasdaq.com/article/fedex-and-ups-deliver-another-record-holiday-season-cm898487
  2. The Kansas City Star –
    https://www.kansascity.com/news/business/workplace/article189245104.html
  3. Huffington Post –
    https://www.huffpost.com/entry/sharon-schweitzers-2017-holiday-tipping-guide-checklist_b_5a037fc3e4b0c7511e1b398c
  4. One Warm Coat –
    https://www.onewarmcoat.org/theneed/

December 2018 Market Update

Greater Phoenix Demand Down 16% in Q4
Seasonal Calm Before the Storm for Buyer Activity

December 2018 Market Update

For Buyers:

Remember when you wouldn’t eat your dinner as a kid and your parents would serve it to you for breakfast or lunch until it was gone? Okay even if you can’t relate, you can imagine a kid’s disappointment in having to see the same thing day after day until they reluctantly eat it. Buyers may be feeling the same way this month as existing inventory has gotten stale and very little new inventory has been added in the first weeks of December. It’s down a whopping 26% from last December with nearly every price range under $1.5M participating in the decline. This reluctance to list in December has offset the 16% decline in listings under contract and the market has managed to maintain a seller market, albeit a weaker one. In the mean-time, existing sellers are dressing up their leftovers with incentives. Seller assisted closing costs have risen on sales between $175K-$300K and price reductions were up 25% in the first week of December compared to last year.

For Sellers:

Seasonally, this is the calm before the storm in terms of buyer activity. Every year, listings under contract drop sharply in the latter half of December before reaching their lowest point on January 1st. Conversely, between January and April buyer contract activity will sharply accelerate. How much it will increase this year remains to be seen depending on interest rates and other lending factors. The past 3 years has seen contracts rise roughly between 70-90% in the first 4 months. Despite this expectation, sellers need to be prepared to compete more in 2019 than they had to this year. The first 4 months are also typically strong for new listings to enter the market. Even though 2019 looks like it will start off with a seller’s advantage, it will be much weaker than last year. The market appears to be resisting higher prices for homes that don’t live up to buyers’ expectation of value for their money.

Contact the real estate experts at NextHome Valleywide in Chandler, AZ at 480-621-6828 for more information.  If you are currently looking to Buy or Sell a home in the Phoenix metro , Scottsdale or East Valley area and are not sure where to turn we can help! Search for homes at ChandlerAreaHomeSearch.com where you can find single family homes, golf and lakefront properties, 55+ communities, townhomes and much more. Visit our blog at NextHome Valleywide for a monthly Phoenix Market Update.