August 2019 Market Update

New Listings at Record Lows
Contracts in Escrow Up Over 15%

2019-08 Infographic

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For Buyers:

It’s slim pickings for buyers in Greater Phoenix these days unless your budget is over  $500,000. Overall supply is 14% lower than last August while contracts in escrow are 15.5% higher! There are a plethora of zip codes considered “frenzies”, where there are literally more properties under contract than there are active for sale; all of them with an average sale price below $400,000. This is unusual for August, which is typically a much softer month. Buyers  will have a slightly easier time in more expensive areas such as Central Phoenix, Ahwatukee,  South Tempe and the Northeast Valley, but not much unless they’re willing to go further out or increase their budget. Any projections of prices flattening out or coming down in Greater Phoenix this year have been obliterated.

For Sellers:

As supply plummets, fewer sellers are deciding to sell. July was THE lowest month for brand  new listings going all the way back to the year 2001. That’s significant because the population today is 50% larger and the number of housing units is 63% higher than it was 18 years ago.  19% of all MLS sales and 26% of sales between $100K and $250K sold over asking price last  July. Coincidentally (or not), 32% of sales within that same price range still included some form of seller-paid closing cost assistance. Despite the frenzy market, the annual appreciation rate for Greater Phoenix is just 6.4% and sales between $225K-$500K are clocking 3.5-4.0% on average. This may seem surprising given the widening gap between supply and demand; but appraisers remain conservative in their valuations and with at least 80% of buyers needing a loan, they’re riding the brakes on runaway appreciation thus far.

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 Valleywide.realestate 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.

Will Your Remodel Payoff?

July-2019-MVP-Social-Media-Image

Most new homeowners have something about their property that they want to change. And as family needs and design trends shift over time, many will eventually choose to remodel. Some homeowners make updates to their property before listing it to maximize their potential sales revenue.

Whatever your reasons are for taking on a home improvement project, it’s wise to consider how the money you invest will impact your home’s value.

We’ve taken a look at six popular home renovations and identified those that—on average—have the best and worst returns on investment. So before you lift a hammer or hire a contractor, take a look at this list and see if your remodeling efforts will reward you when it comes time to sell.

RENOVATIONS THAT PAY OFF

These three common home improvement projects not only add function and style to your home, but they also offer a strong return on investment. Making strategic upgrades to your property will help you increase its value over time.

Minor Kitchen Remodel

The kitchen is often referred to as the “heart of the home,” and for good reason. Traditionally used for preparing food, it has morphed into so much more. Many of us now eat our family meals in the kitchen, it serves as a favorite spot for homework and kids’ art projects, and it’s the place guests tend to gather when we host events. 

Because we spend so much time in our kitchens, it’s natural that we will eventually want to make updates and upgrades to better suit our needs and changing style preferences.

Luckily, a minor kitchen remodel is one of the best investments you can make in your home. According to Remodeling Magazine’s annual Cost vs. Value Report, it has an average 80.5% return on investment.1

The key to making a kitchen remodel pay off is to keep it modest in scale. Spend too much on custom or high-end selections, and you are less likely to recoup your investment. Instead, make an effort to keep your existing layout if it works for you and your family. Paint or reface cabinets instead of replacing them. Update countertops with low-maintenance quartz and swap out old light fixtures with modern alternatives. Replace outdated appliances with energy-efficient models. The average cost for a minor kitchen remodel is $22,500, and it’s likely to recoup more than $18,000 at resale.1

Patio Addition/Extension

A patio addition is a popular way to extend and enhance the use of your outdoor space. It’s the perfect spot for grilling, dining alfresco, and entertaining. In fact, 81% of surveyed homeowners said they have a greater desire to be home since completing a patio addition.2

For a 16 x 20-foot patio extension, you can expect to spend around $13,000. Fortunately, the money you invest offers an average return of 76%.1

Siding/Stucco Replacement

Everyone knows good curb appeal is important when selling your home. And while it may not be the most exciting way to spend your remodeling budget, new stucco and paint can make a big impression on buyers … and your selling price.

Your home’s exterior is one of the first things buyers see when they view your home. It sets the tone for what they are going to see inside. It also gives an impression of how well the property has been maintained. Worn, peeling, or rotted stucco can be a major red flag for buyers.

Replacing 1,250 square feet of siding costs around $16,000 and will net you an average of 76% at resale.1

For an even greater impact, consider replacing a portion of your stucco with manufactured stone veneer. It can have a dramatic effect on the visual appeal of your home. A 300 square foot area will run you around $8,900, but you can expect to see a nearly 95% return when it comes time to sell.1

RENOVATIONS WITH WEAKER RETURNS

These three popular remodeling projects are homeowner favorites. However, don’t expect to see a high rate of return at resale. Instead, consider them an investment in your current quality of life. Just make sure you’ll be living in the home long enough to make them worthwhile.

Major Kitchen Remodel

If there’s one room the majority of homeowners dream about making over, it’s their kitchen. From custom cabinetry to high-end appliances, the possibilities are endless. But those dreams can come at a cost. 

An upscale kitchen remodel with high-end cabinetry and countertops, commercial-grade appliances, and designer features can cost upwards of $130,000. And unfortunately, you’ll only get back around 60% at resale. Even a mid-range kitchen remodel that includes new semi-custom wood cabinets, laminate countertops, and energy-efficient appliances could run you around $66,000 and net you a mere 62% at resale.1 

Of course, an outdated or non-functional kitchen could turn buyers off from your home completely …  and keep you from enjoying it yourself! So if your kitchen needs a major remodel, you shouldn’t necessarily scrap your plans. Just go in with the realization that you may only get back a fraction of what you invest. Then you can decide which upgrades are worth the splurge.

In-ground Pool

Few additions deliver more entertainment or enjoyment than an in-ground pool. It brings families and friends together, provides a break from the summer heat, and offers a fun and convenient way to stay fit. Plus, you’ll be the envy of your neighbors! But before you dive into a pool addition, consider whether the benefits outweigh the (substantial) costs.

The average expense to install a standard 18 x 36-foot in-ground pool is $57,500. And the estimated return at resale is only or 43%.2 In addition to the installation cost, plan to spend money each year on maintenance, repairs, and additional insurance. 

However, 92% of surveyed homeowners said they “have a greater desire to be home” since installing a pool, and 83% have “an increased sense of enjoyment when they are at home.” For you and your family, the perks of a pool may be priceless.2

Master Suite Addition

If you own a house built before the 1980s, there’s a good chance it lacks a master suite, which is a feature that has become commonplace in most newly constructed homes.3

Master bedrooms have evolved from a simple place to sleep into a homeowner’s retreat—often featuring a sitting area, his-and-hers walk-in closets, and an attached bathroom with double vanities, a soaking tub, and a walk-in shower.

And master suite additions have become increasingly popular—both in homes that lack one as well as those with aging owners who can no longer accommodate stairs to an upper-level bedroom.

But what’s the typical return at resale? Unfortunately, a master suite addition offers one of the lowest returns of any remodeling project. With a median cost of $125,000, most sellers will only recoup around 52% of their investment. Nevertheless, in a survey of homeowners, the majority were satisfied with their decision to add a master suite, giving it a “Joy Score” of 10 out of 10.4

WEIGHING COST VS. BENEFIT

It’s always wise to enter into a remodeling project with knowledge of how it will impact your home’s value. In most cases, upscale or highly-customized upgrades are less likely to offer a high rate of return. That said, home renovations that improve your quality of life and enhance your enjoyment may be worthwhile no matter the cost.

GET A CUSTOMIZED ANALYSIS OF YOUR PROJECT

We’ve been talking averages. But the truth is, the actual return you can expect on a home improvement project will vary depending on your particular home and neighborhood. If you have plans to remodel, call or send us the details. We’d be happy to conduct a free analysis to determine how the renovations will impact the value of your home!

Sources:

  1. 2019 Cost vs. Value Report – https://www.remodeling.hw.net/cost-vs-value/2019/
  2. NAR’ Remodeling Impact Report – https://www.nar.realtor/sites/default/files/documents/2018-05-remodeling-impact-outdoor-features-05-23-2018.pdf
  3. Zillow – https://www.zillow.com/blog/evolution-of-the-master-bedroom-48286/
  4. House Logic – https://www.houselogic.com/by-room/bedroom-closet/master-suite-addition-return-investment/

July 2019 Market Update

Contracts Up 19% between $250-600K
Rehab Sales Rebound

2019-07 Infographic

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For Buyers:

New listings activated in June were down 10.0% compared to last June and overall supply has  dropped 9.5% in 4 weeks, putting it below last year’s count for the first time all year. Buyers have gotten used to very little supply under $200K but now they’re feeling it hard between $200K-$250K, where new listings were down a whopping 15.1%. Trying to fill the gap, brand new townhome/condo sales have been strongest between $200K-$250K with a median size of  1,362sf. The top two builders that have sold the highest number of condos in this price range  this year are Lennar in Gilbert and DR Horton in Mesa. Other competing developers building condos between $200K-$250K include Bela Flor in Mesa and Maracay in Goodyear. In Mesa, new condos in this price range have been extremely competitive with resale with an average price per square foot of $155.70 versus $157.47 for resale.

For Sellers:

Listings in escrow are up 7.4% and have soared nearly 19% over last year between $250K and  $600K. Homeowners with property valued under $250K are inundated with offers from investors as rehab sales have rebounded strongly over the past few months. Making up for lost time  after being down 4.2% in the first quarter, successful flip sales have now outperformed 2018 by 4.8%. The median sale price for a flipped home in May was $245K, up 8.4%, and the average size sold was 1,710sf.  The median gross gain for a traditional flip investor was $53K between their acquisition and sale price.  iBuyer companies such as OpenDoor, OfferPad and Zillow showed a median gross gain of just $9,900, however that doesn’t account for significant service charges to the sellers during escrow.  What does this mean to you?

  • The data above reveals the fallacy of the iBuyer proposition:  iBuyer’s make very little on the difference between what they pay and what they sell for.  They make their money on the “significant service charges” they tack on to the sale once in escrow.  These charges typically represent anywhere from 20-30% and basically amount to equity stripping from the Seller.
  • Rehab/Flip projects are back in a big way!  This is good news for us and you.  As many of you know we partner with many clients on investment projects, and the above data correlates with what we are seeing on the ground.  If you have an interest in doing a rehab project with us you can learn more here.
  • Are you what we call an “Accidental Landlord?”  Turn that rental you really don’t want into a rehab project and put cash in your pocket.  Call us today and we can handle everything from rehab to sale!
  • Buyer’s at price points above >$250K are very active in the market.  If you have a home in this price range this is great news!  Give us a call today to learn more about leveraging this market dynamic.

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 Valleywide.realestate 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.

June 2019 Market Update

Monthly Sales Up 7.1% in Greater Phoenix
Higher Incomes Fuel More Contracts & Rising Prices

June 2019 Market Update

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For Buyers:

Re-sale prices are not predicted to come down this year. Between August 2018 and January 2019 it looked like the market was going to balance out and cause prices to stabilize around the 2nd half of 2019. However two things happened to change that prediction. First, average 30-year mortgage rates dropped from a high of 4.94% in November 2018 to 3.82% as of June  2019. That alone has saved buyers around $177/month on a median-priced $279,000 home  with 4% down. Second, private sector annual earnings in Greater Phoenix rose 1.8% in April after an 8-month period of stagnation. In the last decade home prices have gone flat just twice, in 2011 and 2014. Both times there was a corresponding decline in annual earnings. If annual earnings continue to grow and interest rates remain low, the Greater Phoenix seller market will continue to push home prices up this year.

For Sellers:

The May peak buyer season is over. From this point through the end of the year it’s not uncommon to see contract activity gradually decline 30-40%. The good news is that despite the predictable decline, listings under contract are coming in 3.7% higher than this time last year.  It’s not evenly distributed along all price points however. Contracts on listings over $600K are up 3.4% while the $500K-$600K range is up an impressive 33.5%!! Contracts between $250K$500K are up 16.1% and the low $200K’s are up 8.1%.  Lack of inventory under $200K means that contracts in this range are down 20.6%. Expect your highest annual appreciation rates to be between 6-10% in the $150K-$225K range as this is where the majority of investor flip activity lies. $225K-$500K appreciation is between 3-5% and over $500K is between 1-3%.

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 Valleywide.realestate 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.

Top 6 Home Organization Upgrades

Top 6 Home Organization Upgrades

Thanks to Marie Kondo and her hit Netflix series “Tidying Up,” home organization is a hot topic right now. Marie encourages her viewers to minimize their possessions and keep only those items that “spark joy.”

With spring in full bloom, now is the perfect time to do some spring cleaning and add organizational systems to your own home. Not only will you clear out clutter, your efforts can actually increase the value of your home.

Ready to give it a try? Here are six home organization ideas that will “spark joy” for you and your property value.

Boost Bathroom Storage Capacity

When was the last time you cleaned out your bathroom cupboards? If it’s been awhile, remove everything and take a look at each item. Toss any old or expired products—keep only what you actually use.

If your vanity has drawers, add drawer organizers, so you have a dedicated space for smaller items, like makeup and jewelry. For deep cabinets, install roll-out shelves or baskets to maximize the use of space.

And don’t forget about the walls! Mount open shelves to store towels. If you’re short on storage space, a cabinet over the toilet can offer additional room for supplies. These inexpensive additions can make your morning routine a little easier while giving your bathroom a more custom feel. And on average, minor bathroom remodeling projects like these see a 102% return at resale.1

Upgrade Your Laundry Room

Sort through the items in your laundry room and throw away or donate anything you no longer need or use. If you’ve been holding onto a collection of old washcloths and single socks, it’s time to say goodbye. Then give your laundry room an upgrade with some customized organizational features.

A mix of open cubbies and cabinets with doors will give you plenty of options for storing detergents and supplies. If you have space, a divided hamper or set of laundry baskets can provide a place to sort your clothes before washing. Install a hanging rod or drying rack for delicates and a flat work surface for ironing and folding clothes. With a few simple tweaks, you can turn this chore into a score!

Fully Utilize Your Basement or Attic

Basements and attics can easily become a dumping ground for clutter. If that’s the case in your home, you know what to do!

Once you’ve conducted a thorough clean out, think about how you can better utilize the space to meet your family’s needs. Install cabinets and a table so you can use the area as a craft room. Or you could turn it into a game room with a media center and ping-pong table. Investing in your basement will not only add function for your family, but also the average basement remodel can see up to a 70% return on investment when it’s time to sell.2

If you have an attic, consider adding a cedar closet to store your off-season clothing. The cedar lining will keep your clothes free from moths and smelling fresh year round.3 Turning your attic into a more usable space will pay off down the road, too. A finished attic sees an estimated 60% return on investment.2   

Customize Your Closets

Cleaning out the closet is a chore most of us dread, but by now, you’re a pro! Get rid the clothes and shoes that don’t fit you, are uncomfortable to wear, or that no longer “spark joy.”

Then it’s organizing time. So where do you start? You’ll want to create a designated space for each type of clothing: high hanging rods for dresses and long jackets, lower rods for skirts and shirts, and shelves for folded items like jeans. And accessories need a place to go, too. Add racks for your shoes, drawers for jewelry, hooks for hats, and shelves or racks for handbags.

A well-equipped closet can be a major draw for buyers—the average return on a closet remodel is 57%.4 But more importantly, it’ll improve your day-to-day life. Surveyed homeowners gave their closet remodel a “Joy Score” of 10 out of 10, higher than kitchen or bath upgrades.5

Install Built-in Bookcases and Cabinets

Built-in furniture adds functionality and storage to a room while giving your home a high-end look. Built-in bookcases can turn an empty room into an office. Custom cabinets can be used in a living room to display media equipment while providing hidden storage for DVDs, board games, and family albums.

When designing any built-in feature, remember not to go too custom. A design that only fits your tastes or belongings could turn off future buyers. Instead, select standard sizes and classic finishes to appeal to a broad range of buyers when it comes time to sell.

Equip Your Garage

If you can no longer fit your car in your garage, it may be time for a clean out. Similar to an attic or basement, the garage can quickly become overrun with clutter. A thorough cleaning will help you assess which items are worth keeping.

When adding organizational systems your garage, start with a small rack to store yard tools and larger racks for bikes and sports equipment. Overhead racks are a great place to put seasonal items and bulky luggage. A workbench against a wall lined with pegboard and hooks creates a dedicated space to use and store tools. If you have children or pets, add a cabinet with a lock. This will give you a place to securely store harsh chemicals and sharp tools. With a little effort, you’ll be pulling in your car (and buyers) in no time!

SPRING INTO ACTION

If you’re searching for service providers to help with your spring cleaning or home organization efforts, let us know! We can connect you with our trusted network of local home improvement professionals. We can also help you determine which organizational upgrades will add the most value to your home. Call us today, and let us know how we can help!

Sources:

  1. HGTV – https://www.hgtv.com/design/real-estate/top-home-updates-that-pay-off-pictures
  2. Nationwide – https://blog.nationwide.com/valuable-home-improvements/
  3. HGTV – https://www.hgtv.com/remodel/interior-remodel/maximum-home-value-storage-projects–attic
  4. The Closet Doctor – https://www.closet-doctor.com/news/what-is-the-return-on-investment-on-closet-organizers
  5. NAR Remodeling Impact Survey –https://www.nar.realtor/sites/default/files/documents/2017-remodeling-impact-09-28-2017.pdf