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

April 2019 Market Update

Mortgage Payments Drop $50 per Month on a Median Priced Home
Listings Under Contract Up 19% in 5 Weeks!

2019-04 Infographic

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For Buyers:

Buyers got a break last month as 30-year mortgage rates dropped significantly from an average of 4.41% to 4.08%, which is the lowest they have been since January 2018. On a $267,000 home (the median sales price in Greater Phoenix) the drop equated to nearly $50 per month in savings on principle and interest, which was enough to get many buyers off the couch and looking for homes. This rate drop combined with an increased conventional loan limit up to $484K and a 32% increase in weekly seller price reductions meant that price ranges between $200K all the way up to $800K saw a combined 19% increase in contracts written over the last 5 weeks. Contract activity is expected to increase at this time of year anyway due to seasonality, but last year over the same 5 weeks it only increased 8.6%. For buyers who are still waiting for prices to begin declining, their wait just got longer.

For Sellers:

The drop in mortgage rates could not have come at a better time for sellers. Up until 6 weeks  ago the negotiating advantage sellers have been enjoying for years in Greater Phoenix had weakened to the point where the market was on track to enter balance within a matter of months and price appreciation would have begun to slow even more. However by April 4th the average 30-year mortgage rate (as reported by Freddie Mac) had dropped to a 15-month low. This spurred buyer activity and resulted in Listings Under Contract, which were 10.2% below 2018 last month, to sharply increase and surpass 2018’s April count by 0.8%. Currently sales volume is down 9.6% from last April, however when these contracts close escrow over the next 4-6 weeks May and June should fare much better. Don’t get too excited though, the seller market is still much weaker than last year. Affordability and demand were helped by this interest rate drop but could quickly be negated as prices continue to rise. Sellers still need to be mindful of their asking price to get under contract before buyer activity seasonally begins to decline between May and the end of the year.

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.

True Market Value?

March 2019 - MVP - Social Media Image

What is True Market Value?

It’s easy to look up how much money you have in your savings account or the real-time value of your stock investments. But determining the dollar value of a home is trickier.

As a seller, knowing your home’s worth helps you price it correctly when you put it up for sale. If you price it too high, it may sit on the market. But price it too low and you may be losing out on a good chunk of money (nobody wants that!). For buyers, it’s important to know a home’s worth before you make an offer. You want your offer to be competitive, but you don’t want to overpay for the property.

Even if you’re not a buyer or seller right now, as a current homeowner you might just be curious about the value of your home. Keeping track of your home’s worth year over year helps you understand the trends in your market. So when you are ready to sell, you can take advantage of a good window of opportunity.

The good news is, a professional real estate agent—who understands the nuances of your particular area and neighborhood—can determine the true market value of your property … and at no cost to you!

THE THREE TYPES OF HOME VALUES

When you start the process of buying or selling a home, you’ll frequently hear the words appraised value, assessed value, and true market value. It’s important to know the difference between each one so you can make better, informed decisions.

Appraised Value

A professional appraiser is in charge of determining the appraised value of a home. These appraisals are typically required by a lender when a buyer is financing the property. And while the lender is the one requiring this information, the appraiser does not work for the lender.1 However, the appraiser is preparing the appraised value for the benefit of the lender.

The appraised value protects the lender’s interest and assures that they are not over-extending on the loan for the property. For example, imagine a seller lists a home for $400,000. They reach a deal with the buyer to sell the home for $375,000. However, if an appraiser evaluates the property and determines that the appraised value is actually $350,000, then the lender will not lend for an amount higher than that appraised value of $350,000.2  In these scenarios it is critically important to be working with a professional agent who understands how to properly handle this dicey situation.

When determining appraised value, an appraiser will compare the property to similar homes in the neighborhood, and they’ll evaluate factors such as location, square footage, appliances, upgrades, improvements, and the interior and exterior of the home.  It is important to note two factors about appraised value:

  1. Appraised value is a theoretical model and appraisers are limited in their ability to fully account for market conditions  which means that in a rapidly moving market–either up or down–an appraised value can be completely at odds with the True Market Value.
  2. Every appraisal is prepared by a human being, and appraised value can vary widely by the choices made by that individual, including comparables and adjustments made–or not made.

Assessed Value

The assessed value of a home is determined by your local municipal property assessor. This value matters when your county calculates property taxes each year. The lower your assessed value, the less property tax you’ll pay.3

To come up with this value, your assessor will evaluate what comparable homes in the neighborhood have sold for, the size of your home, age, overall condition, and any improvements or upgrades that have been made. However, most assessors don’t have full access to your home, so their information is limited.

Assessments are done annually to determine how much property tax you owe. Many counties use a multiplier (typically between 60%-80%) to calculate the final assessed value. So, if the assessor determines that the value of the home is $300,000, but the county uses a 70% multiplier, the assessed value of the home would be $210,000 for tax purposes.4

If your assessed value isn’t as high as you envisioned, don’t sweat it. Many homeowners appeal their assessment in favor of a lower valuation so that they can save money on property taxes. If you’re interested in appealing your property tax assessment, let us know. We offer complimentary assistance and would be happy to help you build your case.

True Market Value

True Market Value is established by market forces and is completely independent of either appraised or assessed value. It basically refers to the value that a willing, qualified and educated buyer is willing to pay for the property. A good real estate agent is an expert in determining True Market Value because they have hands-on experience buying and selling properties. They understand the mindsets of buyers in your market and know what they’ll pay for a property given its unique combination of location, upgrades, condition, etc.

As a seller, knowing your True Market Value is important because it helps you choose how much to list your property for. It can also help you decide if you want to make any improvements to your home before putting it on the market. Your agent can help you figure out which updates and upgrades will have the biggest impact on your True Market Value.

WHAT’S THE DEAL WITH ONLINE CALCULATORS?

When figuring out your home’s value, you will want to take a look at popular real estate sites like Zillow, Redfin, and Trulia. Or you can use our own online estimator here:

NEXTHOME VALLEYWIDE ONLINE HOME VALUE ESTIMATOR

When you use an online calculator to determine your home’s value on these sites, it is important to remember that it is just an estimate. These sites all have their own algorithms for coming up with their estimates. For example, Zillow comes up with their “Zestimates” by calculating “public and user-submitted data, taking into account special features, location, and market conditions.” 5

Online estimates can be a great starting point for opening up the conversation about your home’s True Market Value. But even Zillow recommends that you use a real estate agent for coming up with the actual market value of your home. The site says that once you get your “Zestimate,” you should still get “a comparative market analysis from a real estate agent.”

Having a professional agent involved in this process is essential because they understand the market better than a computer ever could. They’re showing property in your area every single day, and they know the particular preferences of buyers and sellers in the area. Young professionals, large families, empty nesters, and other groups are all looking for different things in a home. A local agent has most likely worked with all of them, so they understand what every segment in your market is specifically looking for.

HOW AN AGENT FINDS YOUR HOME’S TRUE MARKET VALUE

So, how does an actual real estate agent determine True Market Value? They’ll start by doing a comparative market analysis (CMA). This means they’ll compare your home’s features to similar properties in your area. For the CMA, the agent looks at the below factors to influence their assessment of your home’s worth:6

  • Neighborhood sales – Your agent will look at similar, recently sold homes in your neighborhood to see what they sold for and what they have in common with your house.
  • The exterior – What does your home look like from the outside? Your agent will factor in curb appeal, the style of the house, the front and backyard, and anything else that impacts how the house looks to everyone walking and driving by.
  • The interior – This is everything inside the walls of the house. Square footage, number of bedrooms and bathrooms, appliances, and more all influence the overall market value.
  • Age of the home – Whether you have a newer or older home affects the number your agent comes up with as part of their assessment.
  • Style of the home – The style of your home is important because buyers in different markets have different tastes. If buyers prefer ranch-style homes and you have one, then your home may sell for a premium (aka more money!).
  • Market trends – Because a local agent has so much experience in your market, they have their finger on the pulse of your area’s trends and know what buyers are willing to pay for a property like yours.
  • Location, location, location – This one’s probably the most obvious. Your agent will think about how popular the area is, how safe it is, and what schools are like.

It is part science and part art and a computer algorithm simply can’t take all of these factors into account when calculating the value of your home. The reality is, nothing beats the accuracy of a professional agent when it comes to determining a home’s True Market Value.

YOUR AGENT IS THERE EVERY STEP OF THE WAY

Determining a home’s true market value is a real estate agent’s forte. If you’re a seller, your agent will help you find your home’s market value so you can list it at the right price.

For buyers, your agent will help you determine the value so you can come up with a fair offer. Your agent can also set up a personalized home search on the Multiple Listing Service (MLS) for you so you’ll receive emails of listings that meet your criteria. This will help you see what’s out there in your city and how properties are being priced.

Get a Complimentary Report With Your Home’s True Market Value

Curious about your home’s True Market Value? Call, email, or text us to request a free, no-obligation Broker Price Opinion (BPO) to find out exactly how much your home is worth in today’s market.

Sources:

  1. Chicago Tribune – https://www.chicagotribune.com/suburbs/chi-ugc-article-what-is-the-difference-between-market-value-a-2013-09-30-story.html
  2. SFGATE – https://homeguides.sfgate.com/market-value-vs-appraised-value-1206.html
  3. ValuePenguin – https://www.valuepenguin.com/mortgages/what-is-the-assessed-value-of-a-house
  4. Movoto – https://www.movoto.com/blog/homeownership/assessed-value-vs-market-value/
  5. Zillow – https://www.zillow.com/how-much-is-my-home-worth/
  6. Realtor.com – https://www.realtor.com/advice/sell/assessed-value-vs-market-value-difference/