What' s REALLY Happening in West Valley Real Estate...

Currently we have 2.5 months worth of inventory in the west valley. This means that if no more homes come up on the market and buyers keep buying at the same pace, there will be no more homes to buy in 2.5 months. However, real estate is not static and more homes are consistently being added to our "For Sale" list. (We have 2 great new listings today!)

This 2.5 months benchmark DOES indicate that we are in a seller's market. Because of this lower inventory, sellers are able to push the pricing ceiling. However, sellers must always keep their eyes on the actual sold prices in their area if the house needs to be appraised. We have seen quite a few sellers reach for the stars when pricing their homes only to have the values corrected when the appraisal results arrive.

Mortgage Interest rates dropped slightly last week. Even if interest rates rise slightly, there is a silver lining. Historically, when interest rates have risen, more loan programs were created and more buyers were able to buy. The number of loan programs available affects the number of real estate sales more than a rise in interest rates. So sellers should not fret if rates do increase.

REAL ESTATE BUYERS !!! PAY ATTENTION!!!! IMPORTANT NEWS !!!

REAL ESTATE MORTGAGE RATES FELL YESTERDAY and Real Estate stocks rallied because the Federal Reserve announced it would continue to buy US Treasury Securities and mortgage backed securities. Both have kept mortgage rates well below historical norms for the past few years.

 Back in May, the Federal Reserve began "hinting" about a taper of asset purchases and mortgage interest rates rose. This put the brakes on the housing recovery and resulted in a sluggish summer for real estate. If interest rates retreat to where they were at the beginning of 2013, mortgage refinances and purchases will rebound again.

 IF YOU ARE A BUYER, mortgage rates are expected to drop over the next several weeks. NOW is the time to pull the trigger! For more information, contact our Buyer Specialist, Mike Drefs, at 623-693-1505! He can put you in touch with an excellent loan officer who will determine your current mortgage or refi rate.

Phx Area Home Prices....... A Look Ahead to 2014 ...

Part of our job as Realtors is to always be looking at market statistics, reading predictions from experts and forming an educated opinion on where the real estate in our market is headed. Many of the headsline you read regarding real estate is written on a national level. The market in California and Arizona typically starts the wave that slowly moves across the country. So, the national market statistics you are reading is usually old news for us here in the Phoenix area. So, here in a brief summary is what we are closely watching: 1) In Maricopa County jobs are growing faster than new home starts. Normally this would cause a housing price surge. However, because there are still vacant homes in the area and many residents are taking lower wage jobs, the new workers will most likely be renting or purchasing existing smaller homes. This current job surge is not likely to significantly raise housing prices. 2) Mortgage Interest Rates are expected to keep rising. Interest rates will slowly rise up incrementally, but just a small hike in an interest rate can make a significant increase in your mortgage payment. This means that as the interest rates rise, buyers may have to lower their maximum price in searching for homes. The rising interest rates should also slow rising home values because buyers will be purchasing lower priced homes. 3) Builders are readying plots of land for lots of building in 2014. The new home builders who were sitting on the sidelines for the past 4 years, are now gearing up to build again in 2014. You may have already seen some stalled new communities building again and closing out. As these new homes come up on the market, there will be more competition for the resale homes. So, we are expecting to see resale inventory rise. This increase in inventory will also slow the rising home values. As a side note, it appears the builders are a bit more relaxed when it comes to qualifying new buyers for home loans. As we stated in a previously, please be aware that if you go to a new home builder to purchase a home and do not have a realtor accompany you, you are going in unrepresented. If all goes smoothly, all will be fine. But, if you encounter any glitch in the home buying or building process, please be aware that the new home agent represents the builder and the builder only. They do not have your best interest at heart. Call our Buyer Specialist, Mike Drefs, at 623-693-1505 and we will make sure you get the fair deal you deserve and he will help smooth your path should you have problems with the building process. Mike must be with you on your FIRST trip to the new home community.

Investor, Investor... Where Are You?

We are seeing a decrease in the number of offers from real estate investors.
Why?
The type of real estate investor in AZ is changing.
1) The get rich quick investor, known to most as a flipper, has moved on to greener pastures in other states.  Just as vultures migrate, so does the flipper. They have moved on to states that are promising higher returns on investment, such as Florida and Texas. 
2) The new investor in AZ is buying and holding.  This investor is seeking more stability.  This investor is tracking where people are moving, where job markets and growing and where home prices are most stable.   AZ's job market is growing and AZ prices are still relatively low so investors are still buying rental properties.

While the fast acting flipper investors did help heal the AZ real estate market, the new breed of investor will sustain it.

Real estate continues to be America's second favorite investment....second only to cash.  With prices low and mortgage rates also historically low, it is an excellent time to invest in rental properties in AZ and to re-enter the real estate market if you have been watching from the sidelines.

Phoenix Real Estate Forecast.... PARTLY SUNNY!

According to the experts of the National Association of Realtors, NAR, the strength of the national real estate recovery remains in question. Here in Arizona, our housing prices are still reacting to an inadequate supply of homes for sale. However, the NAR is concerned that the pace of recovery will slow due to difficulty in obtaining housing due to weak income growth and greater lending restrictions.

According to the Bureau of Labor Statistics, the unemployment rate fell to 7.4% in July, but more importantly, average hourly earnings and average weekly hours worked decreased. The unemployment rate is actually closer to 15% if we add in those workers who are underemployed.

For the 1st time since November 2012, home listing prices decreased nationally from June '13 to July '13. Rising mortgage rates, growing inventory and declining investor demand lead to this dip in prices. However, looking at the bigger picture, asking prices are still strong rising 11% from July '12 to July '13. In addition, the NAR reports that the housing affordability index showed housing is still very affordable.

Looking at RENTS for July '13, Trulia reported an increase of 3.9% in rental rates from July 2012 to July 2013 nationally.. However, like home sale pricing, rental rates also seem to be leveling.

So, if you were waiting for home prices to level off before putting your home on the market, now is the time. And, if you are a buyer, now is the time to take advantage of the historically low mortgage interest rates.

Why Do Home Values in Some Phoenix Area Communities Seem to Be Decreasing??

Currently in many real estate sales, Fannie Mae and Freddie Mac,the leaders in the lending industry, are trying to demand approx. 20% over market price on the homes they are selling nationwide. They are attempting to drive prices up.

In other areas of the country where they are in the pit of the distressed market, with low values, this 20% tactic is fine. However, in our area which is the #1 recovery area in the US and where values have miraculously risen, this 20% tactic artificially drives the values even higher. The higher home value is OK if a cash buyer is willing to pay the inflated value, but if the buyer needs a loan, usually the buyer's lender will see the artificial high price, value the house lower than list price and in many cases, Fannie Mae will have to lower their expectations(and the contract price!).

Because the Phoenix area prices rose quickly and our area is no longer viewed as an "extreme" bargain area, many of the cash investors have left for Florida, Nebraska and Iowa. This leaves the bulk of our sales to the buyers that waited patiently and who need loans. So we are seeing the slight downward price corrections on the distressed properties at the time of the buyer's appraisal more and more.

In a few communities that are attracting many FHA buyers, there may appear to be a slight decrease in home values. Many of today's buyers are the "boomerang buyers" i.e buyers that experienced a short sale or foreclosure in the past 3-5 years and are now getting back into the market. An FHA loan is usually their first choice because of the relaxed standards and the low down payment. These FHA friendly neighborhoods are not necessarily declining in desirability, but simply going through a valuation correction. Usually these corrections are short lived... less than 6 months... because our market is so healthy and we have swift sales.

So, if you have seen homes valued slightly lower or are concerned that the values are not rising as quickly as they were in the beginning of the year in your community, don't fret. Phoenix is on a healthy path of recovery and we will continue to climb onwards and upwards!

The Scoop on Flipping in the Phoenix Market

Flipping (purchasing a distressed home, fixing it up and reselling it) has declined in the Phoenix area by 35%. This is because we have fewer distressed homes available in our market and our real estate prices are rising. This decline in flipping is a postive sign that our housing market is recovering.

We are, however, seeing flipping increases in other areas of the country. While Nevada and California are also seeing a decline in flipping, areas like Dayton Beach Florida, Palm Coast, Florida and Omaha, Nebraska are seeing a huge upswing in the number of flips. In some areas of Florida, they are reporting a whopping 85% return on their investment!