Phoenix Real Estate Report

phoenix real estate market update1. How fast are homes selling? Average number of days on market for homes sold is 59 (down 8 from last year)
2. How many homes are for sale? We currently have 15,108 properties for sale (down 24.1% from last year)
3. What is the average sales price? Homes around the valley are selling for $362,060 (up 10.4% from last year)

December’s supply was down 7.2% from December 2018 (measured by 5,746 homes listed for sale last month) and December’s demand was up 20.7% from December 2018 (measured by 7,797 homes sold last month). In the last 12 months, average home values increased over 10% and our current market absorption rate is only 1.85 months (the lower the number, the fewer number of homes for sale) – a drop of 25% in the past year.

What is going on? There is no denying 2019 exceeded everyone’s expectations and went down as the year with the 4th highest number of homes sold, only falling short to 2004, 2005 and 2011 – each of which had an extraordinary story: starting to get crazy, completely crazy and capitalizing on crazy. Not only did we see an increase in sales volume in 2019, we saw continued growth in the average sales price. When we multiply the 4th best sales volume with the average sales price of 2019, we achieve the highest gross dollar volume in our history. Interestingly, the average $/SQFT is still below the 2006 peak but in 2020 the average $/SQFT might topple that peak.

What can we expect? As we move into 2020, there is no more important metric than how supply relates to demand. We’re coming out hot, characterized by above normal demand and extremely low supply. The lack of supply can only be described as shocking: a 24% decline since this time last year to reach the lowest level since August 2005. This to satisfy a population that has grown more than 20% since 2005. Anyone who thinks this severe shortage will not result in a significant rise in prices is going to be surprised. Supply remains under half of what is needed for a balanced market. Phoenix is currently the strongest large-city housing market in the USA and this is fueled by inter-state population movements. Retirees are a big part of that but so are people moving here from California and other Western states for work and lower cost of living. Demand is likely to remain healthy despite rising prices.

Interested in getting multiple competitive offers to buy your house? My new platform Offer Nerd is the only site you need to request numerous offers from institutions competing to buy your home. Simply submit your address, upload property photos (or I can take them for you at no cost) and in a few days I will have obtained several competitive written offers from companies looking to buy your house. I’ll be your guide throughout the process and if none of the offers make sense for you, there is no obligation to sell. I’ll even include my realistic selling price if you were to take your home to market rather than accepting an institutional offer.

Data from ARMLS® COPYRIGHT 2020.

Freon Phase-Out

end of freonYou probably recognize R22 by its common name: Freon. This refrigerant has been used in households for over 60 years to allow our air conditioners to cool our homes. During the 1970s, scientists discovered a link between hydro-chlorofluorocarbons (HCFCs) and depletion of the Earth’s ozone layer. With this link began the phase out of R22, an HCFC product, in 2010. R22 is an HCFC refrigerant that use gases to produce cool air by compressing warm air sources into liquid through HVAC coils. Freon has been an industry standard in refrigerants since the 1950s due to its efficiency.

How will this affect homeowners?
Although production of R22 will cease, there is expected to be plenty available and approved for use through December 31, 2029. Between 2020 and 2029, servicing systems with R22 will rely solely on recycled or stockpiled quantities. Homeowners are not required to stop using R22 air conditioners, nor are they required to replace existing equipment. However, homeowners should keep in mind that as supplies of R22 becomes limited over time, they may experience an increase in prices.

Phaseout dates to know:
Under the Clean Air Act of 1990, the U.S. began to outline a phase out for the use of R22 that would unfold slowly over the course of 20 years.
January 1, 2020 – there will be a ban on production and import of R22. Service of product will rely on stockpile.
January 1, 2030 – there will be a ban on remaining stockpile and import of all HCFCs.

What can homeowners do now?
The phase-out of R22 has been lengthy to allow homeowners to replace their air conditioner as they naturally age, and replace them with new energy-efficient equipment that uses EPA-approved
refrigerants, such as R410A which is a non-ozone-depleting refrigerant alternative refrigerant. It is flourine-based and contains no chlorine. R410A is also noncorrosive, nonflammable, and neutral to the environment. It is manufactured and sold under many names such as, PURON®, GENTRON AZ-20®, and SUVA®.

Purchasing a home warranty plan for the property is likely the most cost effective way to deal with the R22 Freon phase-out and conversion to R410a that we are facing. It can save you thousands when entire systems need to be replaced.

Refinance FHA loan to Conventional loan

FHA refinance to conventionalI often have past clients who purchased their home in Phoenix with an FHA loan ask me about the current estimated value of their home because they are considering refinancing an FHA loan into a conventional loan. Why should you also look into this? To save money every month!

Homeowners who purchased a house using an FHA loan most likely put 3.5% of the purchase price as a down payment. In order to make the lender comfortable with a reduced down payment, this buyer was required to carry mortgage insurance for the life of the FHA loan. How much does mortgage insurance cost? It’s calculated as a function of the size of the loan and the borrower’s credit score (FICO) but typically runs about $200 per month for an FHA loan of $275,000 with a FICO of 700. The monthly mortgage insurance premium declines as the loan balance is paid down, but still amounts to $30,000 for the life of the FHA mortgage in this example!

To qualify for a conventional loan, borrowers must put down 20% of the purchase price of the home. If they go the FHA route of 3.5% down, they will need to contact their lender when they believe they have now built up 20% or more equity in the home. How do you build 20% or more equity? By either paying down the loan balance so the loan to value ratio is less than 80% (it started out at 96.5% in FHA scenario) and/or by having the home value increase. With Phoenix home values up substantially in recent years, if you purchased your home with an FHA loan, odds are you are in a great situation to refinance out of your FHA loan into a conventional loan.

I urge you to contact your lender to inquire about making this change to save thousands of dollars. If you are unsure of your home’s current value to assist in determining if your loan to value ratio is below 80%, request your no-cost and no-obligation Phoenix home value estimate from me. I do not need to visit your home and you will receive your report from me within 24 hours to present to your lender to see if you qualify for an FHA refinance.

Calculating Phoenix Home Value

Calculate Phoenix Home ValueEstimating the value of a Phoenix home is a science more than it is an art. Factors like average days on market, availability of other competing homes for sale and seasonal demand fluctuations should all be taken into consideration – but more so when determining the pricing strategy for your home, not calculating its market value.

Phoenix home value is calculated using a fairly strict set of criteria, including using:
– similar size homes (generally not more than +/- 15% in square footage difference)
– similar age homes (generally not more than +/- 10 years difference)
– similar neighborhoods or subdivisions (appraisers typically will not cross a major road or highway to find comps)

Phoenix home value is impacted by differences in:
– quality of home construction
– quality of improvements made
– size of lot
– lot views and/or privacy
– number of garage parking spaces
– number of bathrooms
– having a pool and/or spa
– having a fireplace

Once an opinion of fair value has been reached, how do you determine pricing strategy?

Within each neighborhood there are typically 3 price ranges:
– high (homes that bring the most $/sqft)
– low (homes that bring the least $/sqft)
– mid (homes that fall between high and low)

Most value ranges vary by more than $10/sqft so it is important to select the appropriate price range for the home and then to correctly position the home within the appropriate range. Having your home well positioned within the correct range doubles your chances of getting the home sold. Keep in mind that selling a home is both a price war and a beauty contest.

As you have probably realized by now, figuring out a home’s realistic market value and proper pricing strategy goes way beyond finding out what a neighbor sold their house for and multiplying that $/SQFT ratio by the total SQFT of living space in your house. Submit your property details if you would like me to provide you with a no cost, no obligation, value estimate for your Phoenix home.

Opendoor Reviews Offerpad Reviews

Opendoor reviews Offerpad reviewsLooking for Opendoor reviews or Offerpad reviews on Yelp? Good luck.

On February 11, 2019 Inman News reported that Yelp made finding these reviews almost impossible, by removing them from Yelp’s online search tool and from Google search results. The review pages are still accessible with direct links so consumers can still read old reviews and post new reviews – you just can’t search for the review pages any more since Yelp has stopped them from turning up in searches. When the review pages became unsearchable, Opendoor had a 3.0 star rating from over 180 reviews, while Offerpad had a 1.0 star rating from only 1 review. Interestingly, Opendoor has received financial backing from Yelp’s CEO as well as two former Yelp board members though they state the Yelp policy change has nothing to do with this relationship.

Why are reviews so important to a business? Consider when you make a small purchase decision, such as buying a new toaster or going out to eat. How often do you read reviews before making your choice? Let’s be honest, most of us hardly doing anything today with a little research first, which includes reading customer reviews and looking up star ratings. Would you buy a toaster with a rating of 3.0 stars in their reviews? Would you eat at a restaurant that only gets 3.0 stars from hundreds of patrons? And we’re talking about spending less than $100 in each of these situations. Consider then that selling a home is one of the biggest and most important financial transactions of many people’s lives. So if you won’t eat at a Chinese buffet with a questionable 3-star rating, would you sell your home with a company that gets the same rating?

Here is a link, which is also fully searchable on Google, to my rating and reviews from Zillow: Andrew Robb reviews.

RE/MAX Fine Properties
21000 N Pima Rd, Suite 100, Scottsdale AZ 85255