Category Archives: Blog

Now or Later: When Is the Right Time to Buy a Phoenix Home?

4-1-15-buyahouseA few weeks ago, an eye-catching article surfaced on the Investopedia web site—one with the arresting title of “When is the Right Time to Buy a Home?” I have always assumed that for prospective Phoenix home buyer, the answer to that question varies by the individual circumstances. But if there is a more cut-and-dried universal answer, it would certainly be good to know it. Definitely worth reading.

Despite its name, Investopedia is not an encyclopedic history of investing. Its own history is interesting, though—it started in Canada, was acquired by Forbes, then sold a short while later to ValueClick for $42,000,000 (talk about good investments)!

The article that was to supply the answer to “When is the Right Time to Buy a Home?” did turn out to have the right answer, though it’s a little less definitive that you would hope—prospective Phoenix home buyers don’t get the simple “NOW” or “LATER,” which would be most useful. However, before the final answer is presented, scattered between the many ads and other clickbait that apparently pay for Investopedia are some interesting current facts and observations, and several cop-outs.

When it comes to the big question, “When is the Right Time to Buy a Home?” by halfway through the article, it’s looking a bit more like “now” than “later.” It cites The National Association of Home Builders’ Housing Opportunity Index, which now finds that nationally, the majority of homes are affordable for families earning a median income of $63,900. True, most Phoenix families don’t earn exactly $63,900, but still, it’s good to know. Reading on, we learn that this level of affordability has been better in the past, and might be better later “unless mortgage rates move higher in the future.” Since elsewhere on the site we find that “the consensus is that interest rates will rise,” it doesn’t take Sherlock Holmes to deduce where “When is the Right Time to Buy a Home?” is leading.

Or so you might assume, before the article quotes a saying on Wall Street: Don’t try to time the market, which Investopedia advises also applies to real estate. Oddly enough, it also says, “If you’re looking for an edge, interest rates are near historic lows so now appears to be a better time than most for purchasing a home.”

That’s a pretty strong hint, but the answer isn’t spelled out. Yet. There follow some bits of good advice (hire an inspector prior to purchasing a home; don’t buy a car while your credit is being checked; inquire about taxes) before we get to the ultimate heading, “THE BOTTOM LINE.” It took a while, but here is the advice Phoenix readers would have been looking for all along, bottom-linewise.

Investopedia’s answer for “When is the Right Time to Buy a Home?” is a lot more sensible than most: “When you can afford it.”

I couldn’t agree more. Even if all the other factors weren’t as positive as they are today, being able to make a good fit financially is at the top of the list.

If now is that time for you—or if it’s time for you to put your own Phoenix home on the market—it’s also a good time to give me a call!

Expanding Perceived Value for a House for Sale in Scottsdale

4-1-15-homevalue_2Trying to ferret out which features home buyers value most is no simple matter, even though that’s of particular importance when you have a Scottsdale house for sale. Updated kitchens and bathrooms are always near the top of the ‘most desired’ features compilations; and I’d put ample storage right there with them. It may not come to mind when you ask prospects what they value the most, because it’s a “feature” that’s so much an integral part of a home’s design—but a house for sale with small closets and few drawers is still likely to register with buyers as somehow “smaller” than others with the same square footage.

According to the National Association of Home Builders, updated cabinets and counters may catch a buyer’s eye, but other less expensive improvements are may serve the same purpose. The top three features home buyers from all walks of life want in a kitchen are double sinks, room for a table, and a walk-in pantry. That doesn’t mean tearing out walls or reconfiguring the whole kitchen—but it can call for seeing if a similar effect can be achieved within a sensible budget. If you don’t have room to create a walk-in pantry, see if there is room for a stand-alone pantry cabinet. If you will be updating the kitchen sink and fixtures anyway, consider a deeper-welled model. Any improvements that add extra ‘roominess’ to the kitchen will register with many prospective buyers.

The NAHB has more findings that should interest anyone with a Scottsdale house for sale. Buyers increasingly favor environmentally friendly homes, for instance—but…they don’t want to pay extra for those ‘green’ features. On the other hand, they are willing to pay more for a home that’s energy efficient. If you have already determined that new appliances will be needed anyway, installing those with high Energy Star ratings is a definite recommendation. Likewise, if window replacements are also in the cards, new energy-efficient windows are worth considering. Today’s buyers are more aware of details like windows constructed with triple-pane glass. It’s common knowledge that those favorable Energy Star ratings mean decades of lower utility bills.

One low-cost way homeowners with a Scottsdale house for sale can capitalize on buyers’ safety concerns is by installing some exterior lighting. It’s a feature rated as “essential” or “desirable” by 80% of buyers in one study. Addressing the same issue: security systems. When a house for sale features a wireless home security system in its listing, even buyers whose safety concerns are less than top-of-mind will take note.

Before making any improvements, it’s only sensible to have a discussion with your Scottsdale Realtor®.

Even before you’re fully committed to putting your Scottsdale house up for sale, I’m ready to offer a no-obligation assessment of your home and how to best take advantage of today’s active market!

Mortgage Lender Optimism Could Spill into Phoenix Market

4-1-15-mortgageIf anyone involved in Phoenix real estate were to try to pick a word to characterize the mortgage industry as a whole, “sentimental” wouldn’t be among them. Especially over the past several years, “frustrated” might be apt, or “hog-tied.” Mortgage issuers been hampered by tough rules developed in reaction to the sub-prime mortgage mess. They certainly wanted to issue more mortgages, if only for their own profitability, but until recently, the lending guidelines made that difficult.

In any case, this is an industry that relies on hard facts and statistics to govern lending decisions. Mortgage industry leaders are therefore not inclined to be overly optimistic, overly pessimistic—nor are they prone to exaggeration in their public pronouncements.

So when the powers-that-be at Fannie Mae come out each quarter with their Mortgage Lender Sentiment Survey, the “sentiment” is not the Cry Me a River or You Are the Sunshine of My Life variety. This “sentiment” describes how real estate lenders (presumably including some Phoenix mortgage companies) feel about mortgage business prospects in the coming months. The actual report has a remarkable record of a lack of sentiment: it’s usually pretty much on target.

So it is that when the 2015 first quarter Survey appeared last month (this is one real estate report whose ‘first quarter’ paper actually appears in the first quarter), it sounded another positive note in the assemblage of springtime real estate projections. The summary talked about “an improving outlook among mortgage lenders” because those surveyed “expect mortgage demand…to grow over the next three months.” The hard number was 71% having that expectation, which wouldn’t be surprising, given our entry into the busy spring selling season. The optimism drew more from the fact that this is a substantial improvement compared with the same quarter last year (71% vs. the previous 59%).

If the growth they anticipate holds true for our own market, it wouldn’t just indicate improving activity for Phoenix home buyers and sellers. After what they viewed as an “uneven” 2014, Fannie Mae’s Chief Economist Doug Duncan said the results were “consistent with our view that an improving economy, strengthening employment, and increasing consumer confidence” pointed to the more cheerful outlook.

Also cheerful was the picture mortgage issuers expected for their own well-being. A year ago, lenders who thought their profitability would increase were in the extreme minority: 21%. This year, the size of the optimistic group doubled.

Local mortgage applicants could find good news in one more of the reasons for the expectation for mortgage demand to grow over the next three months. The report talked about how last year’s credit tightening was continuing to “trend down.” And there at the top was the headline which mentioned “Gradual Credit Easing.” For anyone who had found it hard to qualify under last year’s rules, that’s very welcome news.

If you will be buying or selling anytime soon, I hope you’ll give me a call: the sentiment here is also the green light kind!

Scottsdale Real Estate Watchers Note Strong National Upswing

4-1-15-realestateScottsdale real estate trends don’t always trace patterns that are precisely identical to those in the rest of the state or nation, but sooner or later the local market almost always responds similarly. That’s because there is a certain amount of momentum—positive or negative—that is automatically spawned by the good or bad real estate market news reported in the mass media.

So when last week’s Commerce Department report on new residential home sales was released, Scottsdale real estate watchers had reason to smile. Delightedly.

It wasn’t just that the bottom line number for February’s new home sales was substantial (estimated at 539,000, seasonally adjusted annual rate); it was how all the other stats supported them. Forbes headlined that February’s numbers hit a 7-year high. The financial web site Calculated Risk observed that although the report contained only two months’ worth of this year’s data, “Sales in 2015 are off to a solid start.”

In fact, just about all the accompanying details were heartening. The monthly new home sales are always revised several times as final real estate figures become available, and this time ‘round, January’s already-strong numbers were revised further upward. And the Census Bureau also tracks not seasonally adjusted sales (NSAs)—and so far this year they are up a full 19% above the same beginning months a year ago. For February alone, sales were up 24.8% year-over-year.

So, does that mean we should assume Scottsdale’s real estate sales are certain to jump by a full 24%, too? That would be terrific—but let’s not get carried away. For one thing, the new home sales statistics are a lot more volatile that real estate sales as a whole (new homes comprise less than 20% of the overall market). And the technical way the Commerce Department samples makes it prone to error. They put the margin of error at 15%, which makes for a lot of wiggle room.

Yet the sheer size of the sales increase makes it pretty unlikely that the trend won’t be borne out. Per Forbes, this report’s results are “viewed by economists as a measure of economic momentum and an indicator of future consumer purchases…” Those purchases are in furniture and appliances which traditionally accompany strong home sales.

Forbes’ “solid start” is exactly what we would hope for—especially since it tracks activity that was taking place even before the spring selling season got underway.

It’s getting started in earnest right now, so if you are interested in establishing your own Scottsdale real estate trend, this is the right time to give me a call!

Scottsdale Staging is a Home’s “Packaging”

3-25-stagingStaging is to a Scottsdale home what packaging is to a supermarket product: a vital element that can supersede all others. Product managers rely on advertising and marketing efforts to create awareness among consumers, just as homeowners use their Realtor’s marketing know-how (the listing, web page, signage and all their other advertising initiatives) to bring Scottsdale prospects to the door. Then, just as well-designed, attractive packaging is what finally moves a product off the shelf, it is first-class staging that can transform casual lookers into Scottsdale home buyers.

The goal of staging is to draw observers in; to help them picture whether the property’s spaces have all the nuances of what in their own mind’s eye constitutes a welcoming home. Bottom-line studies continue to verify that, staged correctly, homes sell more quickly. Although there are few absolute staging dos and don’ts, (after all, staging is an art); we can point to a number of probably don’ts. They’re relatively easy to avoid:

Failing to Incorporate the Outside

No matter how beautiful a home is once you open the door, prospective home buyers want to be proud of their new Scottsdale digs. Even if it will be marketed as a fixer-upper, a welcoming exterior is always a welcome surprise. If, on the other hand, dirty windows, dry grass, and cracks in the sidewalk greet buyers, that first impression can be counted on to drive offer numbers in the wrong direction. Staging efforts need to encompass the whole enchilada!

Neglecting the Little Things

When it comes to staging, nothing is completely unimportant. Light fixtures, cabinet knobs, faucets, drawer pulls—even electric outlet covers—all contribute to the cumulative impression a Scottsdale home conveys. It doesn’t mean that every tiny detail needs to be replaced; only those that are conspicuously damaged or dirty need to get attention.

Failing to Capitalize on Natural Light

As photographers know, “It’s always all about the light!” The fewer dim corners, the better. Staging a home to accentuate its rooms’ natural light is important, and where needed, boosting with lamps and overheads.

Forgetting the Nooks and Crannies

Assume that prospects see everything. Before a showing, a last quick walk-through of the whole home is a good idea. Check for stray items that are out of place, and be sure all is properly swept and neatened.

Opting Not to Use a Professional Stager

If the whole prospect of diligent staging isn’t appealing, it makes good business sense to hand it over to a Scottsdale staging professional. Pro stagers see every detail with a trained eye, and work to create a rich atmosphere—not just a collection of rooms.

From a buyer’s first glance at your listing to its ultimate sale, each step of the way is an opportunity to propel the process. The first one of those steps is choosing the Scottsdale Realtor® who will add energy and expertise to the campaign: I hope you’ll consider me!

The Phoenix Mortgage Payment Detail that Many Overlook

3-25-mortgage paymentIt can be a true three-ring circus as you close in on signing day for your new Phoenix home. Sometimes there’s a near-simultaneous sale of the previous house that demands attention. There are the timing issues connected with moving out and then moving in. You may be dealing with furnishing the new house, school schedules, and sometimes work requirements have to be juggled; and everything seems to be happening at the same time.

Amidst all the details you are attending to, there is one that appears so simple that it may not get as much consideration as it deserves. Seeming almost like a non-decision, this one actually has major implications. It’s a true ‘sleeper.’

The subject is your decision on how you want to time the new mortgage payments for your new Phoenix home. It turns out that “once a month” is not necessarily the best answer.

Many lenders offer a variety of mortgage payment options, and they vary in ways that can make a surprisingly great financial difference over the long haul. No matter how busy you get, this is a decision which deserves some serious attention (and probably a hand calculator).

First, there is an English language oddity to straighten out: it’s about the prefix “bi.”

If you think “bi” is a prefix that means ‘two,’ you’re right—but it also has two meanings:

  • ‘Bimonthly’ means twice a month (but not once every two months).
  • ‘Biweekly’ means every other week.

At first glance, “every other week” and “twice a month” seem to be the same thing; but they’re not. The difference is significant, because there are 52 (not 48) weeks in a year. As everyone comes to realize sooner or later, there are 4.3 weeks in an average month (not four). So the number of mortgage payments you will make could be 12 (if you go with the standard ‘once a month’ mortgage payment), or 24 (a bimonthly mortgage payment), or 26 (the biweekly choice).

Most people who choose either of the ‘bi’ payment choices consider a mortgage payment amount that’s exactly half of the monthly amount. If you choose the bimonthly plan, you might save a bit on interest by paying the first half a little bit early. But most lenders just hold the money and apply both payments at the end of the month—if so, the advantage disappears.

The real significant difference arises if you are offered a biweekly option. You can use any of the online mortgage sites to work out the precise details for yourself. Because you are making two extra payments a year, for instance, what would have been a 3.8% 30-year $225,000 loan for a Phoenix home actually turns into a 26-year loan. All else being equal, you’d own your Phoenix home free and clear four years earlier—and save more than $23,000 in the process!

No matter how hectic a house hunting and moving process becomes, it’s part of my job to help my clients keep the important details and decisions front-and-center. Getting the best answer to the mortgage payment choice is one of them; and of course, another best answer is to give me a call!

 

Flipping Scottsdale Real Estate vs. Buy-and-Hold

3-25-flipWhen you own the Scottsdale home your family lives in, you are by definition a real estate investor: it comes with the turf. Your investment is essentially a passive one. Until the day you decide to sell and move on, any improvement in its value is secondary to how well it serves to shelter your family.

How you think about your investment—and how you proceed to manage it—is altogether different when you buy a Scottsdale home purely as a financial venture. For one thing, you face an immediate strategic decision: will you be flipping for a quick short-term profit, or aim for the long term through a buy-and-hold strategy? You have to weigh some pros and cons in order to make the right decision.

Flipping

Pro: Capital is Freed

A flipping strategy minimizes the amount of time your investment capital is committed, freeing it for other uses. Should you identify another potentially lucrative investment, you will be able to take advantage of it.

Con: Unexpected Challenges

While flipping for short-term profit has definite ‘hands-on’ appeal, first-time investors can be surprised by unexpected complications. Properties that appear to be undervalued (and ripe for a quick flip!) may require costly fixes. Overspending on renovations quickly eats into profits, but underspending can lead to a lengthier holding time. Experienced Scottsdale flipping veterans have learned to successfully gauge a property’s true turnaround value.

Additional Consideration: Taxes

Scottsdale flipping has tax implications that impact the bottom line. Profits from a property owned more than a year are generally taxed at the ordinary income tax rate, while a property held for less than a year may be taxed at the capital gains rate. Local and state tariffs need to be considered as well—this is where input from a qualified professional is important.

Buy-and-Hold

Pro: Passive Investment

If management is outsourced to a professional property manager, the buy-and-hold strategy will require less personal attention than flipping does. Preparing a property for a flip often involves considerable time commitment and adept contractor schedule-juggling.

Con: Management Costs

The passive investment advantage holds true if outside management is contemplated— with commensurate expense. If you enjoy the challenge of successfully managing a property, this negative doesn’t apply.

Pro: Fewer Properties Need To Be Identified

Ultimately, successfully executing a flipping strategy means scrutinizing a huge number of properties over the course of time. In contrast, a buy-and-hold strategy necessitates finding only a few great bargains. Pursued intelligently, both buy-and-hold and quick flip strategies have proved profitable for many investors.

Both call for finding solid value in Scottsdale properties—which is where giving me a call comes in!

Phoenix Parents Consider Home Rental for College-Bound Kids

3-25-reentalFor many Phoenix parents of high school seniors, these are hold-your-breath days—the time of year when college acceptance letters begin showing up in Phoenix mailboxes. If all goes well, after settling on a school, next comes tackling the array of decisions that follow. Chief among them: where he or she will live. Many parents tend to take the common course, assuming that a college dorm is automatically the best answer—but a college’s room-and-board plan is actually only one of the possibilities. In fact, it may not be the best financial, social or developmental choice for parent or student. Renting a house can be an intriguing alternative. Here are three of the reasons why some Phoenix parents decide a home rental makes more sense:

1. Cost

Sharing a home rental is often significantly less expensive than renting an apartment—or even a dorm room. Prices vary, but it’s more than possible to end up paying as much as $4,500 per semester for student housing. If your student lives on campus during the summer, fall and spring terms, that would create a $13,500 bill for the year’s housing (the equivalent of paying more than $1,000 in rent per month). Considering that most dorm rooms are tiny, that translates into a much higher cost per square foot than does a shared home rental.

Renting even a one-bedroom home near campus can give your child more space and quiet time to study without interference from fire alarm-pulling pranksters or noisy roommates. Every student is different, and having a place to escape the hustle and bustle of campus life can provide some kids with the extra focus they’ll need for success.

2. Safety

When students live in crowded dorms, many parents worry that they are more likely to catch colds or other communicable diseases. Being packed into a dorm with hundreds of people who may or may not behave responsibly is a dire way to view dorm life, but that is some parents’ view. When their child lives on his or her own or teams with a select group of roommates, some parents breathe easier.

3. Responsibility

With a home rental, any student will learn more about responsible adulthood than when campus authorities assume parental-like responsibility for day-to-day living. Students who are on their own may be wholly or partially enrolled in school cafeteria programs, or may learn to shop for and prepare their own meals. Household and maintenance chores will be theirs to handle, rather than being the province of college employees. In that way, a college home rental can serve almost as a youngster’s “starter home.” They will graduate from college with a rental history, self-sufficiency skills, and home stewardship experience that will prepare him or her to better care for their own home later in life.

Of course, it’s not universally the best answer to the student housing problem: every institution and child combination are different, and different youngsters respond to independence and responsibility in differing ways. But if you haven’t thought about the possibility, it could be worth looking into.

If I can help with a referral to a rental agency—or if you’d like to consider buying—do give me a call!

Scottsdale Mortgage Down Payment Rules See Spring Turnaround

3-18-springmortgageThe first day of spring! The vernal equinox! This year, March 20 is the red-letter day on Scottsdale’s real estate calendar. It’s the nominal kickoff to the traditionally rambunctious spring selling season—historically, the go-go time of year. It’s when more homes come on the market, more prospective buyers come out to see them, and more sales are launched than in any other season.

But this year, what happens three days later might well turn out to be nearly as noteworthy.

The 23rd may not mark an annual event, but it could become a second red-letter day for Scottsdale home buyers and sellers in 2015. If all goes according to plan, it’s the day when Freddie Mac joins Fannie Mae in easing the down payment requirements mortgage lenders observe.

This is part of a development that surfaced last fall when sharp-eyed Scottsdale residents first noticed some trial balloon announcements from the mortgage lending industry. The sources were insiders who leaked details of an agreement being hammered out between Fannie Mae, Freddie Mac, and the lenders they underwrite. Fannie buys mortgage loans from the large commercial lenders, Freddie, smaller houses. Both of the mortgage behemoths are regulated by the Federal Housing Finance Agency. FHFA is the government overseer that lost most of its trusting good humor after it had to bail out Freddie and Fannie during the subprime mortgage fiasco (actually, it was we taxpayers who got the bill).

But last falls’ news leak indicated a reversal was in the wind. Borrowers with weaker credit might soon find it easier to land a mortgage, because Fannie and Freddie would resume making such loans less risky for lenders. That would be welcome news for Scottsdale home buyers and sellers alike. Tight Scottsdale mortgage lending rules had been part of the national reaction to the subprime mortgage mess, but the result had been predictable: a throttling back of the number of loans banks were willing to grant. Fewer mortgage loans meant that some sales simply wouldn’t take place. In some cases, it was downright irritating.

That’s why, for some Scottsdale mortgage applicants, March 23rd could mark the resumption of renewed home owning possibilities. It’s the kickoff date for a program Freddie Mac calls “Home Possible”—and it means that Fannie will be joined in offering “flexible credit terms and low down payment options”…options that can include down payments as low as 3%. Freddie’s website calls the result “more flexibility for maximum financing.”

With the kickoff of the spring selling season, Freddie’s “Home Possible” couldn’t have come at a better time (some humor-minded real estate professionals had begun to think of Freddie’s previous programs as “Home Impossible”). Even just the expected publicity should encourage some formerly gun-shy prospective Scottsdale mortgage applicants to resume their quest for a home to call their own.

If you could be one of them—or a homeowner preparing to list for the spring season—I hope you will give me a call. Your timing couldn’t be better!

If History Plays Hob with a Phoenix House for Sale

3-18-historyWould you buy a house where someone died? Would it make a difference if the death was peaceful or…otherwise?

You might never have considered such questions, but the answers can become a serious issue for a Phoenix house for sale—especially if it has a history that could be right out of a CSI episode. And what if you are the owner of a Phoenix house for sale with this kind of issue? It may be labeled as stigmatized—the unpleasant term that can attach to a house for sale which buyers or tenants may shun for reasons unrelated to its physical condition.

It’s a good thing that the list of potentially disturbing events isn’t a long one: death; murder; suicide; scary illness; being haunted (rather, the belief that it’s haunted—let’s not get into that discussion!). An owner might have known of a sketchy history when he or she purchased the property, or perhaps found out later on. The information may not have made a difference before, but it could impact the number of prospects who will make offers on a house for sale—in Phoenix (or anywhere, for that matter). What to do?

Selling for the Right Price

What of happenings that are simply gruesome? Another property in California’s Bay Area had a grisly past involving drugs, murder and other heinous activities. This was a stylish home in an affluent neighborhood which sat empty while other comparable homes for sale came and went. Then one day a young businesswoman made an offer well below the asking price. The bank that owned the property had a list price of $335,000, already below values in the area. After negotiation, the buyer bought the home for $261,000. She saw past the horrific story to the potential that it offered to someone not affected by the drama of days gone by. And probably counted on the fact that her remodeling efforts—plus the many years she planned on living there—would make future buyers much less likely to worry about what would gradually turn into a distant past.

Telling the Right Story

One otherwise quaint home in a western small town was widely reputed to host paranormal activity. The stories of what previous owners had faced from ghosts of the past were widespread enough that even non-believers might think twice about taking it on. For some properties, it is just a matter of putting the right spin on the story. Events that took place decades ago often bring allure to a property—while more recent activities may cause buyers to hesitate. The Realtor® took the ‘problem’ head-on by making the most of it, figuring that a good ghost story could add to the appeal if it was marketed correctly. It sold at a premium.

The takeaway: if you have a Phoenix house for sale that’s connected to a sad, tragic or paranormal history, don’t assume the worst. Some ‘stigmas’ may mean a sale takes more careful handling (but that’s just one more reason why a call to my office is a good first step).

With the right story and the right price, you’re pretty certain to find the right buyer—one who either overlooks the past, or is fascinated by it!