Category Archives: Buyer

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!

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!

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!

Are Scottsdale Home Values Connected to Starbucks? Really?

3-18-starbucksStarbucks will boost your home’s value?

This was the “hot home-buying tip” splashed all over the airwaves at the end of last month—one that Scottsdale real estate watchers probably assumed had to be one of those weird, crazy coincidence feature stories that crop up from time to time. It was a little surprising that Zillow, the big national real estate firm, was said to be the source. It was all over the TV and radio newscasts, usually providing the cutesy end-of-broadcast segment. It hit dozens of news blogs, led by headlines like “Starbucks will boost your home’s value” (Fortune) and “Starbucks increases neighborhood, home values” (cnbc.com).

Yeah. Sure thing—just like the one about a rock on Mars that looks just like a monkey. Here in Scottsdale, we’ve seen Internet stories like this come and go before…

But then, after delving into the actual source, it turns out that this tall tale actually does have an unchallengeable basis in fact. Zillow research shows that in the 17 years leading up to 2015, homes within a quarter mile of a Starbucks location grew in value by 96%. That’s more than 30% greater than the average increase! It was enough to puzzle even the most skeptical Scottsdale homeowner.

But there is a logical reason that explains it—one that’s a little different from what the headlines might lead us to believe. It’s one that won’t make some fast food execs very happy…

First of all, Zillow did come up with the research. Why is not exactly clear (other than to grab a bunch of headlines), but their blogger Melissa Allison is the author of the ‘hot home-buying tip:’

“Buying near a Starbucks has benefits beyond easy access to your double-tall, non-fat, bone-dry cappuccino,” she wrote, followed by the head-scratching statistics. She also clarified that the effect was not common to all coffee vending shops. Homes near Dunkin’ Donuts locations appreciated only 80% during the same period. And there was a U.S. map pointing out the cities with the most pronounced ‘Starbucks effect’ (Boston and Philadelphia).

Here in town, though, regardless of how relevant it is (or isn’t) to Scottsdale home values, it was definitely one statistic worth investigating further. You just had to—in case there really was some obscure nugget of home value wisdom to be had. In fact, after reading through a half dozen commentaries, there does seem to be at least one logical explanation, and with it, as Ms. Allison promised, a home value tip:

a) The real estate executives at Starbucks are very good at picking their locations. They find areas where home values are going to rise a lot faster than elsewhere.
b) The real estate executives at Dunkin’ Donuts—not so much.
c) Don’t take headlines literally. “Markets Where Starbucks Boosts Home Values the Most” is very misleading. Where an area as a whole is hot, home values rise. Starbucks is just good at slipstreaming behind them.

Scottsdale home values rise when their owners improve the property, or when the neighborhood grows in popularity, or when the trend has all Scottsdale home values on the rise. The best ‘hot home-buying tip’ to come out of this?

Don’t start looking for a Starbucks sign; just give me a call!

Phoenix Real Estate and the Many “Months” of March

3-18-marchThis March has been such a busy one on the Phoenix real estate calendar that I thought it would be a good idea to double-check everything just to be certain I wasn’t overlooking any important happenings.

It wasn’t just that the first day of spring on the 20th is the traditional start of what’s regularly the busiest time of year for Phoenix real estate activity. This is a reliable phenomenon, further reinforced by the 61 million results you get when you Google “Spring Real Estate Selling Season.” To be accurate, the National Association of Realtors® fudges a little by calling spring and summer the hottest seasons for real estate activity—but it turns out they are pointing to the fact that many sales initiated in spring close during the summer (which is when people prefer to move).

March also has a red-letter day on the 23rd, which is when Freddie Mac, the mortgage reinsurer, is set to kick off their ‘Home Possible’ program. It’s a lowering of their down payment requirements, so mortgage lenders will have more leeway with borrowers. That should provide a further boost for Phoenix real estate activity, which has been laboring for years under tough lending requirements that discouraged some otherwise well-qualified home buyers.

Then there is March Madness, in which basketball plays havoc with more than just television schedules. You could say that it plays hob with appointment times for many Phoenix home showings, since the last five minutes of most of the games take at least half an hour.

Just in case the calendar has even more events that might affect Phoenix real estate, we thought we’d better check to be certain we haven’t overlooked any upcoming happenings.

We found out we can relax.

True, this March is Optimism Month, which is certainly thematically in tune with the positive spring real estate outlook (speaking of ‘in tune,’ March is also Music in Our Schools Month and Play the Recorder Month).

It’s International Ideas Month, which, for anyone who’s been following the headlines, is certainly arriving in the nick of time. For those who are, internationally speaking, prone to sticking to their old ideas, March is also International Listening Awareness Month. It’s Mirth Month as well as Humorists are Artists Month. It’s also Noodle Month (does this have a connection with Mirth Month?), Peanut Month, and National Nutrition Month.

In addition to minding nutrition, this is a month for safety: it’s National Collision Awareness Month, as well as National Cheerleading Safety Month. It turns out, there are another couple of dozen other Months that are taking place right now, but most have little to do with buying and selling homes.

What seems better connected to Phoenix real estate is the fact that this is also Umbrella Month, although it’s too early to know the precipitation total for the whole month. It hasn’t prevented many showings or open houses, for sure.

In any case, if you are thinking of taking advantage of the Spring Selling Season, it’s also a terrific month to give me a call!

Relocating from Scottsdale is at Hand, Identifying the ‘Where’

3-11-relocationOnce you’re mentally prepared for the relocating experience (to self: “it’s definitely the right move”), where is the first order of business. Perhaps you’ve outgrown your Scottsdale home anyway—the family simply needs more space. Perhaps relocating is necessary for work reasons; or now that the kids have moved out, you’re ready to downsize. No matter what the reason for relocating from Scottsdale, thoroughly evaluating the possible destination communities before deciding to buy couldn’t be more important.

While your real estate agent can be an invaluable resource in guiding you to the right home within your target area, the original question—designating the search perimeter—is pretty much in your wheelhouse. If you are not already committed to an area because friends or family make it an easy decision, one way to think about narrowing your choices is to recognize and prioritize the elements most important in your day to day living:

If you have kids, the quality of the school districts will play a major role in relocating. The web offers a number of rating and comparison sites (to find them, just search for ‘school district ratings’). How you winnow the field will be different depending on the age of your children and your own priorities. Once you’ve narrowed the field, you can get an inside look at where your kids might be studying if you include tours of potential schools in your house hunting forays. See if you can seek out parents of current students to get their take on the school’s performance: it’s the bottom line.

It may not be a major concern in all neighborhoods here in Scottsdale, but remember that safety is paramount—so you want to choose a community that is comfortable for you. Again, the web makes this research much easier than in years past. Many police department websites include crime maps where you can find both nonviolent and violent crime statistics organized by zip code. Before relocating—in fact, even before you begin your property search—make sure the target areas are safe!

You might not be a resident of the new community just yet, but you can act like one during your research phase. Hang out at a local park; take a stroll through the neighborhood. Have a family dinner at a nice restaurant, and breakfast at the local diner (be sure to pick up any flyers that are laid out on the counter). Look for community events, like fairs or festivals. These simple experiences will give you a sense of the community—one that should make your move less intimidating. Just a little time spent in the neighborhood can help you decide whether the area feels right to you.

Population densities and traffic profiles can differ widely from what you are used to here in Scottsdale. Some are pedestrian-friendly, others in a nearly permanent state of gridlock. Picture your daily commute, whether you’re heading to work, taking the kids to school, or both. How close are grocery stores, restaurants, and retailers? Are doctors’ offices, salons, and other services handy—or a painful 25 minutes away? Looking beyond the house and at the community as a whole can make relocating the success you hope it will be.

If you have to leave Scottsdale, the most fundamental stress-reducer is the one that comes first: the expert handling of the sale of your Scottsdale home. Do give me a call: after all, that’s where I come in!

Advances in Senior Housing Meet Demographic Shift

3-11-seniorlivingAs the demand for age-restricted senior housing continues to grow nationwide, it’s certain to influence more than just the new home builders whose bread and butter depends on paying attention to such trends. It’s also likely to influence the character of neighborhoods as a whole, Scottsdale’s included.

The numbers tell a story that’s been written about for years. As Scottsdale’s baby boom generation joins their cohort’s arrival into retirement age over the coming decades, they will become part of the wealthiest generation of senior home buyers in history. Senior housing developers are very well aware of that fact, but its full impact has only really begun to be felt recently. One evidence: the National Association of Homebuilders reports that starts of age-restricted homes nearly doubled between 2012 and 2013.

Part of the reason may be cultural—but it’s also possible that improvements in health and longevity could be involved. Today’s older generation views senior housing through a different lens than did their forebears, which means that new senior housing communities are taking on a look that’s considerably different from retirement neighborhoods of the past. There are multiple influences that are shaping the new senior housing mold. Among them—

  • Many senior citizens continue to hold jobs. Earlier forecasts of dire results from predicted shortfalls in retirement savings don’t seem to be working out that way, since a great number of seniors are showing marked determination to put off full retirement indefinitely—regardless of financial need. Delaware’s Benchmark Builders reports that more than half of the residents in their age-restricted communities still work at least part-time, a trend being echoed throughout the nation. Developers are moving senior housing out of the Sun Belt and closer to urban areas to facilitate easy commuting (some are even incorporating office facilities as part of resident amenities!).
  • A number of housing projects are being designed to provide a patchwork of age-specific sections. While grandparents may enjoy living on a street or block devoted to neighbors in their age bracket, in the best of all worlds, they also would choose to be close to children and grandchildren. Some new housing developments are setting aside sections for young families close to senior housing blocks.
  • Options for active older home buyers are crucial. In 1960, activity choices in many retirement communities began and ended with shuffleboard. Increasingly, senior housing projects are aimed at buyers who have no intention of pursuing a sedentary lifestyle. They look for active environments, with walking trails and easy access to amenities beyond the community. Indoor walking tracks, lap pools, hiking and biking trails and exercise equipment are becoming must-have features.

Today’s typical senior as part of a financially powerful demographic, is changing the look of retirement neighborhoods. But independent thinking has long been a notable characteristic of the boomer generation—so it also follows that not every Scottsdale senior will make that lifestyle choice.

Senior or not, I’m always standing by to further your next residential move!

Buying a House in Phoenix May Require a Momentum Shift

3-4-buyahouseIt can feel a little like a trip to the shore in springtime, before the summer sun has warmed the water. The water might be okay—but it also might be bone-chilling! Most Phoenix residents will choose caution, and stick their toe in, first…

Deciding whether to buy a house when you have been renting for a while means taking a much more significant plunge. And there’s no way to test the waters, either: you’re either going to buy a Phoenix house or, you aren’t. It’s in or out. And it’s also a deeply personal decision.

Momentum can be a deciding factor. Many people defer buying a home because it comprises such a major change. Especially if they are satisfied with their current rental—and even more if buying a house would make them homeowners for the first time —it would seem to require a major event to get them motivated.

There actually has been something like a major event, but it’s a slow-moving one that doesn’t rate banner headlines in the newspapers. It’s not an earthquake, or fire, or outbreak of war or pestilence. It’s simply a finding by the Federal Reserve. They published it in their triennial Survey of Consumer Finances. It states:

“In the past 15 years, the net worth of the typical homeowner has ranged between 31 and 46 times that of the net worth of the typical renter.”

It’s a simple fact that homeowner equity is a substantial component of homeowner wealth. And you can’t build equity without…well, buying a house!

Many thoughtful would-be Phoenix homeowners have hesitated during the last few years as the logical result of the tumble of residential real estate. If you didn’t have to sell your home, that part of the financial turmoil may have caused scare headlines, but was an otherwise abstract event. But if you had to move and sell, it could have been painfully real (unless you immediately bought another house at an equally depressed price level).

The real estate recovery that is still under way is a less jarring, slow-moving event—much less of a headline-maker. But the financial reality the Fed points to is surprisingly relevant. It was conducted in 2013, after the housing industry meltdown. Homeowner wealth registered a full 36 times the net worth of renters. Evidently, the financial wisdom of buying a house seems to remain a constant, no matter what!

Buying a house in Phoenix is a traditional way of building a solid financial picture, but it’s also a source of pride and family cohesiveness. If you have been thinking about wading into homeownership this spring, I hope you won’t hesitate to give me a call. I have all the information you’ll need to decide if the water feels fine to you!