Category Archives: Market Trend

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!

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!

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!

Foreign Property Offers can Attract Scottsdale Investors

3-4-foreignIn today’s globalized economy, purchasing a foreign property has become an option for Scottsdale buyers who in earlier times would never have even considered it. As an investment, a vacation or retirement property, or as an accommodation for children studying abroad, there are many reasons why you might decide to look into purchasing a property outside of the Scottsdale market. Here are some general tips for how to go about making a real estate purchase overseas:

1. Research the Foreign Market

Research the local real estate market carefully. Its cycles and trends are likely to be markedly different from ours here in Scottsdale. Don’t assume that because real estate prices are on the rise here, the same is true in any given foreign market. You should also step back to make a realistic appraisal of the overall stability of the country’s economy—it will affect your investment.

2. Check the Laws Regarding Foreign Ownership

Many countries place ownership restrictions on foreigners. It’s a favorite ploy of fraudsters to “sell” foreign property in markets were non-citizens are not legally allowed to own…and it’s only one good reason why you will be wise to—

3. Retain an Independent Local Lawyer

You will want to consult a lawyer when purchasing any foreign property. That lawyer should be representing you and you alone. Make sure you can communicate clearly and easily with your lawyer, and that your queries are answered in a timely manner. If you find yourself having major difficulty in selecting the lawyer, that may indicate more serious issues to come.

4. Visit the Property

You or a trusted representative should visit the property before buying. This may sound like a no-brainer, but persuasive pitches and affordable prices can be powerful inducements. Photos, videos, and other marketing materials are designed to present the property (or even a nearby property!) in the best possible light. At a minimum, have a friend or family member look over and photograph the actual site. You need to be firm in your insistence that the property lives up to your expectations.

5. Plan for Changes in the Exchange Rate

Unless you are purchasing the foreign property outright, you may be contracting to make payments over decades—years during which exchange rates might shift significantly—impacting the actual total purchase price. Too, if you are paying for the property outright in cash, there can be a delay between when you agree to the purchase price and when the funds are transferred.

6. Translate all Documentation

Once you have signed the foreign property transfer documents, you will be legally obligated to abide by all its terms, so before signing any documents, make sure that they have been accurately translated. Even relatively small differences in wording can create problems.

Purchasing a foreign property can be a legitimate way to diversify your real estate holdings. Approach the foreign market carefully, do your research, and have the right local representation. But before you make a final decision, think about giving me a call to see how today’s comparable Scottsdale properties compare!

News Flash! Men, Women House Hunters Differ!

2-20-a-menwomenLast week, The Wall Street Journal made it official: they had a slow news day. It was February 11 (that was Wednesday) when they ran the feature story, “A Gender Gap in Real Estate.”

This was something Phoenix house hunters (not to mention those hoping to attract their attention) could certainly appreciate: an article about what men and women consider “very important” when it comes to features in homes. Author Adam Bonislawski based his story on National Association of Realtors® survey information; the results pointed to some dissimilarities between what women and men look for.

Now, I’ve had a good deal of experience helping both men and women house hunters in Phoenix, so it didn’t come as a complete surprise that their priorities differ. For instance, I was not at all surprised about the contrasting emphases the two put on the importance of having a walk-in closet in the master bedroom. The only surprise was that it was the men who found it much more important (38%-29%)!

What about house hunters’ feelings about the importance of kitchen appliances being new? Same phenomenon: men 38%, women 29% (possibly because appliances are gadgets, and men like the newest gadgets). How important is it that a home be single level? The sexes reverse: Male house hunters think it is very important 18% of the time; women, 31%. I’d bet that within the 18% that are masculine we’d find a disproportionate number of stay-at-home dads.

House hunters registered a big gap when it comes to rating 9-foot or higher ceilings as very important. A miniscule 8% of females agreed, while nearly three times that many of their male counterparts thought so (21%).

One harder to guess feature would have been the desirability of a kitchen island. Nineteen percent of male house hunters found it very important, versus just 8% of the females. Does this mean women are tired of entertaining? Do they no longer consider their masculine counterparts capable of sous chef action? Or is it that more men are taking over the cooking duties?

I’d have to admit, I’m less than certain that these national averages are 100% reflective of what house hunters in Phoenix prefer. Yes, Phoenix men certainly value attics (13%) more than the ladies (7%)—they do tend to spend more time up there (but neither are terribly committed to that form of high living). Basements are preferred by close to equal numbers.

Being that these findings are sort of interesting (not fascinating, perhaps, but at least sort of interesting), you might be wondering why at the beginning I thought it was evidence that the WSJ was having a slow news day. It’s because of some tiny print at the bottom of a graph, which gave the date of the NAR survey—all the way back in 2013! More up-to-date is what we find unfolding for today’s Phoenix house hunters: give me a call to get the latest!

International Home Buyers Might be Phoenix’s Next Prospects

1-28-intlbuyerPhoenix homeowners could benefit if the influx of international home buyers continues to expand. According to a study from the National Association Realtors®, the trend in that direction has been accelerating. In the most recent release covering the twelve-month period ending last March, foreign nationals are reported to have spent more than $92 billion in the United States for the year.

That’s growth at a blistering pace: an increase of 35% over the $68 billion spent in 2012!

How Phoenix homeowners stand to benefit from the increase in foreign buyers has a lot to do with today’s changing real estate marketplace. Since international home buyers need to learn as much as possible about a property from afar, the improvements in online presentation serve a very necessary purpose. When one of our Phoenix listings includes an extensive selection of photos or video footage, it becomes a legitimate part of the emerging international marketplace. Combined with today’s easy-to-navigate links to detailed information about Phoenix’s neighborhoods and local amenities, a local property is realistically accessible to buyers from anywhere in the world.

Last year’s foreign sales were split almost equally between foreign buyers whose primary residence is outside the country and those currently living here. Not surprisingly, the greatest number of sales—19%—came from Canadian nationals, closely followed by the Chinese (16%) and Mexicans (9%). Both Indian and United Kingdom nationals weighed in with 5% of last year’s purchases, while lesser percentages of international home buyers hailed from Germany, followed by the French, Brazilians, and Japanese.

The NAR study also delved into the reasons international home buyers increasingly favor U.S. properties—although the answers were wide-ranging. For some, it was the investment potential that was the biggest draw: owning U.S. properties is seen as a solid way to diversify foreign portfolios. International buyers value the relative economic stability and attractive prices present in our real estate market. Other buyers are relocating to the United States for professional reasons, while still others purchase a property for children attending college.

One aspect that Phoenix property owners might find interesting is that international home buyers tend to purchase higher-priced houses. That might be due to the impact of the Chinese buyers, whose primary focus is in areas like New York and California where properties are more expensive. In contrast, Canadians are more likely to purchase in lower-priced areas of the country. This is one reason why, although Canadians purchased more properties last year, the amount they spent ($13.8 billion) represented a slight decline from the previous year.

International buyers have another standout attribute that Phoenix home sellers should find attractive: they are more likely to pay entirely in cash! About 60% of all purchases made by international home buyers required no financing—that’s up a third from 2007. When you consider the average sales price, it represents a fairly hefty cash infusion.

If your own Phoenix home will be on the market soon, I hope you will give me a call to discuss how we can create a strong presentation for local and international home buyers alike!

Moves to the ‘Burbs? Conflicting Trends Shed Little Light

1-28-burbsScottsdale real estate trackers stay informed via the most recent listing and sales numbers, which is the most solid information of all. It’s helpful for planning purposes—even though what has happened in the past is only a suggestion of how real estate in Scottsdale will perform in coming months. To get another indicator of future activity, the broader national trends are worth watching, along with the analyses and predictions of the top real estate experts. But it’s not always clear which trend is emerging, or which expert is right.

Case in point concerns younger families abandoning more urban areas to take up residence in the suburbs. Everyone acknowledges this group has been slow to settle into their first single family homes; but now there is a trend that has them selling their expensive condominium in downtown core areas, then using the proceeds for down payments on a house in the suburbs.

Real estate commentators who see this trend can bring convincing logic to their argument. Condominiums in most major downtown city cores have become increasingly expensive. For the lucky owners, it means they have gained significant real estate equity. However, especially for those with growing families, the downside is that they can’t afford to grow into a larger condo in their current neighborhood. Their best option is to sell the condo and move to the suburbs, where their money will get them more real estate.

Urban Studies Professor Joel Kotkin confirms that the first group of millennials, now entering their 30s, “are beginning, like preceding generations, to move to the suburbs.” It’s a trend that sounds reasonable enough…but not to everyone.

Others disagree, convincingly. In fact, it’s more than a disagreement: they propound the opposite—a movement is toward city cores. The 36th edition of the seriously respectable Urban Land Institute/PricewaterhouseCoopers Emerging Trends in Real Estate report says, right there in Chapter 3, that “vibrant urban centers are almost a universal trend” in all 75 markets surveyed. That’s quite a few markets (compiled by 1,400 contributors). Lest anyone be unclear about the emerging trend itself, those quotes come from the section called “Continuing Urbanization Trend.”

To be fair, both perceived trends are subject to qualifications and footnotes that, it’s fair to say, muddle the picture. Under the Urban Land Institute/PwC’s Continuing Urbanization Trend heading, for instance, lies the statement, “Interviewees…cited activity in the traditional downtown area and also in suburban nodes.” In other words, perhaps the Urbanization Trend could also be sort of suburban, sort of. Scottsdale real estate watchers, hoping to spot a trend, could conclude that young families are moving to and fro…

In any case, you don’t have to fall into the Millennial, Gen X, GenY, Boomer or even the Greatest Gen category to follow one distinctly local trend: if you will be looking for a new home in Scottsdale—or have one to list—giving me a call is the thing to do!

Forecasting the Future for Scottsdale Housing in the New Year

12-31-forecastIt does seem to be time for an in depth forecast about Scottsdale’s housing outlook for 2015. The prediction game is going strong everywhere else this week, with print and online journalists and TV talking heads interviewing experts and each other about what to expect in the coming year. Some make noteworthy predictions—but more seem to be doing their best to sound authoritative while remaining vague enough to avoid provably wrong calls.

I have to sympathize. Last year, after delving into the Scottsdale housing outlook to come up with predictions, the one I put at the top of my list was a forecast that mortgage interest rates would soon be climbing. That was safe—rates had been so low for so long, history told us they had to rise, didn’t it? Besides, all the experts agreed.

What then happened in 2014 explains why financial prospectuses tend to footnote projections with sentences like “past performance is no guarantee of future results.” Rates did rise; but then sank again. So this year, it’s probably a better idea to shelve the crystal ball in favor of laying out some of the factors we do and don’t know—factors that should influence the direction of Scottsdale housing trends for the coming year.

First, what we do know for sure. Since Baby Boomers make up the largest demographic in the country…

Uh-oh! No they don’t. The Census Bureau now says that the cohort of 23-year-old Americans has just become the largest in the country. Followed by 24- and 22-year olds, respectively. Probably why the chief economist at the NAR® projects that this generation will “drive two-thirds of household formations over the next five years.” He says 2015 will become the point at which the millennial generation’s presence in the housing market will be truly felt for the first time. So what we do know is that younger buyers have begun to join the ranks of homeowners in substantial numbers. That’s different; it has the look of a major trend.

And mortgage rates will rise (because they have to, right?) Again, this one only seems to be a reliable projection. At this point, a 30-year mortgage is actually lower than it was a year ago. It is thought that foreign influences (uncertainty in Europe; economic weakness in the Far East) are what have held down U.S. housing financing rates. If that’s true—and since no one can say with any certainty what to expect from events overseas—mortgage rates and their influence on Scottsdale housing activity should more accurately be placed in the don’t know column.

So will Scottsdale housing prices and sales activity rise in the coming year? We do know that the public opinion polling data supports that likelihood. Consumer confidence is building, possibly because of a brightening employment picture (not to mention last week’s record-breaking Santa Claus rally and other strong economic news). In fact, real estate mega site Trulia reports that their samples tell them “consumers expect 2015 to be better, especially for selling a home.”

Economists agree. Fortune.com says that economists are “nearly unanimous in predicting that home values would continue to rise” and that “surveys of homeowner sentiment suggest that more of them will look to sell their homes” in the coming year.

If you are leaning in that direction yourself, there’s one factor we know for sure: I’ll be standing by in 2015, ready to put all of my resources and experience to work for your Scottsdale home sale!

Scottsdale Foreclosure Watchers Note Last Month’s Trend Change

12-24-foreclosureScottsdale foreclosure watchers keep their eyes trained on the local market filings, but also stay aware of the national trends as a signal of what might be coming down the pike. Across the U.S., by the end of November there were nearly 112,500 foreclosure filings, which amounts to one out of every 1,170 homes.

The company that keeps an eye on such things, real-estate data source RealtyTrac, just offered a bar chart showing historical trends, which highlighted something that would be lost in the raw numbers alone. It showed about 27 (it looked like 27; the bars were tiny) little bars hanging underneath the “0% foreclosure start” line, meaning months in which foreclosure starts had declined compared with the same month a year earlier. Twenty-seven months is more than two straight years of fewer foreclosure starts (including default notice filings, scheduled auctions and bank repossessions). But the standout was one little line that stood bravely alone above the line—and it was for this November!

That doesn’t mean Scottsdale foreclosure rates are now destined to explode, but it is the first reversal RealtyTrac has registered in years. For potential home bargain-hunters, it might be a heads-up to keep their powder dry—and perhaps a reasonable idea to once more go over some of the basics that veteran Scottsdale foreclosure buyers generally agree upon:

Get pre-approved:

For anyone who wouldn’t be ready with cash in hand, when foreclosed homes are in the cross-hairs, it’s really imperative to have advance bank approval. When a good Scottsdale foreclosure value comes up, you need to be ready to act immediately. About 60% of foreclosed homes are financed—and pre-approval is the way to prevent a cash buyer from swooping in ahead of you.

Find a qualified real estate agent:

A competent agent—one experienced in dealing with Scottsdale foreclosures—does more than just put you ahead when it comes to the underlying values of homes in the area. Your agent can point out issues others may have overlooked with certain properties, help you navigate local procedures and red tape, aid with inspections, etc.

Focus on REO properties:

Scottsdale REO properties are foreclosed homes that have already gone through the foreclosure process completely, and are now owned by the lender. They are typically vacant, and are sometimes priced to sell since banks are incented to get them ‘off the books.’ It’s not universally the case, but REOs can be more straightforward to deal with than auctions, pending foreclosures, or short sales.

Check things out thoroughly:

Foreclosed homes often are in need of repair. Since lenders sell them “as is,” prudent buyers know to identify any major faults before making a buying decision. Good foreclosure inspectors will have a generator and other equipment available so they can test all of a property’s major systems.

Check for liens:

A foreclosed home can be burdened by pre-existing liens from utility companies, municipalities, and unpaid contractors. Knowing about them early helps estimate the total true value (and ensure they won’t cause your deal to fall apart).

Buying a Scottsdale foreclosed home can offer immediate value and equity to those who are prepared to make sophisticated inquiries. I offer my clients the kind of experienced teamwork that makes that happen!

Real Estate Markets Register Steady Improvement

11-19-marketupdateScottsdale real estate observers got some background information last month that seemed to confirm much of what we’ve been seeing for a while now. Mid-term election politicking is now safely behind us (for a brief while, at least), but in the run-up to the elections, this was a comprehensive real estate canvass that yielded some comparisons of note. It was called the 2014 Election Housing Scorecard, released mid-month by RealtyTrac. The idea was to rate how national real estate conditions had fared in the two years since the previous national election. The answer: better off.

Think back just a couple of years, and it’s not hard to recall the period following the bursting of the housing bubble, when it was hard to find anyone with a cheerful attitude about investing in residential real estate (Scottsdale’s included). It may have been intellectually certain that those deflated prices wouldn’t last forever—but even so, it took hardy resolve to step up and buy into such an outwardly unstable market.

That was then; this (as they say) is now—and by mid-October, the Housing Scorecard ‘s findings were in. By something like five to one, the majority of Americans now live in a housing market that is better off than it was two years ago.

The scope of the study was broad: residential real estate markets in 1,547 counties were evaluated based on affordability, median home prices, unemployment figures and foreclosure start rates. What the study found was largely positive.

A full 811 of the analyzed markets—or 52%—rated as “better off.” Only 176 markets (11%) rated as “worse off.” The remaining 36% were tossups. The total combined population in the “better off” markets was 140 million. The population in the “worse off” category was just 24 million.

Those positives paint a fairly broad picture of the recovering real estate market. Other statistics show that foreclosures and short sales recently hit their lowest level since the start of data collection in 2011. Add to that the sales numbers released in October showing existing home sales in America at their most robust in a year, and with Scottsdale mortgage rates still down in historically low territory, and it’s easy to agree with Reuters’ opinion that the housing market recovery is gradually “getting back on track.” If you are of a mind to take advantage of the rising market, I hope you will stop by or give me a call!