April Market Stats

This is for the General Arcadia area of Phoenix/Scottsdale, Arizona. To get a better idea of what might be happening in your neighborhood or with your type of home, contact me.  I will be happy to provide these same stats on a neighborhood level. 

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Homes took longer to sell and the number of homes sold was less in April than in March.  While the volume was down the actual sales prices were up. For the first time since I have been doing these charts for the General Arcadia area, the average sales price topped $1 Million and average square footage has gone over 3,000. But it is interesting to note, the price per square foot actually dropped by $3.73. So these big sales prices are a result of larger homes being sold, not so much a monthly appreciation jump. But, as compared to April 2017, the sold price per foot is up 10%. 

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again

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With home prices rising again this year, some are concerned that we may be repeating the 2006 housing bubble that caused families so much pain when it collapsed. Today’s market is quite different than the bubble market of twelve years ago. There are four key metrics that explain why:

  1. Home Prices
  2. Mortgage Standards
  3. Mortgage Debt
  4. Housing Affordability

1. HOME PRICES

There is no doubt that home prices have reached 2006 levels in many markets across the country. However, after more than a decade, home prices should be much higher based on inflation alone.

Frank Nothaft is the Chief Economist for CoreLogic (which compiles some of the best data on past, current, and future home prices). Nothaft recently explained:

“Even though CoreLogic’s national home price index got to the same level it was at the prior peak in April of 2006, once you account for inflation over the ensuing 11.5 years, values are still about 18% below where they were.” 

2. MORTGAGE STANDARDS

Some are concerned that banks are once again easing lending standards to a level similar to the one that helped create the last housing bubble. However, there is proof that today’s standards are nowhere near as lenient as they were leading up to the crash.

The Urban Institute’s Housing Finance Policy Center issues a Housing Credit Availability Index (HCAI). According to the Urban Institute:

“The HCAI measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

The graph below reveals that standards today are much tighter on a borrower’s credit situation and have all but eliminated the riskiest loan products.

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3. MORTGAGE DEBT

Back in 2006, many homeowners mistakenly used their homes as ATMs by withdrawing their equity and spending it with no concern for the ramifications. They overloaded themselves with mortgage debt that they couldn’t (or wouldn’t) repay when prices crashed. That is not occurring today.

The best indicator of mortgage debt is the Federal Reserve Board’s household Debt Service Ratio for mortgages, which calculates mortgage debt as a percentage of disposable personal income.

At the height of the bubble market a decade ago, the ratio stood at 7.21%. That meant over 7% of disposable personal income was being spent on mortgage payments. Today, the ratio stands at 4.48% – the lowest level in 38 years!

4. HOUSING AFFORDABILITY

With both house prices and mortgage rates on the rise, there is concern that many buyers may no longer be able to afford a home. However, when we look at the Housing Affordability Index released by the National Association of Realtors, homes are more affordable now than at any other time since 1985 (except for when prices crashed after the bubble popped in 2008).

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Bottom Line

After using four key housing metrics to compare today to 2006, we can see that the current market is not anything like the bubble market.

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

U.S. Houzz Kitchen Trends Study

Great article, starts you thinking about what to put in your kitchen if you are planning a remodel. I thought it was interesting that San Francisco spends the most on remodels.

Download the full report here

Some Key Take Aways:

Clutter drives us mad: Most homeowners admit to obsessing over decluttering kitchen surfaces and putting things away hence, the abundance of built-in cabinet storage and organizers that cater to these needs. Pullout waste bins, utensil and dish organizers, and wine/bar cabinets have become increasingly popular. 

Engineered quartz eclipses granite: Countertops are the top feature to splurge on during kitchen renovations. Engineered quartz is now the most popular material for countertops, as granite continues a three-year decline. The popularity of quartz is highest in urban and suburban areas, while granite is still the top choice in rural areas. 

Styles in transition: More renovating homeowners are opting for a completely different kitchen style compared the previous two years. Iconic modern and traditional styles are giving way to transitional, contemporary, and farmhouse styles. Similarly, homeowners are leaning away from a more traditional U-shaped kitchen layout toward an L-shape.

San Franciscans spend the most on remodels: Among the top 20 U.S. metro areas, homeowners in San Francisco spend the most on kitchen remodels, averaging $70,000 for a major remodel of a large kitchen (200 square feet or more), compared with $42,000 nationally. Overall, costs vary significantly by scope of remodel, size of kitchen, and region. Coastal cities spend the most on average.

A recipe for technology: Technology is no stranger to modern kitchens, with many homeowners integrating new electronics, such as wireless speakers, and new appliances with high-tech features, such as wireless or voice controls. These preferences continue to evolve as new devices, such as home assistants, take the place of older ones, like TVs.

Download the Full Report

March Market Stats

Here is an update on Single Family Homes in Arcadia Proper...

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Where are the opportunities for Buyers? 

With only 4 homes sold so far this year priced between $2 and $3 million, this price range is experiencing a lot of competition with 20 homes available for sale. In last six months, 7 homes have sold in this range. If no new homes were to come on the market, it would take 17 months (over 510 days) to sell through all of the inventory. This favors buyers, a balanced market is 6 months worth of inventory.

As always, the real opportunity for buyers remains the same...homes that have a functional floor plan and just need a little bit of updating. After a little bit of remodeling, you get to experience the gain in equity for yourself. 

Where is the opportunity for Sellers?

Many new construction homes are in this $2M to $3M price range. If you are a builder, this type of product seems to be the most desirable to Arcadia buyers, so the outlook might not be so bad. A well thought-out new home will typically sell  more quickly than homes that need work. Also, Valley-wide, there is 21 months of inventory in that price range, so Arcadia's 17 months doesn't look so bad.

General Arcadia Snapshot 

You can tell we are the the midst of our strong Spring selling season. Prices and volume are up, but homes are taking a little bit longer to sell than last year at this time.

Market Snap Shot Mar 18 General.jpg

Test Your Phoenix Area Real Estate Knowledge

So you think you know what is going on in Phoenix Real Estate? How many questions can you get right?

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1. In what month do we see the most new listings come to the market in Phoenix?

March is the month in Phoenix that the most new listings come to the market!  The time is now! With Spring Training in full force and the height of our tourism season, give your home the opportunity to shine!  March too soon? April is still a strong month, you missed January...but you could shoot for October which is a strong month for new listings. Little fact: we had more new listings in January 2018 than we have had since 2012. 

And the other side of the coin? When you come on the market in March, you are facing the most competition from other listings. You better look the prettiest and be priced competitively to get invited to the ball!

2. In what month do we see the most closed sales?

This is a little bit of a softball...a typical escrow is about 30 to 45 days, so that means that a buyer has made a decision to purchase 30 to 45 days before the sale gets recorded. So if the most new listings come to market in March, you can estimate that the most closed sales occur in May, June is a really close second.  

3. Which zip code saw the greatest median sale price increase in 2017?

If question 2 was a softball, number 3 is a bit of a trick.  In 2017, the zip code that saw the greatest increase in median sales price was (drumroll...please) 85007 with an increase of 103%!! Where is 85007? It is on the either side on I-10 through downtown and just over the I-17 and includes the historic districts of Encanto, Palmcroft and FQ Story.  

The next highest increase in median sale price 85377, which is Cave Creek and the next highest is 85361 which is in Wittman, Arizona, half way between Sun City West and Wickenburg. 

How did you do?

 

 

New Hype Video

At Russ Lyon Sotheby's we pride ourselves on our excellent marketing...on the international level, the local level and even the hyperlocal level.

Check out this great new video to promote our brand on the national level

Open Floor Plan Homes: You Really Want One? The Pros and Cons

Open floor plan homes—those with no walls separating the kitchen, dining and/or living area—are all the rage today. According to the National Association of Home Builders, 84% of new single-family homes have fully or partially open layouts.

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But whether you're thinking of buying an open floor plan home or renovating your way to one by knocking down a wall, you should know both the pros and cons of this setup (because it's not all good news).

A history of open floor plans

Early American homes were "open" by necessity: one or two rooms built around a central hearth. During the Victorian era, however, it became popular for homeowners who could afford it to build many smaller, specialized rooms, from parlors to maid's quarters. Yet as society changed, so did our floor plans. As full-time help became less common and home life became more casual, there was no need for cooks to hide out in the kitchen.

At the same time, new construction materials such as steel beams and advances in heating and cooling technology made big, open rooms more feasible to build, heat, and cool. As Jay Kallos, vice president of architecture for Ashton Woods in Atlanta, points out, "Prewar, before air conditioning, the kitchen was a very hot place, so it was closed off to keep heat from spreading around the house."

Architect Henry Hobson Richardson is credited with first introducing a living-dining room combo in his Paine estate, built in Waltham, MA, in 1886. But Frank Lloyd Wright pushed the open floor plan idea to a whole new level, with homes like the one he built in Hyde Park, Chicago, for Frederick C. Robie in 1909, with a combined living and dining area in one minimalist, free-form space.

Benefits of open floor plans

Open floor plans are popular for good reason.

  • Maximizes square footageOpen floor plan homes feel bigger, since the square footage isn't cut up into small, cramped quarters. Plus, "With a living room and dining room, you're allocating 300 square feet of space to rooms that are only used a few times a year," explains Kallos. "An open floor plan home will feel bigger because you don't have all this unused space."
  • Better natural light. Removing walls lets the light that comes in through your windows spread throughout the home, eliminating dark interior rooms that have to have artificial lights on even during the day.
  • Social cohesiveness. Open floor plans make socializing easier, even when people are doing different things—say, Dad's cooking dinner while the kids are playing in the living room while Mom pays bills at the dining room table. Entertaining guests is easier, too; you can catch up with guests in the dining area while preparing dessert.
  • Flexibility. "Open floor plans create a usable space that's flexible, based on your needs," says real estate agent Jimmy Branham of the Keyes Company in Fort Lauderdale, FL. Want a giant TV to be the center of your living space for sports games? No problem. Long for a farmhouse table for dinner parties? A dance floor for all your friends? Go for it. However homeowners choose to define their space, it works without making major architectural changes.

Downsides of open floor plans

Open floor plans may be popular, but they're certainly not for everyone. Here are a few of their challenges.

  • Cooking heat and smells travel everywhere. Don't want your couch to smell like fried fish? Unless you've got a heavy-duty vent hood, you might just have to go to the chip shop with an open floor plan. There's no way to keep the smoke, food smells, and oven heat contained.
  • Less formal living. Some people want to be able to sauté while chatting with guests sipping wine at the kitchen island. Other people want to be able to get some cooking done without anybody sticking a finger in the sauce. If your hosting style is more formal—or if you employ professional cooking help, and you don't want guests to bother them—an enclosed kitchen and more formal living/dining space might be better for your needs.
  • Less privacy. Sometimes, hanging out with your whole family is a downside. Parents like to be able to escape from kids for a little while. Or maybe you just want to read a book while someone else is cheering for their basketball team.
  • It's noisier. Kid noise, cooking noise, TV noise, the dishwasher running, someone else's music on the stereo: There's no hiding from everybody's noise in an open floor plan, and a lack of walls makes the space echo more and is less sound-absorbent.
  • You can't hide the mess. It's nice to have guests come over and only have to clean one room. In a home with a dedicated office, a separate playroom, and closed kitchen, you can just shut the doors and deal with the mess later. With an open floor plan, everything is visible, including your clutter.
  • It could date your home. Open floor plan living is a trend that's been building for years. It shows no sign of slowing, but everything goes in and out of fashion. With a completely, radically, loftlike open floor plan, you might be setting yourself up to look "so late 20-teens" in 10 or 20 years' time.

Audrey Ference has written for The Billfold, The Hairpin, The Toast, Slate, Salon, and others. She lives in Austin, TX. Follow @audreyference

 

 

Arcadia Area Market Stats for December and 2017

The holidays did not slow down the sales numbers for the general Arcadia area. In fact, it was almost identical to the previous month, with the same number of home sales and only a slight decrease in sales price. Home prices were up about 6% over last year at this time.

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Below is a breakdown of total single family home sales for the year in Arcadia Proper. The number of homes sold was down only slightly. The average sale price in 2017 decreased about 8% as compared to 2016. 

There were two remarkable sales in 2016, one over $6 Million and one over $7 Million. 2017 did not have any of those extreme sales, which had an effect on the numbers.  If we remove those two sales, the decrease in average sales price is only 3%. 

Something interesting to note, the average sold home size in 2016 was 4,199 square feet, while 2017 saw an average sold home of 3,803 square feet, a decrease of about 9%. Could this just be the sign of what was available to purchase in Arcadia or a sign that people are wanting smaller homes? We will have to see what 2018 holds!

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What about off-market listings? There was actually a decrease in the number of off-market transactions in 2017 as compared to 2016. Most of the vacant land and hidden gems in Arcadia have been gobbled up.

These numbers are generated from ARMLS.

Highlights of the Tax Bill that Relate to Real Estate

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The National Association of REALTORS® (NAR) worked throughout the tax reform process to preserve the existing tax benefits of homeownership and real estate investment. Many of the changes reflected in the final bill were the result of the engagement of NAR and its members, not only in the last three months, but over several years.

    Exclusion of Gain on Sale of a Principal Residence

    • The final bill retains current law. A significant victory in the final bill that NAR achieved.
    • The Senate-passed bill would have changed the amount of time a homeowner must live in their home to qualify for the capital gains exclusion from 2 out of the past 5 years to 5 out of the past 8 years. The House bill would have made this same change as well as phased out the exclusion for taxpayers with incomes above $250,000 single/$500,000 married.

    Mortgage Interest Deduction

    • The final bill reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17. Current loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap. Neither limit is indexed for inflation.
    • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.
    • The final bill repeals the deduction for interest paid on home equity debt through 12/31/25. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.
    • Interest remains deductible on second homes, but subject to the $1 million / $750,000 limits.
    • The House-passed bill would have capped the mortgage interest limit at $500,000 and eliminated the deduction for second homes.

    Deduction for State and Local Taxes

    • The final bill allows an itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes. This $10,000 limit applies for both single and married filers and is not indexed for inflation.
    • The final bill also specifically precludes the deduction of 2018 state and local income taxes prepaid in 2017.
    • When House and Senate bills were first introduced, the deduction for state and local taxes would have been completely eliminated. The House and Senate passed bills would have allowed property taxes to be deducted up to $10,000. The final bill, while less beneficial than current law, represents a significant improvement over the original proposals.

    November Arcadia Sales

    Here is a summary of what happened in November in the general Arcadia area. Sales prices were down 6% as compared to last November, but up 4% as compared to last month. The length of time a home took to sell also increased by 3% last month as compared to October.  Accurate pricing and quick adjustments are necessary to put your home in the best possible position with buyers. I can explain why pricing accurately out the gate leads to a shorter marketing time and greater returns.

    Market Snap Shot NOV 17 General.jpg

    Below is a look at just Arcadia Proper.  We are slightly ahead of last year, but the real strength in the market this year has been in the lower end, 61 homes priced under $1 million have been gobbled up this year and the number available homes in that price range, 13, is only 2.3 months of inventory. Meaning that if no more homes were to come on the market in that price range, Arcadia would be out of homes in that price range in 2.3 months, very seller-favorable. But, that doesn't mean you can demand a higher price. The only properties that sell are accurately priced properties. 

    The price range between $2 and $3 million is exciting...more than one a month is selling.  The homes priced over $3 million have a bit more competition for buyers and are selling a bit more slowly than last year, but still at a swift pace, given the limited number of buyers in that price range.

    Chart 12.01.17 Arcadia Proper.jpg

    Average New Home Price Tops $400k for First Time Ever

    And new single-family home sales are up 6.2 percent month-over-month, according to just-released Census figures

    The U.S. Census Bureau today released its October 2017 new residential sales report, which boasted an average home sales price of $400,200 — the highest since March 2007’s average of $329,400.

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    The sales of new single-family houses in October 2017 were at a seasonally adjusted annual rate of 685,000. This is 6.2 percent (+/- 18.0%)* above the revised September 2017 estimate of 645,000, and 18.7 percent (+/- 23.5%)* above the October 2016 estimate of 577,000.

    The estimate of new homes for sale at the end of October was 282,000, which represents a 4.9-month supply at the current sales rate.

    Realtor.com Chief Economist Danielle Hale says although the number of new homes for sale has moderately increased (+3,000), buyers won’t receive a break from excessive home prices in the immediate future. But she says the uptick in demand should rouse builders to construct more homes, leading to increased affordability down the line.

    “The pick-up in new home sales should improve builder confidence and lead to more home construction, offering home buyers additional options and creating opportunities for current owners to trade into new homes, potentially unleashing existing home inventory,” said Hale in an emailed statement.

    “The number of existing homes for sale according to realtor.com data are down 8 percent from a year ago in October and increasing availability of homes for sale would be welcomed by home shoppers.”

    Other data from the Census Bureau and HUD:

    • The average sales price was $312,800.
    • The Northeast led the way in new residential home sales, with a 30.2 (+/- 89.3)* percent month-over-month increase. The Midwest experienced the second highest rate of month-over-month growth at 17.9 (+/- 41.5)* percent.
    • The West and South shored up the end of the pack with 6.4 percent (+/- 38.6)*and 1.4 percent
      (+/- 18.3)* growth month-over-month, respectively.

    The Census Bureau and HUD use sample surveys to collect data for their home sales, which means this data is subject to sampling variability as well as the typical statistical variance. * The survey is based on a sample of houses pulled from building permits. “Sales” are defined as deposits taken or sales agreements signed, not necessarily closings.

    Article source: inman.com

    Spend the Night in a Lego House

    About three years ago, this would have been an incredible dream for my kids!

    LEGO and Airbnb have teamed up to offer some lucky winners a night in an architect’s dream house filled with 25,000 LEGO bricks. READ MORE HERE

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    Perhaps the most impressive angle to examine the new structure is from above; BIG conceived of the project as 21 brightly colored, large-scale LEGO bricks that overlap to frame a publicly-accessible central plaza. Above the square, a cluster of galleries overlap to create a continuous sequence of exhibitions, and children’s play zones are located on the first and second floors.