Warp Speed Market

Talking about the 2020 real estate market causes even seasoned agents who

survived the 2005 run up to shake their heads.  This is truly a year that feels like “there is nothing for sale”.  While listings coming to market are lower than last year’s numbers, the truth of the matter is that 30,343 new listings came to market between July and September. (source: Tina Tambour, Cromford Report) The fact is that demand has so outpaced supply that very few listings last on the market for even a week.  In fact over half the listings in the 3rd quarter were active only 9 days or less prior to contract.  And most of those had multiple offers – thereby lengthening the time on market just to field all the offers.

Unbalanced markets make for unbalanced emotions for agents and their clients alike.  Many a buyer, after losing home after home, is tempted to step to the sidelines for a more favorable buyer market.  Unfortunately for those buyers, stepping to the sidelines is not a great solution. The median sales price is up 18% since last October with the bulk of the appreciation occurring in the last 4 months.  As this strong appreciation in pricing continues, it will eventually dampen demand and increase supply.  But at that point buyers will be paying more for the same home months earlier.   To quote Tina: “As exhausting and stressful as it is for buyers and their agents, supply and demand measures indicate prices in Greater Phoenix will continue to rise well into 2021. Hopefully the short-term pain will lead to long-term gain for those who ultimately win a successful contract.”

Have questions about buying or selling?  We are always here to answer your questions.

Russell & Wendy Shaw

The Market Frenzy Continues. For Now.

The effect the pandemic has had on the real estate market has been surprising to say the least.  Most homeowners are quite shocked when we inform them that the current market is the strongest seller market we’ve seen since 2006.  We certainly expected 2020 to be a sellers’ market, given that 2019 so strongly favored sellers thanks to a low supply of homes combined with strong demand.  But we have to confess that we didn’t imagine a pandemic would further strengthen that.  But, as counterintuitive as it sounds, it has fostered a frenzied real estate marketplace.

Supply                                                                                                     

Supply (homes for sale) began to dwindle once the local government ordered shutdowns.  Fears over contagion of the virus, homes suddenly converting to makeshift workplaces, job losses & furloughs, all combining with “sheltering in place” caused sellers to delay home selling.  The already low inventory that began the year winnowed to ridiculously low levels as homes under contract were not replaced by other sellers coming to market.  A balanced market is approximately 30,000 properties for sale – as of the date of writing we are at only 8500 properties!

Demand

On the demand side, the initial drop in demand that occurred in March and April strongly reversed course in mid-May.  This occurred primarily for two reasons.  First, demand was unseasonably suppressed in March – typically one of the highest months for demand yearly.  But the demand was just temporarily suppressed and returned with vengeance (the coiled spring theory – the longer something is suppressed the higher the bounce when freed). Second, demand was strongly spurred on by historically low interest rates. 

When low supply meets high demand, multiple offers collect on homes and results in upward pressure on pricing.  That is exactly what has happened to our market. Tina Tamboer of the Cromford Report comments:

“Contracts on luxury homes over $1M are up an incredible 93% over last year at this time. Between $500K-$1M, contracts are up 64%. Between $300K-$500K, they’re up 39%. Between $250K-$300K, up 15%.  If you need to sell, this is the time to do it.”(emphasis added)

So if prices are moving upwards, shouldn’t that dampen demand?  Yes, that is the theory of supply and demand being a scale that constantly rebalances.  But interest rates have a strong impact on affordability – even more than a moderate rise in pricing.  Which is exactly why demand still remains strong – these historically low rates have improved affordability despite the rising prices in the valley.  In fact here are some interesting numbers from Tina Tamboer regarding the “Home Opportunity Index” (HOI) which is calculated on a combination of pricing, lending guidelines, interest rates, and medium pricing in an area.

“It’s a jungle out there for buyers, but despite recent appreciation rates the HOI measure for Greater Phoenix increased to 64.8 for the 2nd Quarter 2020; the previous measure was 63.0. This means that a household making the current median family income of $72,300 per year could afford 64.8% of what sold in the 2nd Quarter of 2020.  By comparison, the HOI measure for the United States was 59.6. Historically, a normal range for this measure is between 60-75. During the “bubble” years of excessive appreciation between 2005-2006, the HOI plummeted from 60.1 to 26.6. Typically if it falls below 60, the market should start to see a drop in demand.  With the most recent increase however, Greater Phoenix is still within normal range and experiencing demand 20% above normal for this time of year.”

2006 market all over again?

Despite the HOI for Phoenix remaining in a viable range, there are many who fear that 2020 has all the makings to repeat the notorious rise of 2006 followed by the infamous implosion in late 2007.  Despite such fears, this market is very different from the 2006 market.  At that time we had a glut of supply (i.e. housing was built faster than the population growth supported). Today there is no such glut. In fact we have the opposite issue – the population growing faster than housing.  Too many buyers, not enough housing is a key reason we currently have the hottest market for sellers since 2006. 

But if history is a teacher, we have learned that markets like this don’t last forever.  To that point Tina Tamboer further comments:

“…This type of market and appreciation is not sustainable over time; however it’s here now and properties purchased today are expected to continue appreciating over the next 6-12 months.”

The Future

If we don’t expect a repeat of the market crash of late 2007, what do we expect to happen down the road?  Our personal guess (and this is admittedly a guess) is for supply to remain artificially low the rest of this year.  However we do expect to see a strong increase of sellers coming to market in 2021.  Why?  As government programs lapse (i.e. unemployment rates reverting to former payment levels, forbearance for mortgagees, landlord/tenant relief ,etc.) some homeowners will likely need to sell in order to relocate for employment, change to housing that better suits their economic situation, or move for altered needs (homes with more workspace or to more rural settings).  Additionally, just like demand, the coiled spring theory applies to supply. Sellers who postponed selling due to the pandemic cannot postpone forever.  We expect that to show up in 2021.  Does that mean we see a rash of foreclosures?  Absolutely not.  There is simply too much equity in homes (unlike 2007) for sellers to need to do that.  Sometimes history does not repeat itself.  Whatever the future brings, we are here to answer your questions and concerns.  Thinking of selling?  We are always delighted to examine the numbers in your particular neighborhood!

Russell & Wendy (mostly Wendy)

Your September Market Update

Video starts at 3:18.The Phoenix market has been changing rapidly over the past several months – to keep you updated, Russell is here to give you the news.To see any previous market updates, visit our website’s blog:https://nohasslelisting.com/blog/If you would like to receive monthly market updates and more straight to your inbox, click here to sign up:https://nohasslelisting.com/newsletter-sign-up/Click here for video

To Russell, Wendy, JC, Andrew and all the fine folks at Realty One – THANK YOU!

After 19 offers we have accepted what we thought fit our objectives best. Thanks to Wendy for all of your counseling and advice. Outstanding job of taking things a measured step at a time and explaining  the process in detail. We appreciate that. We haven’t sold a home in 15+ years. Your patience with us was so genuine and sincere and after your counseling we felt like old pro’s. Andrew, I hope we didn’t make you work too late dealing with those offers! You can blame it on JC.  JC’s initial consultation and telling us how to stage the house was priceless. And I can’t leave out the big guy….I loved the personal calls from Russell. I felt like I was talking to a movie star!

After a whirlwind 55 showings and 19 offers it sold in 4 days with a SUBSTANTIAL premium! We aren’t at the finish line yet but we are sprinting towards a quick appraisal free close with the Shaw Team leading the way. I’ll make sure my neighbors know that the experience and professionalism of Wendy Shaw just increased the value of their homes (comps) by thousands of dollars due to her negotiation skills and getting such a magnificent price for my house.

This has been a life changing event for my wife and I and it looks like our dream of living in northern New Mexico is one BIG step closer. To all he Dream-makers at Russell Shaw Realty One, thank you all.

April Showers Bring May Flowers

The strongest time of year for the valley’s real estate market is typically our “spring buying season” – March through May. This year is no exception – but it could have been. We ended 2018 with a rather lackluster market due to anemic demand. Entering 2019 it looked like the market was heading towards a balanced market – something we haven’t seen in the valley for years. But buyers suddenly reversed course and began to enter the market place in strong numbers. What turned things around? Two financial factors: interest rates & raised loan limits.
 
By April 4th the average 30 year mortgage rate had dropped to a 15 month low. Combine that with loan limits rising (conforming conventional loan limits went from 417K to 484K, and FHA saw a similar bump up) and the buyers responded by buying. As Tina Tamboer from the Cromford Report shares:
 
“The drop in mortgage rates could not have come at a better time for sellers. Up until 6 weeks ago the negotiating advantage sellers have been enjoying for years in Greater Phoenix had weakened to the point where the market was on track to enter balance within a matter of months and price appreciation would have begun to slow even more.”
 
But before we break out the party hats, she reminds us:
 
“Don’t get too excited though, the seller market is still much weaker than last year. Affordability and demand were helped by this interest rate drop but could quickly be negated as prices continue to rise. Sellers still need to be mindful of their asking price to get under contract before buyer activity seasonally begins to decline between May and the end of the year.”
Michael Orr of Cromford Report echoes those sentiments with this:
 
“We have witnessed a very favorable change in interest rates over the past 4 months and that effect will gradually dissipate unless rates continue to fall even further. Meanwhile prices continue to rise which will re-introduce affordability concerns during the second half of the year.”
 
The message here seems pretty clear – we are in a sellers’ market, again, and for now. But as the marketplace is a moving target with lots of moving pieces, sellers with a choice may want to pick selling now thereby avoiding the uncertainties of the back half of the year.
 
Cash offers and seller guarantees
 
So if the market still remains in the seller’s favor, why would any seller give up their hard-earned equity by taking a “we buy houses” offer? Shouldn’t selling below market occur only in a buyers’ market – where desperate-to-sell sellers are forced to open up their pocketbook to investors? Well, yes, but it would be simplistic to write this off as just illogical human behavior.
 
Given that we are Realtors with the job of advocating for buyers and sellers, we naturally have a bias against companies that appear to be “helping” in the name of corporate profit. With that said, here are our thoughts – both the good and the bad.
 
What we like about the “instant offers” or I-buyers:
1. Removes uncertainty. Avoids appraisal and concerns on buyers ability to qualify. Typically will close when the seller wants.
2. No showings, no need to prep the home for sale.
3. The largest one of them allows the seller to cancel the contract with no cancellation fees. Please note: others charge a cancellation fee. Make sure you know what the offer says before you sign.
 
What we don’t like about the “instant offers” or I-buyers:
1. Below market offers. Home sellers are giving away $20,000 – $30,000 or more of their equity. Most home sellers have no idea that they are taking a below market offer because they don’t know what their home’s true market value is.
2. The home owner is not being represented. The average seller sells every 11 years vs. corporate experts who buy daily. Knowledge is power.
3. Misleading advertising. They claim “No commissions” but charge 6-12% “customer experience fee”. They advertise an “as-is” sale and then typically charge 10k for repairs. They advertise their offers are “fair” when it is below market (“click here for a 15-20% below market offer” doesn’t make for a compelling marketing slogan)
4. Not all homes qualify.
 
The solution
 
Change is inevitable in market places. Amazon has changed forever how people buy (ask mall owners). We are not opposed to progress, we embrace it. For our customers (and you need only call or email us to become a customer) we offer a hybrid solution. If you wish to take an I-buyer or investor offer, we will represent you at no cost to you. We have established alliances with the largest investors in town so that we may do that for you. We will explain the costs and your options so you make the choice that is right for you. You don’t have to go it alone.
 
Russell & Wendy Shaw
(Mostly Wendy)

Arizona’s Scorpion Threat

When you live in Phoenix, you’re living in scorpion territory. That’s simply a fact that comes with living in the Arizona desert. During the winter, scorpions are less active and can be found indoors. In the summer, scorpions are actively hunting for food or a mate and can be found inside and outside. Scorpions like to shelter in dark cool places with an air flow, like cracks and crevices inside block fence walls or under palms tree bark.

Living in scorpion territory doesn’t mean you have to live WITH scorpions in your home. If you have scorpions inside your home, contact an experienced scorpion control professional to evaluate the situation and recommend an effective treatment for you.

Arizona’s Scorpion Threat

The Phoenix, Arizona area is in the Sonoran Desert, and scorpions are native to desert environments. If you live in or near Phoenix, chances are you’ll run into scorpions on your property or in your neighborhood sometime. You can refer to recent maps to see where scorpions have been reported in the Phoenix area.

Arizona is home to the Arizona Bark Scorpion, which the most lethal venomous scorpion in the United States.

It can also be found in parts of Nevada, Utah, New Mexico, and Mexico. You can find other scorpion species in Arizona as well, like the desert hairy scorpion. However, other scorpion species in the USA do not pose a medical threat like the Arizona Bark Scorpion.

You can recognize an Arizona bark scorpion by the following:

  • Length – From head to stinger, a mature Arizona bark scorpion has a slender body that measures 2.7 to 3.1 inches;
  • 2 dark eyes on top of its head, and 3 eyes on each side of the head;
  • Eight legs;
  • Color. Arizona Bark Scorpions are tan in color. However, they can be yellow or even almost orange when they molt. Though these scorpions typically do not have markings, you could find one with stripes along its body and tail;
  • The Arizona Bark Scorpions has a “subaculear tooth”, or a small bump on the tail that juts out beneath its stinger.
  • The easiest way to identify an Arizona Bark Scorpions is by watching it! These scorpions lay their tails down parallel with the surface they are on when they’re at rest. Other scorpions keep tails up over their bodies.

When you come into contact with a scorpion, and you’re not sure which species you’re facing, exercise caution and treat it like it is venomous.  Arizona bark scorpions are nocturnal and capable of climbing textured surfaces, so be aware that you can find them on walls, ceilings, in trees and high on shelves and furniture. This includes brick walls, stucco walls, wood paneling, and drywall. Scorpions can also survive underwater for hours, so it is possible to find one alive in your swimming pool, sink, bathtub, or toilet. Arizona bark scorpions tend to gather in groups (especially during cooler months) so when you see one, others may not be too far away.

Prevent Scorpion Infestations in your Home

Arizona Bark Scorpions are attracted to cooler, moist areas that have sufficient airflow. Specialized scorpion control treatments treat all cracks and crevices around your home and yard to eliminate scorpions inside and prevent further infestations. Another way you can reduce your chance of scorpion infestations around your home is to seal up any holes or cracks in your foundation, sidewalks, block wall fences, and exterior walls. You should also repair and replace old door sweeps and weather stripping around windows and doors.

Arizona Bark Scorpions eat crickets, cockroaches and other insects. You can help prevent infestations of pests to help discourage a scorpion infestation. After all, scorpions are predators that follow food sources.

A few places where you might find Arizona bark scorpions inside your home include:

  • Under Cabinets;
  • Running across the floor;
  • Between floors and baseboards;
  • Inside Sinks and Bathtubs where they get trapped;
  • In Shoes and clothing where they go for quick shelter;
  • Hanging from the wall or ceiling; and
  • Inside any cracks and crevices especially concrete cracks and crevices!

How & When to Hunt Scorpions

The Arizona bark scorpion survives 12 months out of the year. Usually, scorpion season begins when the temperature hits about 70 degrees Fahrenheit, which is usually in the early spring. This is when scorpions become most active.

You can hunt scorpions around your home. Generally, you’ll find them in the dark and just before sunrise with a black light – flashlight. New moon and cloudy nights tend to be the best for hunting scorpions because they’re the darkest.

When you’re searching for scorpions in your home, don’t forget to look up high. As we mentioned, Arizona bark scorpions climb. Shine your flashlight high on walls and ceilings, down by the concrete foundations, and on block wall fences. Instead of using a regular flashlight, use a black light.

Arizona Bark Scorpions glow under black light and look almost fluorescent. Pick scorpions off walls, ceilings, block wall fences, branches, and out of debris piles with needle nose pliers. Place them carefully in jars and screw the lids shut. Using a glass jar to collect scorpions prevent scorpions from climbing out because they can’t climb the smooth glass surface. When you are hunting scorpions, wear thick gloves to prevent stings.

If you do not feel comfortable killing the scorpions yourself or your infestation is too large for you to handle on your own, call a professional pest control company to handle the job. An experienced scorpion control professional will not just kill scorpions on contact, but they prevent scorpion infestations in the future.

Residential Pest Control for Scorpions

Scorpions aren’t like other kinds of pests. They can’t be controlled with general pest control like other types of bugs. Scorpions need to be treated with specialized products formulated to be effective specifically on scorpions.  There are several over the counter “scorpion killer” products at home improvement stores but don’t be fooled, this may be best left to the professionals. Over the counter products only kill scorpions when they are sprayed directly. They DO NOT keep killing or repelling scorpions after they dry.

Scorpion populations need to be managed with compounds specifically formulated for scorpions. Unlike other pests, which can be managed with less potent compounds, scorpion control involves potent compounds mixed with extended exposure agents. This is because scorpions tend to hide out in nooks and crannies throughout homes and yards. Effective scorpion control keeps killing scorpions even after treatments have dried and keeps working for about a month.

Work with a Scorpion Pest Control Pro

When you have scorpions in your home and property, work with a scorpion pest control professional who can eliminate the problem and prevent future infestations. Contact Responsible Pest Control today to set up your initial consultation, and start effective scorpion pest control for your home.

Kobuk

Five year old Kobuk is ruggedly handsome with an aloof independent side.  He has been with Home Fur Good since January after being discovered at county.  Kobuk is listed as an English Sheepdog mix weighing in at 68 pounds.  Kobuk is people selective, however, once you enter his circle of trust, he will be the bestest friend you could ever have.  Kobuk likes to lean on his people for their attention and affection.  He loves toys, especially those he steals away from other dogs.  Kobuk has a very playful side, but with the stress and activity of the shelter he does not let his guard down often enough to show it to everyone.  With time and a little patience Kobuk will show you his inner puppy ready to romp and goof around.  You can visit Kobuk, Thursday, Friday and Saturday at Home Fur Good, located at 10220 N 32nd Street in Phoenix.  You can contact the shelter at info@homefurgood.org or by calling 602-971-1334.

Is it like 2006 all over again?

Given the strong recovery the Phoenix housing market has posted, it is understandable that comparisons are still being drawn to 2006 (the peak of our housing market).  We have commented in the past that we are not in a “bubble”.  But a recent commentary by the Cromford Report on pricing really caught our eye.  It is not surprising to us that the press routinely shares erroneous housing market information often using statistics to make a poorly examined point.  Homeowners would be well advised to have a skeptic’s heart when accepting the media’s research.  As British Prime Minister Benjamin Disraeli so famously said (and Mark Twain popularized) “There are three kinds of lies:  lies, damned lies, and statistics.”  The latest premise is that housing prices have exceeded the prices set in the 2006 market. Uh… not exactly.  As no one says it better than our guru Michael Orr of the Cromford Report, here are his comments (with only bolding by us for emphasis) that explain the facts about the housing numbers:

“The local press has been headlining that sales prices for homes in Maricopa County have hit an all-time high. This is a very misleading statement that I take strong issue with. Although the median sales price has recovered to 2006 levels, the conclusion that sales prices in general are higher than June 2006 is completely wrong.

There are very few homes that would sell in 2018 for more than they would have sold for in 2006. The vast majority of homes in the valley have not recovered the value they had in 2006 and are still quite a long way from doing so. If home sellers believe they can sell their home for more than it was worth in June 2006, they are going to be bitterly disappointed, unless they live in the heart of Arcadia or a few isolated parts of South or Central Scottsdale. These media stories make life hard for agents trying to set reasonable asking prices when taking new listings.

The first problem is that the stories in the media are comparing the monthly median sales price for May 2018 with that for June 2006. The homes that sold in May 2018 are a very different collection from the homes that sold in June 2006, so this is an apples to oranges comparison. Let us compare the two sets of homes:

  1. June 2006
    • number of affidavits describing the property as a single-family home = 10,715
    • median sales price = $280,000
    • percentage of homes that were new builds = 28%
    • average sales price = $357,067
    • average home size = 1,840
  2. May 2018
    • number of affidavits describing the property as a single-family home = 9,987
    • median sales price = $285,000
    • percentage of homes that were new builds = 14%
    • average sales price = $354,727
    • average home size = 2,007

We can see that the sales mix is very different between June 2006 and May 2018. In June 2006 we had twice as many new homes as in May 2018 and the average homes size in 2018 is over 9% larger than in 2006. The average price per sq. ft. is much lower in 2018 than 2006.

A second problem is that affidavits of value are woefully inaccurate about property types. Hundreds of townhomes and condos are mis-classified as single-family properties every month. Therefore any numbers quoted for single-family homes in May are likely to be wrong until the affidavits have been checked and corrected, which takes several weeks.

In general, median sales prices are often misused and should NEVER be the basis for comparing the values of homes or comparing new home prices with re-sale prices.

A much more reasonable measurement is average price per sq. ft. which, though not perfect, adjusts for the difference in the average home size. In June 2006 the average price per sq. ft. of single-family homes sold in Maricopa County through the MLS was $193.65 while the average for May 2018 was $170.02.

We therefore estimate that the average single-family home in Maricopa County has a 14% rise in price to achieve before it reaches its value in June 2006. Individual homes will obviously vary quite a bit.

While the median sales price has recovered to the level of June 2006, the value of the average home has certainly not achieved this. Do not let your clients be misled.”

So we accept his missive to not let our clients be misled and hope this article helps to that end.  The 14% mentioned above is an average and every neighborhood has its own “number”.   As always, we are happy to answer any of your concerns or questions about your specific neighborhood.

Russell & Wendy Shaw

(Mostly Wendy)