Metro Phoenix Real Estate Report

Contracts In Escrow Up 19% Over Last Year Despite Rising Prices, Affordability is Good

For Buyers: Buyers waiting for prices to come down have been sorely disappointed so far in 2019. The average sale price per square foot is up 6.7% since last November and the median sales price is now $283,000, up $21,000 from last November’s measure of $262,000.

Despite rising prices, affordability has remained normal throughout the year. One relevant factor is Private Sector Earnings in Greater Phoenix has risen 4.5% annually as interest rates have continually declined. The median family income was measured at $72,900 last quarter and families making that income could afford 68% of what sold last quarter (according to the HOI index published by the National Association of Home Builders and Wells Fargo). The historical norm for our market is 60-75%.

Clearly not all buyers have parked on the fence, demand has been hovering 6-7% above normal for our area for about 4 months while supply is 44% below normal. The only measurable relief for buyers is last month’s supply level was 47% below normal, so it’s 3% less hard to find something suitable.

For Sellers: The number of listings under contract may have declined 26% from its May seasonal peak, but it’s nearly 19% higher than it was this time last year. This, combined with monthly sales up nearly 15% over last year, is a solid indicator that year-end closings will outperform last year despite a shaky start.

Single Family permits (future supply) are up 4.6% year-to-date and multi-family permits are up 6.4%, reaching a level not seen since 2007. Single family home sales are up 5.7%, but new townhome and condo sales are down a whopping 30%, which is surprising. Resale condos and townhomes have increased in sales volume this year, so the drop in sales for new construction despite an increase in permits indicates that much of the multi-family units constructed are not for individual sale but are for rent.

This is good news if you’re planning to sell your condo because the majority of developments are not competing for buyers. This is not good news if you’re renting your condo nearby because that’s an increase in competing units for renters. “Apartment style” private condo rental rates per square foot have grown less than 1% over the course of 3.5 years according to the Arizona Regional MLS records.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2019 Cromford Associates LLC and Tamboer Consulting LLC

Characteristics of a Desirable Street

Sometimes you know a desirable street when you see one. For example, it’s obvious that a home on a cul-de-sac is enticing mainly because there isn’t any through traffic.
What are the other characteristics of a desirable street that may not be as obvious? Here are just a few:

Sidewalks. A sidewalk in front of your home is not only handy, it also adds to the property’s curb appeal. In addition, if you have kids, a sidewalk makes it easier – and safer – for them to play and visit neighborhood friends.

Mature trees. Trees lining the street add depth and beauty. Most homeowners value front yard trees and would miss them if they were gone.

Safety. Unfortunately, some streets are more prone to crime and other issues requiring police intervention than others. Clearly, homeowners appreciate a street that’s known for being safe and located in a neighborhood with a low crime rate.

Pride-of-ownership. When considering buying a home, take a walk along the street. Do homeowners take good care of their properties? If so, that sign of pride-of-ownership indicates it’s a great place to own a home.

Location. Where the street is located is just as important as its characteristics. Are things you want, such as parks, schools, shopping, etc. nearby? Is the street in a desirable area overall?

Noise. This is a characteristic that can be invisible to the home buyer. If the street is in a flight path, or near a busy highway used by rush-hour commuters, you want to know!

A great street can dramatically add to the enjoyment of a home. As your real estate agent, I can answer your questions about the characteristics of streets you’re considering and the surrounding area.

Homeowners Associations

For everyone out there looking at homes right now, there are three little letters that could make or break your purchase decision. They are “H,” “O” and “A.” Three of the most frightening letters of the alphabet, imposed over the largest purchase you’ll ever make — it’s a recipe for high anxiety.

But not every Homeowners Association is the nightmare that many home buyers imagine. As long as you do your homework and know exactly what you’re getting into, your HOA may be the best decision you ever made.

Homeowners Associations, Maintenance and Uniformity

HOAs are often part of life for condo, townhouse and some single family homeowners. They’re not all good and they’re not all bad. Their purpose in this modern world is to maintain a sort of uniformity and authority that can not only help neighbors deal with disputes, but help the neighborhood as a whole keep a nice, shiny reputation.

When it comes to attached homes, like condos and townhouses, the HOAs also maintain the exteriors of buildings, including roofing, and common areas, like lawns. Single family HOAs often provide amenities like pools and common buildings that can be used for parties. The more the HOA does, the more the fees will be. And sometimes there will be fees even if they don’t do much.

Homeowners Associations Versus Neighborhood Associations

Another point to clarify is that there is a difference between a neighborhood association and a homeowners association. Neighborhood associations are voluntary, generally have very low fees for membership and do not run with the land. That means that you can buy a house where the former owner was part of the neighborhood association, but decline to be a member yourself.

On the other hand, if you buy a home that’s part of a homeowners association, the covenants, conditions and restrictions (CC&Rs) run with the land itself. So, you buy the land (usually with a house on it) and at closing sign that you agree to the HOA’s rules. You can only change those by being an active part of the association itself and going through the process it takes to allow RV parking in the front yard or whatever it is that you really want to do.

Is an HOA For You?

It’s really hard to know if you’re going to get along in an HOA-controlled neighborhood without taking a long hard look at those CC&Rs. They vary widely, just like the people who live in different neighborhoods. Even if you find a home that you absolutely love, don’t sign a thing until you’ve seen the CC&Rs and gone over them with your real estate agent. You will be living under those rules for a while, make sure you can accept that.

While it would be fun to have a pool you don’t have to clean, sometimes you have to be realistic and say, “These rules just aren’t for me or my lifestyle.”

But, sometimes those rules are really practical and make a lot of sense. For example, some might state that your grass has to be kept under six inches high. Great rule, this practice reduces animal and insect problems by removing cover.

Others might say you can’t have a clothesline or a fence, which might be a total deal-breaker for you. There is often an appeal process, but if that clothesline is a big enough issue, don’t risk it. There are plenty of houses in the sea.

Don’t Forget, HOA Fees Are Included in Your DTI

Last, but not least, remember that HOA fees will be included in your debt to income calculation. So, if you are just barely able to afford that lovely home, the monthly fees may make your lender give you the red light. This is an important item to check when you’re investigating the other terms of the HOA.

You can expect them to run anywhere from a few hundred to over a thousand dollars a month. Definitely something you want to be sure about before committing. Would you rather have that much more in home, or in amenities?

Already in Love With the Idea of a Home In an HOA?

If you and your real estate agent have taken the time to investigate the HOA and the CC&Rs and you’re still good to go, write that contract! Make that home yours and know that the rules will help to maintain home standards, even if they can be a bit draconian at times.

Making “Neighborhood Targeting” Work for You

Imagine if you dreamed of owning a special limited-edition vehicle. What would you do to ensure that your dream vehicle would someday be parked in your driveway – with your name on the ownership papers?

You would probably start by doing some research. You’d find out how much that vehicle would cost, what features are available, and so forth. You would likely visit a local dealership and take a test drive if a model is available on site. You would keep an eye on the market for any that come up and let the dealer know you’re looking for just that car. If you did, then, someday, you’d probably be the proud owner of the limited-edition car of your dreams.

What does this have to do with real estate?

Well, you can take the same approach when there’s a neighborhood you’d love to live in someday. You can target it, learn what homes typically cost in that area, and keep your eye on that market in case a property becomes available that meets your criteria.

By focusing on a specific neighborhood, you increase your chances of someday living there, simply because you’re focusing on it.

Of course, neighborhood targeting isn’t as simple as aiming to own a specific car someday. That’s why you need someone like me who can keep an eye on that neighborhood on your behalf, and alert you to opportunities that become available.

Then, if a listing that’s a good fit comes on the market, you can decide whether or not to make a move.

Is there a dream neighborhood you’d like to live in some day? Call today to start making it happen.

Photo by Artur Matosyan on Unsplash

Neighborhood: Arcadia (Phoenix, Arizona)

Roughly bounded 44th Street to 68th Street and Camelback Road south to the canal.

The large properties (some near 5 acres, but rarely less than half an acre) and the original luxury guest resorts along Camelback Road like the Royal Palms, will give today’s house hunter an idea of Arcadia property values at a glance. This is one of the most desirable and priciest addresses in Phoenix.

These custom-built homes from the 20s through 50s have been maintained and updated over the years. You’d be hard pressed to find a new home built to the same high-quality today. As a result, the estate homes in the Arcadia Neighborhood can quickly soar to over 6 million; you’ll have to be quick and aggressive when trying to buy one of these properties.

Lush, green, mature landscapes of irrigated orange and date groves still suggest a hint of “rural” as do the quiet streets dotted with Ranch, Revival, and Pueblo style homes. All within minutes of high-end shopping and dining at the Biltmore Fashion Park (24th Street and Camelback, Phoenix) or the Scottsdale Fashion Square (Scottsdale Road and Camelback, Scottsdale), world-class resorts, arts centers, and great restaurants. A short drive takes you to downtown Phoenix, old town Scottsdale, or Phoenix Sky Harbor International Airport.

The Arcadia neighborhood seems meant for families with schools being some of the best in the state. Homes vary in size but have lots of space, and the large yards have pools and sports courts for active kids. The biking paths along the Arizona Canal bordering Arcadia on the south offers another opportunity for expending young energy without worrying about traffic.

If you love the Arcadia area but don’t have budget to support an estate, Arcadia Lite (to the west) or North Central Phoenix (7th Street to 7th Avenue, Camelback to Northern) offers mid-range prices for charming homes (mostly Ranch-style, built in the 50s and 60s). While you won’t have a lush, green Arcadia estate with acreage, you will still have the amenities as you meet neighbors over coffee at the bustling La Grande Orange market or over a glass of wine at Postino Wine Bar (40th Street and Campbell). Entry level begins at around $300,000.

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