December 2016 Phoenix Real Estate Update

I hope you enjoy this monthly newsletter.  Are you thinking about selling a property?  If you want to know the true value of your home, not just Zillow’s opinion, please call or send me an email.  You can also search the MLS from my website at greathouseaz.com


Are you looking for a rental property manager?  Please call or email Karen at 602-316-7028 or ftr9558@cox.net.

Sincerely,

Pat Hune

Broker

greathouseaz@gmail.com

480-703-1976

www.greathouseaz.com

Equal Housing Opportunity



Market Overview - 2017 Predictions

Commentary from Pat Hune, Broker, 1st Southwest Realty,  and various sources


Next month I will review 2016’s predictions and see how well the experts did.   This month the experts are publishing predictions for 2017.  Here is a summary from the articles below:


1) Single Family Housing - Home builders will zero in on new infill projects especially those close to the light rail where old dilapidated properties will be removed and replaced.  Typically this will be high rise apartments and condos but some detached single family housing projects may also appear.  Pinal County is expected to have a growth spurt especially around Casa Grande due to many large employers moving into the area including Lucid Motors, PhoenixMart, Frito Lay and Abbot Labs.


2) Southeast Valley will continue to grow as the bulk of post-recession jobs, real estate development and business site selection have increased significantly in Scottsdale, Tempe, Chandler and Pinal County (Queen Creek Area). 


3) The National Association of Realtors ranks the Phoenix-Mesa-Scottsdale market to be number one in price and sales gains in 2017.  The average price gain is expected to be  5.8% and sales growth of 6.3%.A major contributing factor in the anticipated strength of the top ten markets is that of economic resilience. Each city listed in the report is home to a thriving business community which contributes to both continued population growth and the steady construction of new homes.


4) Mortgage rates will be volatile for the first few month of 2017.  Consequently homeowners with low mortgage interest rates might not be able to afford to move into a bigger house due to the higher interest rate.  This may impact the housing supply as there will be little incentive to move.  


8 Expert’s 2017 Predictions


2017 Predictions


2017 Top 10 Housing Markets


Articles

1)  STAT Newsletter

2)  Rental Market

3)  Multifamily and Commercial Real Estate Trends

4)  Entry Level Housing in Central Phoenix?

5)  How Do I Skip the Long Security Lines at the Airport?

6)  Tales From the Trenches -  Is Confrontation the Best Way to Handle Neighbor Complaints?


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1) STAT Newsletter Link - Commentary by Mike Orr, Founder of the Cromford Report

(Note the numbers are reported one month behind.)  STAT is produced monthly by the Arizona Regional Multiple Listing Service.  This is the database realtors use to list homes for sale and the source for historical sales. ©ARMLS 2016


Home sales are up, interest rates are up, the stock market is up, fake news is up and speculation as to what it all means is up. Oh, and by the way, a presidential election took place but let’s pump the brakes for a moment on tying it all together. For the last month, regardless of what I read, everything seemed to be filtered through post-election goggles designed and engineered by preelection beliefs. In STAT this month, we are going to ignore the clatter and focus on two metrics which we think are related: a 28.1% increase in year-over-year sales volume and a 19% increase in mortgage rates. 


On the surface these numbers are quite impressive and I’m certain in coming days will be hyped. We might even hear the phrase breakout month bandied about. There is reason to be impressed as November sales this year had the third highest resale home volume in the past 19 years according to tax records. The month was third only to 2004 and 2005 when our market was red hot. Accompanying the strong resale numbers, new home sales were up 43% year-over-year. The 1,298 new builds as reported by The Information Market accounted for their highest monthly total this year. 


Now for the part you’re not going to like as much.  There are three reasons why you shouldn’t get overexcited about the reported 28% November year-over-year increase.  The first is TRID which slowed down closings in November 2015.  The second is there was one extra business day in November 2016 - 19 versus 20.  Lastly interest rates increased prompting Buyers to find a home quickly, lock the interest rates and close within the 30-day interest rate lock window to save thousands of dollars over the life of the loan.


Last month STAT projected a median sales price for October of $225,000, with the actual median coming in at $226,000. The actual median was 0.4% higher than the $225,000 projected by our model. Looking ahead to December 2016, our model projects a drop in the median sales price as the ARMLS Pending Price Index projects a median sales price of $225,000. Our mathematical model projections have been trending slightly lower than the actual results. I expect little to no change in the median sales price this month and would not be surprised to see the median price slightly increase.


Click here for the latest STAT Report


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2) STAT Rental Market Link


The November median lease was $1,295 as compared to the October's median lease of $1,300. The November average lease was $1,464 as compared to the October average lease of $1,476.  The November average days on market was 34 as compared to the October average of 33 days on market.  Rental activity typically decreases in December as people get ready for the holiday season.


Rent Check


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3) Multifamily and Commercial Real Estate Trends


It appears multifamily prices will end 2016 with an increase of 14.5% year over year. The prices are averaging $68,231 per unit. Multi-family properties sell quickly at close to asking price if they are in desirable areas, rents are at market, HOA dues are reasonable and the property is in good shape.


Loopnet Commercial Trends


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4)  Entry Level Housing in Central Phoenix?

Phoenix Business Journal, December 2016


Saul Siegel is developing affordable, for-sale lofts in a planned development on the west side of downtown.  Siegel’s Capitol Lofts are slated to be built on Washington Street in between Ninth and 10th avenues between downtown and the Arizona Capitol.


The loft designs have 20-foot ceilings, range from 571 to 869 square feet and will be priced starting at $165,000.  He’s also looking at $100 per month HOA fees for the 65-unit loft development.  Both the sales price — and the homeowners association fees — are a far cry from the higher-end pricing seen for other new downtown developments.


“Nothing was under $200,000,” Siegel said of the downtown Phoenix.  Downtown Phoenix has seen some big changes the past decade with Metro light rail, CityScape, Arizona State University’s downtown campus and an expanded Phoenix Convention Center.


Siegel — a development veteran who’s also done work in California — said he wants to bring downtown housing options to government workers, young professionals and other downtown workers.  “The guy at Starbucks can afford a place,” Siegel said.  Buyers with incomes of $27,000 or more can potentially qualify for the mortgages.


Capitol Lofts


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5)  How Do I Skip the Long Security Lines at the Airport?

Pat Hune, Broker, 1st Southwest Realty


Anyone who travels by air a lot, or even a little, is probably tired of the long wait, pat downs, shoe, jacket, jewelry and belt removal to get through airport security.  The hassle of getting through security can be minimized by applying for a TSA Pre Check Known Traveler Number (KTN) .  The process was put in place in the fall of 2013 to reduce the wait times for the average traveler to get through airport security as well as reducing the airport security workload.  Over 4 million people, 180 airports and 19 airlines are participating.  Getting the pre check is easy and the cost is relatively cheap at $85.  The number is good for 5 years.  An applicant must be a U.S. citizen, U.S. national or Lawful Permanent Resident (LPR) and cannot have been convicted of certain crimes. If an applicant has a record of any of the crimes identified in the eligibility requirements, they may choose not to apply, as the application fee is nonrefundable.


To apply first go online at tsa.gov and fill out the application.  Then search for an enrollment center that is convenient for you.  Then make an appointment as you need to physically visit the enrollment center to provide fingerprints and sometimes they are very busy.  They will require some kind of enhanced identification like a passport book or card or certified copy of your birth certificate if you are a US Citizen.  Permanent residents will need an unexpired permanent resident card like a green card.  The process at the center takes about 15-20 minutes.  Receiving the TSA KTN results takes about 3-4 weeks.  If you are lucky enough to receive the KTN use this number when booking travel reservations, add to your frequent flyer profiles and carry it with you whenever you travel.  


Notes:  Children under the age of 12 or passengers 75 or older do not need to enroll but may decide to do so to receive the full benefits of the expedited screening.  All other security rules still apply like the maximum amount of liquids and other restricted items no allowed in carry on luggage. 


For more information go to TSA GOV Pre-Check


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6)  Tales From the Trenches -  Is Confrontation the Best Way to Handle Neighbor Complaints?

Pat Hune, Broker, 1st Southwest Realty


Recently on my neighborhood website there was a post talking about a neighbor who was leaving anonymous notes about issues they were having with the owner along with complaints lodged with the City of Tempe for various issues like poorly maintained landscaping or parking vehicles on unpaved areas.  This neighbor asked the unhappy neighbor to come over and talk to them so they could work things out face to face.  


Though this may seem like a good idea it probably is not.  Here is an example.  My friend, Stardust, lives in Colorado where it is legal to grow marijuana plants in your home for personal use.  Her neighbor, whose house is very close to hers, decided to build a 10’ x 20’ outside shed and planted 25 plants.  This became a neighborhood nuisance due to the all night growing lights, 12 foot plastic fence outside her bedroom window, the constant aroma of processing pot, extension cords running everywhere creating a fire hazard as well as increased traffic.  Stardust tried to work something out face-to-face but the neighbor became very aggressive and mentioned he had a gun.  Add to all the problems above the unpleasant idea of flying bullets if the neighbor had an unhappy customer or someone tried to steal his crop.  Yikes!


At this point Stardust had no choice but go to the city and lodge a formal complaint.  Once the neighbor received the complaint the anger and aggression directed towards her went up exponentially.  Stardust decided the situation was not going to get any better and put her house up for sale.  Luckily where she lives in Colorado is a seller’s market so the house sold quickly.  The unruly neighbor had to be disclosed but it did not seem to bother the buyers.  Stardust got lucky as if she had been in a slower market the neighbor could have scared off potential buyers and she would have been stuck in a very bad situation.


The lesson learned is it may be better to report an issue with a neighbor anonymously to the proper authorities rather than risk a potentially dangerous confrontation.  One never knows how someone is going to react.