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John Groves' Blog

By John Groves | Agent in Scottsdale, AZ
  • Phoenix area luxury home listings rise as sales fall...

    Posted Under: Market Conditions in Scottsdale, Home Buying in Scottsdale, Home Selling in Scottsdale  |  November 12, 2013 4:29 PM  |  187 views  |  2 comments
    The number of high-end homes on the metro Phoenix market grew last month for the first time since April while sales took a slight dip, according to a new report released this week by Michael Orr.

    There were 1,935 luxury homes for sale in the Valley on Oct. 1 on the Arizona Regional Multiple Listing Service, up 9 percent from Sept. 1 and 15 percent year-over-year. It was still down, however, by about 14.6 percent from April 1, when there were 2,267 active luxury listings.
    Even despite the decline in luxury listings over the past several months, the luxury market has maintained a relative balance of buyers and sellers. This is in stark contrast to the lower-end price ranges, which have been grappling with a chronic supply shortage for more than a year.
    Orr is a real estate expert at Arizona State University’s W.P. Carey School of Business and author of the Cromford Report in Phoenix. The report looks at homes priced above $500,000 and located in the Northeast Valley, including Carefree, Cave Creek, Fountain Hills, Paradise Valley, Rio Verde, Scottsdale and the Arcadia and Biltmore areas in Phoenix.
    Distressed properties are also whithering away in this high-end sector.
    The number of bank-owned properties listed for sale on Oct. 1 — 13 — was down 55 percent year-over-year, while the number of short sales — 52 — was down 63 percent during the same period, the report said.
    Luxury sales, however, took a 9 percent month-over-month dip in September to 233.
    That was still 32 percent higher than a year ago and the strongest September sales figure since 2006, the report said.
    The average price per square foot — $243 — has remained stagnant over the past six months but is still up 8 percent year-over-year, the report said.
    Contact me at any time for a complimentary price analysis of your home, or with any real estate related questions 480-239-3023 or john.groves@azmoves.com 
  • Phoenix Real Estate Market Update - July, 2013

    Posted Under: Market Conditions in Scottsdale, Home Buying in Scottsdale, Home Selling in Scottsdale  |  July 11, 2013 11:00 AM  |  283 views  |  No comments
    2013 continues to be "predictable" - as much as real estate in Arizona can be considered predictable in the last several years! Predictable as it has followed the pattern of last year. However, real estate history never completely repeats itself - therefore addressing market conditions still remains important for the consumer. Here are a few key areas to consider:

    Supply: Supply concerns of 2012 proved to be a shifted market as far as supply went. As the distress pipeline began to dry up, active listings began to slide downward - quickly. The constricted supply of new listings to the market in 2012 was the lowest in 12 years. Unfortunately, we have fallen 2.6% below last year. By expert predictions, the drop in distressed sales was going to be replaced by the long suffering equity home seller who would then be able to sell. That is not occurring. Add to the strain that new home building is also hugely constricted as the building community plans to hold out for higher pricing before opening the flood gates of new builds. Limited resale, combined with the last 5 years of almost no new builds, is creating a very short supply of homes. More specifically, homes priced below $150,000 are in extremely short supply. Another interesting shift is that the number of flips (homes purchased to fix-up and quickly resell) is down 58% from last year. 

    Demand: Unlike 2005, demand is declining - somewhat - along with supply. Some of this drop is related to larger cash infused investor buyers. While "normal" buyers are still very active in the market, small investors outweigh the large institutional buyers. Investor purchases which peaked at 40% of purchases have now dropped well below 30% and looks to be continuing downward. Despite this, there is NOTenough supply to satisfy demand. To sum up the supply/demand issue, Valley real estate expert Michael Orr stated, "We don't have enough homes on the market to meet demand, and there is no significant source of new supply. Hence prices rise. There is nothing fake about that."
    Foreclosures: Foreclosures (fortunately) continue to dwindle in Arizona. The change from 2010 (AZ was in the top 5 for delinquent loans) to where AZ is today - #9 in the country for fewest delinquent loans - is amazing. To quote Valley real estate expert Michael Orr once again: "Pending foreclosures in Maricopa County (including all property types) dropped to 8,147 in June. This is the lowest number we have seen since August 23, 2007, almost six years ago. It is also lower than we saw in the period January through April 2002 when the economy was being hit in the slowdown that followed the 9/11 attacks. Given the large growth in population since 2002, the current level of pending foreclosures, and the fact that the number is still dropping by 6% to 8% per month, this is a very positive sign for the housing market in Maricopa County. The maximum pending foreclosures we ever saw was 51,022 in December 2009 and we have now fallen 84% from that peak. We anticipate that foreclosures will continue to drop quickly and fall below normal levels in the fairly near term, probably before the end of 2013. Given strict underwriting over the last 4 years we expect foreclosure rates to drop well below normal in 2014 and for several years beyond that before returning to normal."
    Mortgage Debt Forgiveness: For homeowners considering a short sale (even with rising values many homeowners are still underwater) I urge you to consider acting now rather than later. Congress extended the Mortgage Debt Relief Act for one year (to expire on 12/31/13). Unlike last year where we felt confident of an extension, another extension is not a sure thing. As the tax piece of short selling (or foreclosure) could cost home sellers thousands of dollars that would be avoided if they act now, I urge those in an underwater situation to act NOW. Short sales take time and December comes very quickly in the land of short sales.
    As always, I stand ready to guide both Sellers and Buyers in this (or any) market. If you are considering a home sale or purchase, you owe it to yourself to know what I will do for you. A simple call or email and I can provide you with a strategic plan to assist you. And the best part, there is no cost to you. I look forward to earning your business and the opportunity to work with you. Call (480-239-3023) or email (john.groves@azmoves.com) anytime. I’m here to help.
    Enjoy your summer-
  • Phoenix Real Estate Market Update - June, 2013

    Posted Under: Market Conditions in Scottsdale, Home Buying in Scottsdale, Home Selling in Scottsdale  |  June 4, 2013 8:52 AM  |  316 views  |  No comments

    June, 2013

    After what seems like an eternity of the most depressed buyer's market the Valley has ever weathered, Sellers are NOW seeing the pendulum swing in their direction! Values are continuing to surge upwards and Sellers are frequently receiving multiple offers - within days of offering their home for sale. With the real estate market so clearly favoring the seller, it would be natural to assume that Sellers are now “bullet proof”. Unfortunately this market, like all past strong seller markets, is with potentially costly seller mistakes.

    • “Zestimates” / automated valuation systems: Although Zillow has done a fabulous job of marketing their automated online valuation system, what they haven't done as fabulous a job of accuracy with that valuation. Too often would-be Sellers visit their site (or the multitude of similar sites) to determine "their home's value". Sadly, these systems are NO substitute for an appraisal or (even better) the massive exposure of the home on the open market. Ultimately, a home is worth what a Buyer will pay. In a market that is generating competition for homes, prices can escalate beyond what any website or appraisal claims the home is worth. Valuation systems use preset computer generated metrics to estimate the value. It is difficult to foresee a time when these systems will be accurate, as determining home values is something of an art. Values are comprised of market conditions, property's location, features, pricing, accessibility, market exposure (i.e. marketing), and negotiation. There is simply no substitute for someone with real estate expertise actually viewing the property.
    • Appraisals: Appraisals are an "opinion of value for lending purposes". That is what it is, an OPINION of value. This is so true that homes that obtain more than one appraisal often receive entirely different numbers. I’ve seen it over and over. It isn't that appraisers aren't attempting to do good work; it is that they are always looking into the past for value. Appraisers are required to use sales in the last 3-4 months (due to our fluctuating market, which has changed from when it used to be the last 6-12 months). The highest likelihood of an appraisal being accurate, is where the homes are homogenous and supply and demand is in equal balance (a four to six month of supply of homes) for an extensive period of time. We don’t have that history. Balanced markets in the valley have not been common. In a declining market (as we saw in 2007-2011) appraisals often came in higher than true market value. This is due to the very definition of a declining market is one where a home today is selling for less than yesterday. Conversely, a rising market (as we are in now) has tomorrow selling higher than today. This is the current problem for Sellers - appraisals are often coming in lower than buyers have offered to pay. Without addressing these appraisal issues upfront, Sellers can find their value being slashed. Fortunately, I have distinct success and experience in challenging a weak appraisal.
    • Choosing your agent: All too often, Sellers use the first agent they talk to (so the primary hiring criteria is someone simply being there). Additionally, Sellers may pick an inexperienced agent. This does not mean the agent hasn't "been in real estate for years", they may however lack experience. Another error can be using our friends and family as Realtors. It can be very difficult for Sellers and their family to have the conversations that are necessary to really sell a home. Honest feedback on pricing, home staging, and commissions can result in destroyed relationships. Again, finding the agent with both knowledge and marketing power can produce results that outperform an average agent (or friends/family) by thousands of dollars, not to mention save well established relationships.
    • "Saving the commission": Quite honestly, Sellers can sometimes be "pound wise and penny foolish", often worrying about saving the commission expense while losing the benefits that commission is really paying for. If it doesn't matter who sells your home then Sellers would always be better served just selling it themselves or paying the part-time agent a small amount to write up the deal. This is not the case however. If an agent cannot produce results above what a Seller can do, you simply have the wrong agent. A quality agent can not only counsel Sellers on how to prepare the home for market (avoiding the first costly mistake, a badly presented home), but expose the home to the maximum amount of buyers. This is in addition to the often undervalued marketing and advertising an agent pays for to market YOUR home. Competition for a home is THE most important factor in generating the MOST money for the home.

    As always, I stand ready to guide both Sellers and Buyers in this (or any) market. If you are considering a home sale or purchase, you owe it to yourself to know what I will do for you. A simple call or email and I can provide you with a strategic plan to assist you. And the best part, there is no cost to you. I look forward to earning your business and the opportunity to work with you. Call (480-239-3023) or email (john.groves@azmoves.com) anytime. I’m here to help.
    Enjoy your summer-
  • Phoenix Real Estate Market Update - April, 2013

    Posted Under: Market Conditions in Scottsdale, Home Buying in Scottsdale, Home Selling in Scottsdale  |  April 9, 2013 9:15 AM  |  323 views  |  No comments
    We NEED Seller's!
    2013 is now well underway and we continue to observe the clear signs of vibrant recovery. Like most transitions, ours is not without its challenges, but the upward movement is clear to those observing facts rather than emotions. However, there is a lag from the time facts become available until public sentiment broadly accepts those facts. Remember this the next time you see an article explaining how "the valley's market is worsening" or "foreclosures are on the rise". It IS NOT true. Since 2004, an ongoing challenge has been to separate market fact from fiction. With that in mind, I rely on FACTS. Our facts come from the incomparable Michael Orr of the Cromford Report, a trusted and well qualified source within the Phoenix real estate market.
    Supply of homes for sale: The supply of new resale listings coming on the market remains constrained. The total current supply of homes for sale is 8.7% lower than last year. The primary cause for the reduction in inventory is due to the rapidly disappearing distress product. The traditional seller is simply not coming to the market in sufficient volume to replace this loss. The yearly change in mix of the type of homes for sale is dramatic.
    Lender owned listings (REOs) are down 15.3%, but short sales show the most dramatic shift - down 46.4%. While the traditional seller is up from a year ago with an increase of 19.1%, you can quickly see it is not enough to fill the large loss of the distressed properties.
    Price ranges that are constricting: Supply is very tight below $225,000. Between $225,000 and $500,000 supply is low but stable. Above $500,000, supply is recovering and in the top ranges over $2,000,000 supply is plentiful and now increasing.
    Short Sales: Weaker than last year, largely due to the small supply of bank owned and short sale homes available. The number of short sales and lender owned properties were both down by 47% from last year. Investor purchases are at the lowest number since September 2011 and now comprise only 25.3% of the sales in Maricopa County (compare that to at one point hovering in the range of 50%).
    It is IMPORTANT to remember that while 2013 sales are down from 2012 and 2011, they are higher than any year from 2006-2010. So it is far from a dire situation as they remain "above normal". With pricing still below replacement cost and interest rates hovering at record low levels - this market has a lot to offer buyers.
    Prices: While price per square foot is typically our best indicator of short-term pricing trends, it is quite interesting to note long-term trends through median pricing (the point where half the sales fall above the price, half below). Currently our median pricing is up from a year ago by 31%. The median price is now $160,000 vs. $122,000 last year. We expect to see strong upward pressure on prices through the summer. 
    Certain areas and prices are showing a scarcity of supply more than others. In particular the areas that have lost inventory of homes for sale from last year and are showing the tightest supply - are Tempe, Glendale, Chandler, Peoria, Avondale, and Gilbert. Conversely, supply is still adequate in luxury home areas such as Carefree, Rio Verde, Paradise Valley and Gold Canyon. Scottsdale, depending on the location - falls within both. McCormick Ranch for instance is very low on supply, where areas in North Scottsdale (i.e., Grayhawk) have good supply.
    New Homes: For buyers frustrated with finding a home, new homes offer only a small respite. While production has increased, they are not even at a third of the production levels they were at 15 years ago! Increasing labor costs and the time needed to put that labor team in place, combined with the fear of repeating the drubbing they took back in 2006, production remains too low to fill the demand for needed homes.
    As we have mentioned so many times, supply and demand ultimately provide a tug of war on prices. While supply continues to remain lower than demand, we expect prices to rise accordingly. Rising prices bring out the sidelined sellers who have been waiting to sell. In short, this too shall pass. In the meantime, if you are considering selling your home, NOW is that time. Call or email me for a quick pricing evaluation. No obligation, no sales pitch - just the facts. I look forward to hearing from you, and for the opportunity to earn your business.
  • Phoenix Real Estate Market Update - March, 2013

    Posted Under: General Area in Phoenix, Market Conditions in Phoenix, Home Selling in Phoenix  |  March 14, 2013 7:44 AM  |  468 views  |  No comments

    Phoenix Real Estate Market Update - March, 2013

    The market continues to shift! We started 2013 with the lowest supply of listings coming on to the market. This has put pressure on pricing as supply is low. A new rumor has now been "the talk" - "Another Housing Bubble Approaches?". The mindset is that as prices move up we are re-experiencing a bubble like that seen in 2005, which could be followed by a crash similar to 2007. Let's look at the facts (courtesy of Phoenix real estate expert and trusted resource - Michael Orr of the Cromford Report):

    "Most housing analysts use data to support their observations. Those analysts tend to agree that housing is becoming a bright spot in a broader though slow economic recovery. This is particularly true in the Phoenix area, where our economy is improving a little faster than most and the housing market has been improving much faster than any other in the country. However there are also large numbers of commentators who are NOT data driven, but rather tend to rely heavily on theirpersonal theories, largely based on sentiment or political viewpoints. They tend to take one aspect of the market and amplify it out of proportion to derive their conclusions.
    One example of this is an article by Lauren Lyster based on the views of David Stockman, who describes the current situation as "Housing Bubble 2.0". This is a ridiculous description of a market in which the median home price is lower than the median replacement construction cost, even excluding land values. The observations by David Stockman have only a tentative connection with reality. His logic is flawed because, unlike the real housing bubble in 2004-2006:
    •      investors in 2012-2013 are not borrowing money to buy homes - they are predominantly using cash
    •     investors are buying homes to rent out for several years, not to flip after a short term rise in prices
    •     we have a real housing shortage because new construction has been so low for the last 5 years while population continues to expand
    •     the pool of home buyers is being fueled by younger buyers leaving their parents' homes at last
    •     people need these homes to live in, they are not just trading commodities like they were during 2005
    It is also not true that first time buyers and move-up buyers are missing. On the contrary; there is a strong presence of such buyers in the market. However they often find it difficult to qualify for loans and are frequently outbid by investors when trying to purchase homes.
    In 2004 and 2005 the signs of a bubble were obvious but the vast majority of people chose to ignore them. In 2012 and 2013 the signs of a bubble are absent, but many people choose to "invent" them.
    The key issue remains - where is the new supply coming from to keep pace with demand? January 2013 saw fewer new listings added to the MLS than in any January since that database was first built in 2000. The weaker sales rate in January disguised this effect but sales will not be weak from now on. The peak buying season is about to start and we simply have too few homes available."
    We cannot argue on what Mr. Orr has to say. We only add, that it is a very easy (and perfect) time to be a seller. For Sellers sidelined from selling, it may be time to jump back in while competition is fierce for your home. For Buyer's who missed the market low, they should take heart in the fact that homes are still below replacement cost. In short, both sides can benefit NOW - which has been slow to arrive. Act now - call or email me anytime to discuss your options. I'm here to guide you all the way.
    My very best to you for a continued bright and prosperous 2013. We all have much to be grateful for. Call or email me any time (480-239-3023 or john.groves@azmoves.com). I look forward to earning your business.
  • Phoenix Area Housing Market – UPDATE JANUARY, 2013

    Posted Under: General Area in Phoenix, Home Buying in Phoenix, Home Selling in Phoenix  |  January 4, 2013 7:31 AM  |  347 views  |  No comments
    2013 has arrived!

    With 2012 now part of the past, we turn to the brand New Year. Since early 2007, it has seemed that the New Year usually didn’t promise better news than the previous year. Real estate has been much the same…until now! Experts are more optimistic than in years past that whatever the year brings, one way or another, the Phoenix real estate market is in MUCH better shape than most of the country in our recovery. That is EXCELLENT NEWS!

    As previously reported, supply and demand are the key factors in all of this. Right around mid-summer of 2012, supply began to slowly build after a very busy buying frenzy in the first part of the year. Now as we begin 2013, supply has increased dramatically in some areas while simply building up in others. Amazing what a few months can do to improve a market. Some of the outlying communities (Gilbert, Maricopa, Avondale, Litchfield Park, etc) have seen a significant rise in homes for sale accompanied by a very sharp drop in demand. For example, in the town of Maricopa - supply is about 4 times higher than mid-2012 and demand has dropped in half. 

    In short - Maricopa is currently a strong buyer's market. Some interior areas (i.e., Scottsdale, North Central Phoenix) are seeing rises in inventory as well, although less dramatic ones, which means a balanced market has occurred or soon will through most areas. Builders are contributing to new supply after years of little to no building which is helping this shift as well. Demand is dropping largely due to investors losing their appetite. So while 2012 was a seller's market, we expect to see 2013 be a balanced market tipping into a buyer's market. 

    One interesting change to the market is that many sales are not occurring through MLS. Builder sales, trustee sales, “pocket listings” (non-MLS sales) and private sales are composing anywhere from 20-30% of the sales NOT reported in the MLS. 

    Short sales - a significant component of the market for the last few years, have dropped dramatically - in fact they are down at a level not seen since February 2011. REO's (bank homed homes) are staying in low levels and we hope to see them dwindle by the end of 2013, such that they become an irrelevant factor. The ongoing media reports of huge looming levels of "shadow inventory" have been proven to be a case of crying wolf. 

    The local real estate future still hinges, as all areas do, on the overall economy, consumer confidence and our government fiscal challenges. What impact that will have is anyone's guess. No matter, experts continue to feel very optimistic that the first half of 2013 should be a healthy one in the Phoenix real estate market. There is reason to celebrate the arrival of a New Year.

    If you are thinking about selling your home, allow me the opportunity to provide you with a market anaylisis to help you determine if NOW is the time. This is free knowledge I am happy to share. Call or email me any time (480-239-3023 or john.groves@azmoves.com).

    As a potential Buyer in this market, and depending on where you would like to “set down roots”, there are plenty of homes available – particularly in our top school districts which are an important factor many forget ADDS to your resale value.

    My very best to you for a bright and prosperous 2013. We all have much to be grateful for.
  • Phoenix Area Housing Market – UPDATE DECEMBER, 2012

    Posted Under: Market Conditions in Scottsdale, Home Buying in Scottsdale, Home Selling in Scottsdale  |  December 6, 2012 9:35 AM  |  322 views  |  No comments

    After a sluggish summer, the Phoenix real estate market regained strength in the 4th quarter. Supply continues to build, although still below average. Homes priced below $200,000 are moving quickly and we are still seeing multiple offers on these homes – edging prices up at this price point. The highest appreciation rates continue to occur in those places where prices fell the most in 2007-2009 - primarily the drive until you further qualify communities. In contrast, higher priced homes have shown only a small amount of appreciation with just a few posting double-digit improvements such as - Carefree at 11.7%, Desert Hills at 13.9% and Tempe at 11.0%

    Increasing prices are luring “on the fence” Sellers - and even builders - back into the marketplace. At some point, increased prices will drive back the demand resulting in a balanced market. We do forecast spring of 2013 to be a very healthy market for both buying and selling. 

    The best summary of the 2012 market is stated most perfectly by Michael Orr of the Cromford Report (a trusted and highly sought after source throughout the Arizona real estate community)

    "The change in price over the last 12 months is clearly impressive. There are very few occasions in which the average price per sq. ft. rises by 25%. The only previous time I know of is May 2005 to March 2006 and that was at the height of the bubble. A rise of 2.7% in the single month of September would also normally be startling, but we have got used to big numbers. When the market eventually gets back to normal we should expect to see 2.7% for a whole year, not a single month.

    What we have seen is the "coiled spring theory" in action. Supply became extremely low last year, but prices refused to react until the 4th quarter of last year. Now prices have moved substantially higher, we are seeing signs of the market cooling. Supply is growing as Sellers start to take advantage of the higher prices achievable. Some Buyers have become discouraged by the amount of competition - along with higher prices - and have left the market, resulting in some softening of demand. Sales volumes though ARMLS (Arizona Multiple Listing Listing Service) are down. However, this is somewhat misleading because a large number of real estate transactions are happening outside of the MLS. Deals between investors, new homes sales, trustee sales, pocket listings and private sales add up to a significant volume which is missing from the MLS numbers but captured by the county records."

    For the 3rd quarter, normal sales are now 59.5% of the market. The number of normal sales should continue to grow. Short sales have stabilized at 30.17% of the market (and we expect them to be a declining part of Phoenix area real estate sales for the next couple of years). Happily, REO/HUD (bank owned) sales are down to only 13.95% and have become almost irrelevant. On that note, you may recall last month I noted Bank of America suddenly shifting gears by taking back into their inventory REOs rather than selling them at auction to investors. After 5 weeks of this, it appears that they have stopped that program. We expect to see a small increase in REO (bank owned) listings as these homes go to market, but will have a negligible effect. The number of Notices of Trustee Sale in Maricopa County was 2,690, the lowest total since July 2007 over 5 years ago. This is all GOOD news. Our hope is that by the end of 2013 REOs will be back in the "normal" range.

    As always, I am happy to provide you with a free market analysis of your home at any time. If you’re looking to purchase a home, NOW is absolutely the time to do so. I look forward to working you.


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