“The market will never come back”. How many times have sellers told us that in the last five years? The problem with that sentiment is that it’s untrue. All financial cycles are just that – a cycle. But for the last five years homeowners were justifiably gloomy about the great American dream. It is very hard to describe something as a “dream” when its value is plummeting below not only what is owed but the sheer cost of the commodities that make it up (i.e. the concrete, plumbing, roofing, etc.) Once the mindset of the consumer shifts to gloom, it can be very hard to shift back to sunshine.
However, the current strong recovery that is underway in the Phoenix market should encourage sunshine. In light of that, we’ve put together some reasons that we believe might make now a very good time to consider selling.
1. Because you CAN sell your house and you might NOT be a short sale. Values are moving up at a very strong clip – as quickly and strongly as the 2005 market. So much so that the pace is not sustainable long term. Sellers who couldn’t sell in years past, now with the increase in value, can finally come to market. How can you tell if you now have equity or can sell? Simple. Ask us for a free market analysis.
2. If values haven’t risen enough and you must sell, short sales are both easier and faster than ever. Although we would not describe the banks as efficient on processing short sales (of course they are not that good at banking either) – it still has gotten so much easier to complete a short sale. The success rate only a year or so ago was probably at 50% as an industry and now the rate is closer to 90%.
3. Low Interest Rates. For those looking to sell and buy, the most important factor in the timing of the sale is interest rates. Since the house you’re selling and the house you’re buying are appreciating at approximately the same rate – then the primary impact on affordability becomes interest rates. Right now rates are amazingly low. But, again, low rates will not be with us forever history says.
4. Condition and the overall look of your home is NOT all that important right now. The condition of the home always impacts pricing, but in some markets the condition determines if you can sell at all. Right now regardless of condition, we can probably find a buyer for your home. Additionally, thanks to the last few years of “as-is” distress sales, many sellers can sell their home in “as-is” condition avoiding costly and aggravating home repairs.
5. Speed of sale – less time on market, less intrusive to sell now. In a strong buyer’s market, sellers might expect the average marketing time to be around 5-7 months. That’s a lot of bed making and potpourri. Now most sellers will secure a buyer in 3 weeks or less.
7. High percent of cash buyers. While all sales are “cash” to the seller at close, the fact of the matter is buyers who need financing are part of any normal market. Currently we have an unusually high number of transactions that are cash sales. This is good news for sellers because the issue of low appraisals (the most common problem in a rising market) is eliminated with cash.
8. Easier for seller to dictate the terms of the offer. Higher purchase prices of course are what most sellers focus on as a benefit in a strong seller market. But just as important is the evaluation of the terms. Issues like the right to take certain fixtures, the ability to dictate the close of escrow date, the right to rent back, these are all benefits available to sellers in today’s marketplace.
9. You can afford to hire an agent. It sounds strange that this would be a benefit of today’s market, but it is. In a strong seller market, a great agent can actually attract enough buyers to effectively pit them against each other. It is not unusual for a skilled agent to jump the pricing by strategically bidding the offers against each other more than offsetting any cost of commission. We have seen many a seller sell to a neighbor or friend to “save the commission” only to forfeit the commission amount and then some through the elimination of competitive bidding.
Hopefully we have given you a reason or two to think “sunshine”. If you would like market information on values, please let us know. As always, we will keep you informed.
Russell & Wendy Shaw
We have waited since 2006 to be able to write that headline. Yes there have been little spurts of improvement during those years (remember the tax credit of 2009?) but nothing that was headline inducing or that in hindsight really signaled much of anything other than tax breaks do work. But this market is different and truly is making news – and some of the news is even accurate! For those who prefer we bottom line it, the price per square foot of homes sold has moved upward at an average of 24% since September 2011. Price per square foot is the most accurate short term tracking number. 24% is a rather amazing number by any standard, but particularly so as the national news is still reporting declines in housing values for our area. As Mark Twain said there are “lies, damned lies, and statistics” – so what is really going on?
Remember that housing is a local issue, not a national issue. So any discussion of our marketplace by necessity must be confined to our marketplace. So let’s look at what is a fact, the price per square foot is up by an average 24% since September. That is a fact. What does that mean for the home seller or buyer in this market?
First to the seller: the message here is that the market has improved greatly and for those sidelined from selling due to value issues, it may be time to check current pricing in your neighborhood. Does that mean every home has gone up 24%? No. As could be predicted, price point has something to do with the movement in values. The lower prices (let’s say $500,000 and under) show the really significant price appreciation. Above 500K we see a different picture with price per square foot showing both less of a drop and less upward movement as well.
Also, another factor that is slanting the numbers a bit is the dropped numbers of homes coming to market. This is one of the factors contributing to the price rise – reduced supply. In our opinion this is the untold story of the market. New listings coming on the market continue to hit record lows since 2011(when that statistic first began being kept). The dropped supply is actually affecting the number of sales – Phoenix single family homes are down 18% compared to 2011 the same time of year. Mesa sales are down 10% and Glendale is down 15%. However, Scottsdale is up 5% over last year. Because Scottsdale homes are more expensive on a per square foot basis, this is affecting the monthly average appreciation just by virtue of throwing higher priced homes in to the mix! So although appreciation is on average 24% since September, that number may be a little bit higher than “reality” given the drop in lower priced sales and the increase in the higher priced sales.
To state the obvious, the best way to determine your current market value for your home is to request a Market Analysis from a competent agent (I highly recommend us). Even then with supply and demand in flux and pricing shifting, the value is a moving target these days. A “range of value” for your home is probably the best you will do on determining pricing without actually placing your home on the market.
To buyers: prices today are likely lower than tomorrow’s values. If you are a buyer, be prepared for the frustration that goes with rising values, limited supply and a strong seller market. Currently, most homes are receiving multiple offers and cash offers are abundant and often winning over financed offers. Asking prices in the lower price ranges in particular, are just starting points for the offers as most offers will be above list price. Those who say “I don’t want to play a bidding game” need to understand that avoidance of this market and the competition for homes means that you are willing to pay more down the road for the benefit of being the sole bidder.
Rising prices at some point will dampen demand – the real question is how high and how long until we hit that point. That is the million dollar question. As the future market unfolds we will attempt to answer it for you. As always, we are here to help you with the challenges this market presents.
Russell & Wendy Shaw