The real estate market has turned around in Arizona, this is welcome news for anyone that experienced the massive boom and bust cycles of the last 6 years.  However, buyers are now finding it difficult to find a bargain and in many cases even to find a home to purchase.  Investors are driving up prices, and inventory is low, especially for homes priced under $250,000. That’s not great news for anyone hoping to buy an affordable house to live in.

Arizona is home to one of the nation’s extraordinary turnarounds. The Phoenix-area median home price rose 20 percent over the past year — 6 percent in March alone.  But the easy money has already been made.

Anything under 180 thousand is receiving multiple offers and moving very quickly.

Inventory Down, Prices Up

Many of the homes that would have sat on the market a couple of years ago are now getting multiple offers.

Agents are now able to list properties above comps and wait for the market to catch them, a welcomed turn around from the previous years.  A property that would’ve listed for $130- to $140,000 is now listing for $160- to $170,000.”

About a quarter of all home sales in Phoenix and Tucson are to investors — people looking to fix and flip or fix and rent, or people looking for a second home.

Many people are still looking for bargains, but the deals are harder to find.  One of the main reasons prices are up is because inventory is down — there are fewer homes on the market. There are also fewer foreclosures — about 60 percent fewer than last year in the Phoenix area.

There is still a flow of foreclosures taking place, it’s dramatically down from the peak, which was2008 through 2010.

Homes worth more than $250,000 are moving up in value, too, but more slowly. Rising prices are good news for Arizona homeowners who saw their property plummet in value since 2008, but the investor frenzy on the market’s low end is bad news for people who just want to buy an affordable home and live in it.

When an investor is buying, they will very often offer cash and waive the appraisal contingency, and that is very attractive to a seller because they know the deal is almost certain to go through.

Sellers don’t have to wait to see if a buyer has good enough credit to get a mortgage, and the relatively tight credit is helping to keep the rental market strong — more good news for investors looking for tenants.

A Welcome Turnaround

Having an empty home occupied is good for any neighborhood.

Arizona, and especially Phoenix, experienced one of the biggest bubbles and biggest busts. So this turnaround is especially welcome.

Arizona housing inventory continues to fall to near record levels. The number of homes for sale in the Phoenix metro area is now less that 13,500 homes, and it continues to drop at a staggering rate. Just a few short years ago the Arizona housing inventory peaked at 48,340 homes. Now it is nearly 1/4th of that number. These low inventory numbers have not been seen since 2005, during the housing bubble.

The Reeves Team takes a market snapshot every Tuesday. Take a look below to see just how quickly the inventory has fallen in 2012.

1/18/2012            18,459
1/31/2012            17,744
2/8/2012              17,327
2/20/2012           16,860
2/29/2012           16,154
3/6/2012             15,822
3/14/2012           15,235
3/21/2012           14,845
3/28/2012           14,352
4/4/2012            13,962
4/11/2012           13,846
4/18/2012          13,616
4/25/2012          13,477

We have been hearing for weeks now that housing prices are on the rise, but now Arizona’s job growth appears to be on solid footing again and getting stronger by the month as well.

Not only did the Arizona Department of Administration report Thursday that the state had 47,000 more jobs in March compared with March 2011, but almost 60 percent of the state’s 100 largest employers surveyed by The Arizona Republic reported adding employees last year.

Some of the gains were substantial. Intel Corp. added 1,300 workers; JPMorgan Chase, 1,100; and Grand Canyon University, almost 900.

This year marks the 20th anniversary of The Arizona Republic 100 list, which first listed the state’s 100 largest employers on May 10, 1992. At the time, the leaders were manufacturers Motorola Inc., AlliedSignal Aerospace Co. and Honeywell International.

Today, the state’s largest employers are Walmart, Banner Health and Wells Fargo & Co. Several health-care, financial and education companies have risen significantly over the past two decades. Some other Arizona Republic 100 companies, such as No. 29 CVS Caremark, No. 54 Go Daddy Group Inc. and Gila River Gaming Enterprises, didn’t exist in 1992.

A look at the state’s fastest-growing job sectors shows that the reasons behind Arizona’s new growth are varied. They include more medical clinics and specialty treatment centers, construction of the new $5 billion Intel fabrication plant in Chandler and a renewed appetite among consumers to go out to eat and shop.

There is still pain, of course. Although the most widely quoted Arizona unemployment rate is 8.6 percent, about 18 percent of Arizonans are out of work, have given up looking or are working part time because they can’t find full-time jobs, according to the U.S. Department of Labor.

Although more jobs have been created, The market still has a lot of healing to do.

According to the latest state data, the job sectors growing the fastest in Arizona over the past year are health care, restaurants and bars, specialty construction trades (such as electricians and plumbers), retail and public schools. Altogether, they accounted for about 71 percent of the jobs added over the year.

So what do you think? Is the Arizona heading in the right direction for good? Or is this just a temporary increase?

The presence of a seller can be off-putting.

It’s the dreaded question real estate agents fear when speaking to the seller. “May I be present at the open house or showing?”

Having the seller present during an open house or showing of their property is almost always a bad idea. Here are three reasons why.

1. The seller’s presence will make buyers feel awkward.

Home buyers need to feel as comfortable as possible when looking at a potential new home. It’s a big investment, and they should feel welcome to open closets, look in cabinets, look behind the couch, or put their ears up the walls or windows. A serious buyer of a property needs to do whatever they can to learn about the home.

In the presence of a seller, the buyer may feel like a guest in a stranger’s home, a patron at a museum, or something in between. They spend too much time being cautious and not enough time really delving into the property. When buyers don’t feel completely comfortable to explore, they may miss the intricacies of a property. Or they might not give the home a fair chance. This means a missed opportunity for both the buyer and the seller.

2. Sellers tend to talk too much.

Honesty is always the best policy, of course. But don’t forget that this is a “sales” process, and that less is usually more. Let’s say a potential buyer asks the seller about the neighbors. “Oh, we love our neighbors!,” the seller answers. “They drop by our house all the time and we do the same. They’ve got high school-age kids, too, who are a lot of fun. It’s one big, constant block party!” While some might like this idea, others who value their privacy will be turned off.

3. Sellers can get hurt feelings, which can cost them money.

A seller may experience hurt feelings from questions or comments that buyers ask. This could lead to a negotiation that starts off on a bad note.

For example, a buyer touring a home with dark colored walls, floors and heavy window coverings asking his agent what it would cost to refinish the floors and paint the place. The seller, who preferred the dark, may be insulted by the questions and immediately go on the defensive. When the low offer comes in from that buyer, the seller may think that they were trying to discount the price to pay for those cosmetic changes and refuse to budge on price.

Emotions can get the best of a seller. Ultimately, the seller lost a buyer and a good offer.

Exceptions to the rule

Every once in a while it helps for the seller to be present during an open house or showing.

After weeks on the market without any offers, especially with a property that needs serious cosmetic or staging work, it might be helpful for the seller to attend the open house anonymously. They can hear directly from buyers that the paint job is off-putting, how the place feels too much like a bachelor pad, and so on. The real estate agent may have been trying to tell the seller these things all along, but sometimes, independent confirmation is needed before the seller will take action.

Q: How long do I have to own my home to avoid repayment of the $8,000 tax credit?

A: One of the requirements of getting the 2009 – 2010 Homebuyer Tax Credit is that you have to maintain the home as a primary residence for 36 months. So if you move out — even if you still own the property — you’ll have to repay the credit. Additionally, if you sell the home you have to pay back the credit. The good news is that you only have to repay up to the home’s gain, so you may not have to repay the entire credit.

Q: I’m looking to move in to a new home. The home I’m currently in is my first home and I accepted the first-time homebuyer credit. I’m wondering how strict the government is on enforcing the mandatory three-year occupancy after accepting the credit. If I want to sell the house at two years and 10 months, would I have to repay the credit? If I would have to repay the credit, would it be prorated, or would I be required to repay the whole $8,000?

A: As you have indicated in your question, one of the requirements of getting the 2009 – 2010 Homebuyer Tax Credit is that you have to maintain the home as a primary residence for 36 months. So if you move out — even if you still own the property — you’ll have to repay the credit. Additionally, if you sell the home you have to pay back the credit. The good news is that you only have to repay up to the home’s gain, so you may not have to repay the entire credit.

There are some exceptions to the requirement to repay the credit immediately on your next tax return:

• If the spouse of a deceased homeowner continues to live in the house. If the spouse sells the home, though, before the time is up he or she must repay half the credit.
• Spouse remains in home to finish the 36 months after a divorce.
• Military or other personnel required to move more than 50 miles away.
• If your home is involuntarily damaged and you are forced to move. However, you have to buy a new home within two years.

Q: I bought my house in July 2009. I now have to recieve spinal surgery and have to move to a family member’s house for several months during recovery for necessary care. I thought I would just rent the purchased home while I recover and move back in a year. I will be about six months shy of the thirty six month rule. Do I have to repay the eight grand?

A: One of the requirements of getting the 2009 – 2010 Homebuyer Tax Credit is that you have to maintain the home as a primary residence for 36 months. So if you move out — even if you still own the property — you’ll have to repay the credit. Additionally, if you sell the home you have to pay back the credit. The good news is that you only have to repay up to the home’s gain, so you may not have to repay the entire credit. There are some exceptions to the requirement to repay the credit immediately on your next tax return:

The Gilbert LDS Temple is nearing completion.  Recent pictures posted online are starting to get the community excited.  Hear is a list of the top luxury homes near the Mormon Temple in Gilbert.  Click on the address at the top to view more details.

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$1,195,000

2959 E Bonanza Road
Gilbert, AZ 85297

# of Bedrooms:	8
# of Bathrooms:	5.5
Square Footage:	6211
Year Built:	2004
Area:	U41

View Details View Photos (40)  |  Virtual Tours (1)

$1,195,000

2837 E Bonanza Court
Gilbert, AZ 85297

# of Bedrooms:	5
# of Bathrooms:	3.5
Square Footage:	5955
Year Built:	2002
Area:	U41

View Details View Photos (42)  |  Virtual Tours (1)

$874,900

2874 E ARROWHEAD Trail
Gilbert, AZ 85297

# of Bedrooms:	4
# of Bathrooms:	6
Square Footage:	3716
Year Built:	2008
Area:	U41

View Details View Photos (25)  |  Virtual Tours (1)

$777,500

2517 S CONSTELLATION Way
Gilbert, AZ 85295

# of Bedrooms:	7
# of Bathrooms:	6.5
Square Footage:	7005
Year Built:	2004
Area:	T41

View Details View Photos (28)

$675,000

2854 E Bonanza Court
Gilbert, AZ 85297

# of Bedrooms:	5
# of Bathrooms:	3.5
Square Footage:	3518
Year Built:	2003
Area:	U41

View Details View Photos (20)  |  Virtual Tours (1)

$661,500

3159 E Bonanza Court
Gilbert, AZ 85297

Open House (05/11/2012 - 9:00 am)

# of Bedrooms:	5
# of Bathrooms:	4
Square Footage:	4195
Year Built:	2006
Area:	U41

View Details View Photos (25)

$639,000

2031 E Melrose Street
Gilbert, AZ 85297

# of Bedrooms:	4
# of Bathrooms:	3.5
Square Footage:	3000
Year Built:	2000
Area:	U40

View Details View Photos (18)

$499,000

3098 E Blue Sage Road
Gilbert, AZ 85297

# of Bedrooms:	5
# of Bathrooms:	4
Square Footage:	4381
Year Built:	2007
Area:	U41

View Details View Photos (70)  |  Virtual Tours (1)

$448,995

3127 E LOS ALTOS Court
Gilbert, AZ 85297

# of Bedrooms:	5
# of Bathrooms:	3.5
Square Footage:	4858
Year Built:	2011
Area:	U41

View Details View Photos (1)

$439,000

2715 S BANNING Street
Gilbert, AZ 85295

# of Bedrooms:	6
# of Bathrooms:	3.5
Square Footage:	4330
Year Built:	2002
Area:	T41

View Details View Photos (20)

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So your bags are packed, you’ve decided to move to Gilbert Arizona.  You have heard great things but you are not familiar with the area, and much less with the real estate market.  It can be a tough decision, but first you need to make sure you have all the proper tools.

Financing

Even before you fully make up your mind, the first thing you need to do is get pre-approved for a mortgage.  This will tell you how much of a home you can obtain.  This will allow you to view homes in your price range and help you make a more educated decision.

Look Online

The first step is to check online and contact a Realtor in the Gilbert area that specializes in residential sales and in representing buyers. Not all agents are experts in every area of real estate and you want the best one for the type of transaction you are doing not the one that dabbles in anything anywhere. Make sure you feel comfortable with them, they will communicate with you (text, email, Skype, Facebook, phone etc) in a manner that is convenient for you, that they have availability when you will be looking (full time agent, not going away they week you’re coming) or that they work with a partner or can arrange to block off times for you in advance. Feel free to ask for video testimonials, past client letter of recommendation, a summary of their transactions or their designations. Most will have something prepared that they can provide you to give you a feeling of their experience and if their clients experience working with them.

Your agent should be able to answer all of your questions like “Should you rent or buy?”, “What are the benefits or owning a condo, townhouse, single family home or multifamily home?” etc. We can help you compare towns, tour areas, find a reputable lender and attorney and get you 100% prepared to buy. Then you find a home and let your Buyer’s Agent, guide you through a smooth transaction with them by your side educating you so you are the one in control and making informed, confident decisions.

Too many Gilbert real estate buyers pay way too much attention to short-term price changes. People are so worried that prices might drop a little and feel that maybe they should wait to buy something. So if you think you can predict the future, follow your beliefs! However, the reality is that the price, within reason, really should be a secondary matter in your search for a good property to purchase.

The main reason that price is less important is that individuals who want to increase their net wealth from real estate ownership, which is the goal of many buyers, should only be purchasing property that they will hold for a long time. The longer the better and a minimum of five years is probably the breakeven point to start building wealth. It is more likely than not that down the road, years after our economy has sprung back to life, real estate prices should be much higher than what people paid for properties in the next twelve months.

Affordability is now

In 2020 or 2022, you won’t even remember the 2012-2013 price fluctuations. You’ll just be gloating to yourself how brilliant you were buying into the market ten years ago. Not only will you have purchased a great property at the most affordable pricing seen in decades, but you will probably have locked in an outrageously low interest rate on a mortgage that can be fixed for thirty years!

But, what if you buy and prices drop a little? Who cares! It won’t matter because you purchased a great property that you love for all the right reasons. You want to own real estate and any slight dip in the next year or two should be a wholly irrelevant short-term blip on the radar of a long term real estate holder.

In addition, in many areas right now, your monthly payment for ownership (including principal, interest, HOA fees if any, property taxes, and repairs) may be close to or less expensive than renting. That alone is an amazing turn of events in the history of personal residence ownership. This is more likely true for moderately priced properties. Even expensive, untouchable properties a few years ago are astonishingly affordable right now!

Buying is not for everyone

Now this doesn’t mean that it is the right time for just anyone to buy property. If you are not 100% sure you will own the property for a long time, it is probably smarter to stay a renter. If you move often, renting is probably a better option..

Additionally, this doesn’t mean that you can just buy any property to build wealth. You should probably avoid properties that need:

Significant rehabilitation work
Properties in HOAs where the association is in bad financial shape
Properties in areas where there are lots of foreclosures, high vacancy, near lots of buildable land
Areas where the local economy is in desperate shape.
Rarely are those wealth-building purchases. Go for the properties that are in better shape or in more stable areas with jobs and economic development.

For buyers who are too focused on price, are worried about short-term price drops and are holding off on buying, we long-term holding real estate buyers can only say thank you so much! Please keep obsessing over those monthly housing price reports and stay on the sidelines!

With less competition in the market, it makes the process of finding a great home to secure, and with those incredibly low interest rates, only sweeter for the rest of us who are charging forward to buy a property in the best buying environment in a generation!

The Arizona real estate market is on an upswing. All the economic news and stats are pointing toward a long sustained recovery. The Reeves Team’s last 8 listings have had multiple offers from aggressive buyers competing for their homes. So what info do we have that leads us to believe this white hot market will cool off in a few short months? Check out our Market Update below.

Article Summary

1.) Arizona housing inventory is the lowest it has been in over 5 years. (see chart below)
2.) The 5 largest banks just settled a major suit with the government, bringing nearly 2 Billion to the AZ economy.
3.) Home prices in AZ have risen for four consecutive months, first time since the housing collapse. (see chart below)
4.)The Reeves Team and other big agents handling a large portion of the foreclosure business in Arizona have seen foreclosures dry up in recent months.

The Good News

Arizona real estate has been in the news quite a bit over the last month. First, there was the report released that confirmed Arizona was the only state in the U.S. that experienced an increase in home values. The speculation is that because Arizona was one of the hardest hit states when the housing bubble burst that it is also going to be one of the first to rebound.
Next came the news that the 5 biggest mortgage companies in the United States agreed to a 26 Billion dollar settlement with the government. This 26 Billion is to go back into the pockets of homeowners that had been harmed by fraudulent foreclosure processes put in place by the banks. This is also seen as great economic news for the state of Arizona. Arizona residents are expected to receive nearly 2 Billion dollars from the banks settlement, that money will go directly into the Arizona economy.

So with all this good news, what is this 90 day window we are talking about? Before we explain why all this good news might not last, let me give you one more piece of good news. Take a look at the three charts below, for the first time since the market collapsed all of the major market trends are pointing in the right direction.

Average Sales Price In Arizona.

We have now seen the average sales price rise for 4 consecutive months. The metric jumped nearly $15,000 in 4 short months. So what are the reasons for the turn around?

Why is Arizona the only state that is seeing this kind of improvement? The economy is partially to thank, but the real secret is the shortage in houses for sale.

Arizona Housing Inventory

The housing inventory in Arizona has been steadily declining now for the past year, this has more to do with the lack of foreclosures being processed by the banks than anything else, but we will get to that in a moment. At the height of the housing crisis, there were over 57,000 homes on the market in Arizona, as of the writing of this article there are just above 16,000. We have not seen inventories this low since the height of the market back in 2005 and 2006.

Days on market

The average days on market has been nearly cut in half over the past year, this is truly incredible when you consider this is not the amount of days that it takes to receive an offer, but instead it reflects the amount of days necessary to complete the entire transaction. Still not stunned? Consider this, the days on market metric also includes short sale listings, which can take upwards of 6 months to get closed. Yet the DOM is still under 90 for the first time in years.

The Clouds In The Distance

Yet Troy Reeves is quoted as saying “There is a 90 day window to get your home sold before the market conditions change.” What is it that Troy and his team are seeing that most of the media must be missing?

Fallout from the bank settlement

The truth is all of these current factors, the low inventory, the rising home values, and in some part the economic turnaround are due to one forgotten truth. While the banks were in negotiations with the federal government they basically quit foreclosing on properties. They did this because they knew they were going to have to pay out a sum of money for every house they foreclosed on between 2009 and when the agreement was reached.

So the banks made a strategic decision to halt foreclosures and save themselves the penalty they would eventually be paying. So many homeowners that were late on payments never received a foreclosure date, and many of those that had already been issued a foreclosure date saw that date pushed back until after a settlement could be reached.

Short Term Gain

This dramatic decrease in foreclosures eventually helped dry up the houses for sale in Arizona, which in turn increased competition for the current homes on the market and drove up prices. There is however a flip side of the coin. Even though these huge banks were not processing as many foreclosures, it does not mean that homeowners were not still falling behind on their payments.

Long Term Pain

So as the banks begin to ramp back up their foreclosure process, they will not only be dealing with the foreclosures to come, but they will also be cleaning up all the foreclosures they let slip through the cracks during the bank negotiations. Its possible, because of these circumstances prices might not only fall, but fall back even further than they were just 4 or 5 months ago.

What got the banks into trouble in the first place was moving to quickly, and not paying enough attention. Lets hope that the banks have learned their lesson and will take their time getting these foreclosure homes back on the market. While we can’t predict the banks, one thing is clear, with the banks ramping up their foreclosure process again the inventory levels can’t stay this low. More homes on the market means less competition, and less competition typically means lower prices.

Now that we know the banks have come to an agreement and will resume the foreclosure process, we expect it will take nearly 90 days before the market will see a major impact. Let us know in the comments below how long you think it will take, and if you disagree with us completely please let us know, we value your opinion.

The foreclosure nightmare that has plagued the U.S. and Arizona in particular over the last few years will eventually come to an end, but what we are seeing now is not that end, but it paints a good picture of what the end will look like. We here at the Reeves Team like what we see!