Sandi Nilson Sells Arizona

Folks, we have a SELLER’s market this year!

Active Listings for Sale: 17,591 (down 11.4% from last year)

Listings Under Contract: 10,408 (down 6% due to lack of inventory)

Monthly Median Sales Price: $243,000 (up 8%)

Total Monthly Closed Sales 8,365 (up 2%)

Listing Success: Of the listings that came off active or pending status, 80.6% successfully closed escrow. In 2016, that number was 76.8%. In 2015, it was 76.2%.

We currently have 2.6 months of inventory. This is down from 3 months in 2016. If no new listings came on the market, we would run out of inventory in 2.6 months.

(These statistics courtesy of Cromford Associates LLC and Tamboer Consulting LLC and compiled by Empire West Title)

I often am asked by homeowners what kinds of improvements will most assist in adding value to their home. Thought I would give some attention to that question for this first blog post of 2015. I will give the average cost of the upgrade, and also the average increase in value the improvement gives..

Cleaning and decluttering: $290-300 cost Over 5 1/2 times the cost of the work price, almost

$2000 increase in price (586% ROI)

Kitchen and bathroom upgrades: $1300 cost Over 2.6 times of the cost of the work, $3400 price increase (172% ROI)

Landscaping clean-up: $500-550 av. cost 2 1/2 times cost of the work in increased value (over 250% ROI)

Replace or shampoo carpet: $650 av. cost 2.7 times of cost, $1730 price increase (159% ROI)

Paint interior of home: $1012 av. cost Over double the cost ($2100 price increase) (109% ROI)

Paint Exterior: Average: $1500 av. cost 51% ROI, $2200 price increase (51% ROI)

I recently rehabbed a home that had been a rental, at a cost of $20,000, and found that I got a return of $39,000 in added value over and above the original value, almost double the cost of the improvement.

Yes, it pays to invest in some improvements when you are preparing to sell – some more than others. Contact your agent to discuss the improvements that will yield YOU the best results with your property!

Compare your rent with a mortgage payment on a similar size property. If you want a larger home than your current one, use the rent that property would require instead of what you’re currently paying. If it’s considerably cheaper, you may not need any further encouragement.

By the time you consider the principal reduction, appreciation and tax savings, your monthly cost of housing could be much less than the rent you’re paying.

The principal reduction included in each payment is like a forced savings account that increases as your mortgage balance decreases. Your equity in the property will also grow due to appreciation. The equity is part of your net worth and an investment in your family’s future.

The income tax savings can be an additional financial consideration if the combined interest and property taxes exceed the allowable standard deduction.

Trends are showing that both tenants and homeowners are staying in their homes longer. It’s been said that whether you rent or own, you’re paying for the home. Do you really want to buy the home for your landlord?

How has the market changed over the past year? Interesting stuff – what a cycle we have run! From December 2011 to December 2012, our active inventory is down 15%. Total inventory equals 3 months worth of homes average. The inventory in homes under $150,000 is so low that it amounts to about 2 1/2 months worth of inventory. In any real estate market, that is considered a real shortage. In fact, even in the price ranges up to $350,000, there is a 4 month or less inventory. As price ranges increase, the amount of inventory increases gradually until we get to the $800,000 mark, where inventory jumps to almost 10 months worth, and at $1 million, we have over a year’s worth of inventory.

Due to the lower inventory, the actual number of closings in the valley is down 11%, and new contracts pending is down 10% over the year.

Here’s the net effect: The median price of sold homes is UP 32% over the year. That means we have finally gotten to the point where families can sell their homes if they need to move up into that larger home they’ve been thinking about. While we have not gone back to 2005 prices, the recovery is pretty powerful.

Foreclosure filings (notice of foreclosure) are down 50% over the year, and actual foreclosures are down over 33%. The lower the number of foreclosures, the less they will affect home prices.

If you are wondering what your home is worth today and whether you can manage to move up to a larger home, call for a market analysis at no charge so you can determine what your equity really is.

Here’s a comparison of REO (foreclosed), short sale, and non-distressed (traditional sales) in our market last month.

Non-Distressed Sales: 61.2%

Short Sales: 26.8%

REO Sales: 12.1%

This is another indication that our market is pulling out of the severe recession. Following is a graph representing the number of closed sales for the past 3 years, showing improvement in the number of sales for 2012. Our biggest problem currently is lack of inventory, particularly under $200,000. For homes under $150,000, bidding wars are common and cash buyers are still getting the edge because no appraisal would be required for those sales. We didn’t drop in sales as is typical in October, but saw a 7.4% increase last month from September, possibly due to more listings entering the market helping to alleviate the shortage of listings we’ve had over the summer. Red line represents 2012, black line 2011, blue line 2010.

Lower sales in 2012 from the past 2 years are due to severely decreased inventory; a slight increase of inventory in October boosted sales effectively.

Further evidence of a market shortage is regional MLS average price increase average of 2.8% to $211,537. This is a result of two factors: prices are actually increasing AND more expensive homes are selling due to shortage of inventory in the lower price ranges.

Homes on the market (active listings inventory) increased somewhat in October to 13,704 – a welcome change although it is still far lower than the previous 2 years when we saw 19,781 (2011) and 39,176 (2010). Our inventory dipped as low as 9,785 in May – an extreme shortage. Our current inventory is still considered a seller’s market.

Buyers and Sellers, listen to your agent if buying or selling a home is a plan for this or next year.. The market it is a-changin’!

HALLELLULIA! Finally – some encouraging news for financially stressed homeowners across the country: The Senate Finance Committee has approved a bipartisan bill that would extend the Mortgage Forgiveness Debt Relief Act through 2013.

The Senate committee managed to pull together enough votes Aug. 2 to pass the debt relief extension, after heavy lobbying by the National Assn. of Realtors and the National Assn. of Home Builders. The bill, which now moves to the full Senate for possible action next month, also would extend tax write-offs for mortgage insurance premiums for 2012 and through 2013 and continue some energy-efficiency tax credits for remodelings and home construction.

But underwater homeowners aren’t in the clear yet: Republican Party strategists are speculating that tea party freshmen in the House might oppose the debt relief extension because they see it as another costly bailout funded by taxpayers. The estimated revenue cost to the Treasury for a two-year extension is $2.7 billion.