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Casey Taylor

Home Sales in Bloom

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New Home Sales blossomed in March reaching their highest level in nearly a year, the Commerce Department reported. Sales were up 5.8 percent from February and nearly 16 percent from a year ago. New home inventories edged lower to a 5.2-month supply in March. A six-month supply is considered “normal” inventory.

Existing Home Sales hit their highest pace in over 10 years in March, according to the National Association of REALTORS®, with sales climbing 4.4 percent from February and 5.9 percent above a year ago. However, existing home demand continues to outweigh supply with inventories down 6.6 percent from the same time last year.

New home construction didn’t fare as well. Inclement weather during March in the Midwest and Northeast chilled residential home construction after unseasonably warm weather in February. March Housing Start numbers fell nearly 7 percent from February, per the Commerce Department. The year-over-year picture was still rosy, however, with Housing Starts up 9 percent from March 2016 to March 2017.

Economy, Markets Thunder Along
The first reading on first quarter 2017 Gross Domestic Product (GDP) was anything but rosy, as GDP came in at 0.7 percent. This was below the 1.1 percent expected and below the 2.1 percent recorded in the fourth quarter of 2016.

GDP is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. It is considered the broadest measure of economic activity. Typically, readings of 2.5 to 3 percent signal strong economic growth.

April also brought uncertainty over the tensions surrounding global events, causing investors to move their money into the safer haven of the Bond markets. This helped home loan rates, which are tied to Mortgage Bonds, hit their best levels of 2017. Stocks around the world also benefited after the French presidential elections in April ignited a global rally.

Despite the volatility, home loan rates remain in attractive territory and still provide many opportunities for homebuyers and homeowners considering a refinance.

Should You Rent or Buy a Home? Weighing the Pros and Cons of Each Option

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Should You Rent or Buy a Home? Weighing the Pros and Cons of Each Option

When you are looking for a new home, there are seemingly endless factors to consider: what is your price range? What type of neighborhood is right for you? How much space do you need? One of the most fundamental decisions you’ll face is whether to buy or rent a home.

While home ownership is often glamorized and renting is sometimes thought to be preferable only for those who cannot afford a down payment, both options carry advantages and disadvantages that warrant careful consideration. Whether you’re a renter thinking about making the transition to home ownership or a homeowner drawn to the idea of renting, it’s important to remember that this is a deeply personal decision that should take into account your lifestyle, goals, and financial situation.

Here are a few of the pros and cons of each option:

Buying

    • Pro: The chance to build equity. When you own a home and make your monthly mortgage payments, you will gradually build equity by paying down the principal on the loan. Aside from the sense of fulfillment that comes from having an ownership interest in the property, you may eventually be able to obtain a home equity loan, which can be used to meet various financial needs.
    • Pro: The possibility of profiting from your investment. Most homes appreciate in value over time. If you have the flexibility to wait to sell your home until it is worth more than you paid, you may easily walk away with a profit.
    • Pro: The freedom to customize the property. As a homeowner, you typically do not need permission to decorate, paint, and renovate your home to suit your unique style and needs. Such improvements will enhance your enjoyment of the property and may boost resale value.
    • Con: Substantially higher upfront costs. Many lenders require a down payment of 20 percent of the home’s sale price—which can amount to a hefty sum, even for inexpensive properties. In addition, you must be ready to pay for the appraisal, inspection, and closing costs.
    • Con: The risk of losing money. Market conditions are hard to predict. Even if buying a home seems like a good investment, you run the risk that it will not be worth as much as you paid when you are ready to sell.

Renting

    • Pro: Greater mobility. When you are renting, it is easier to move when your circumstances change. Even if you have to break your lease, it is less time-consuming and stressful than selling a home.
    • Pro: No risk of losing money on your investment. When you are renting, you are insulated from declines in the market.
    • Pro: No responsibility for maintenance and repairs. When something breaks at a rental property, the landlord is usually responsible for fixing it. For tenants, this means less expense and less hassle than homeowners face in similar situations.
    • Con: Continually increasing rent. Although renters do not have to pay many upfront costs when moving into a property, many landlords raise the rent each year.
    • Con: Unable to renovate the property. As a renter, if you want to change a paint color or replace the kitchen cabinets to suit your style, you cannot do so without approval from the landlord—if at all.

How to Negotiate the Best Possible Outcome on Your Home Sale

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When your home is for sale, getting an offer from a possible buyer brings a surge of relief and excitement. However, this pivotal step is just the beginning of the long road to closing the sale. After the initial offer, you and the buyer begin the process of negotiating a mutually agreeable sale price and other conditions.

As a seller, the pressures of the sales process and an upcoming move may cause you to make mistakes in negotiations that could prevent you from getting the highest possible price for your home. Here are some strategies to keep in mind as you review offers from buyers:

  1. Consider your strategy as early as possible in the selling process. What is the lowest price you would be willing to accept? Do you have any time constraints? What items do you feel are non-negotiable? Although these may change if your home is on the market for a long time, having a clear idea of your minimum acceptable terms will help you decide which offers are worth accepting or countering.
  2. Trust your realtor. Even if you are a skilled negotiator in your professional life, it is best to leave negotiating with the buyer to your realtor. He or she represents your interests and has the knowledge and experience needed to help you achieve the best possible outcome.
  3. Learn about current market conditions—as well as the buyer’s circumstances, if possible—in order to better understand your relative bargaining power. For example, if there are not many similar homes available for sale in your area, and you know that a prospective buyer wants to get settled into a new home as soon as possible, you can probably assume that you will not have to make many concessions. On the other hand, if there are several comparable homes for sale and you are under pressure to move quickly, you may need to give in to more of the buyer’s demands.
  4. Knowing that the buyer will likely use information that you are urgent to sell your home against you in the negotiation process, try to stay as private as possible about the circumstances surrounding your move. If you have a tight deadline, are struggling financially, or are coping with other difficult circumstances like a divorce, withholding this information from prospective buyers and their realtors will help you maintain the upper hand as you strive to reach acceptable sale terms.
  5. Consider bargaining chips other than price. While both buyers and sellers tend to focus on finding an optimal sale price, there are several other factors that can be used for leverage in negotiations. For instance, you might agree to make repairs, leave behind furniture or appliances, or pay the buyer’s closing costs.
  6. Act swiftly when responding to offers. Even if you are disappointed by an offer, remember that a lowball price may just be part of a buyer’s strategy. Depending on buyers’ moving timelines and how much they like your home compared to others they have seen, they may be willing and able to agree to a much higher purchase price. However, the longer you wait to make a counteroffer, the more likely the buyer is to lose interest or find another home.

Selling your Home – Spring Cleaning

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Mature Landscaping

Want to sell your home and get top dollar?  Follow these simple steps for some spring cleaning that will make your home look great:

  • Landscaping:  Clean up and cut all of the dead growth off of bushes and shrubs.  This will leave the new growth showing with bright greens and vibrant colors of blooming flowers.
  • Fresh Paint:  painting the exterior can provide a nice “pop” as potential buyers pull up to your home.  As the expression goes “You only have one chance to make a first impression”.
  • Interior Paint:  if it’s been a while and you have marks and other wear and tear that shows on the interior paint, it might make sense to provide a fresh coat.  Be sure to use neutral and earth tones that would appeal to the masses.
  • Carpet and Floors:  If your carpet has plenty of wear, it may be time to step it up and buy new carpet and pad.  When buyer’s walk through your home, they will surely notice new carpet.  Tile Floors:  be sure that all stains are gone and the tile is nice and clean.  Perhaps it’s time to get the grout cleaned and make that tile look it’s best again.
  • The NOSE test:  be sure that your home smells good.  If you have pets, you may not be able to smell them, but new people walking into your home for the first time certainly will.  Be sure to have air freshners and accents that leave your home smelling fresh and clean.

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Phoenix Housing Market on the rise

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Phoenix housing prices have seen a substantial increase in the past 12 months with as much as 20-40% growth rates in certain parts of the city.  With limited inventory available for many new home buyers, many builders have seen an increase in sales.  As investors flocked to the Valley over the past 2 year, with housing prices at historic lows, many of the distressed properties for sale have been either scooped up as rentals or resold as “Fix and Flips”.  Investors often times going in and doing a nice re-model of the home in order to improve the property and sell to an end user.

The Phoenix housing market has a number of factors influencing home sales:

  • Price Increases
  • Consumer Demand
  • Historically Low Mortgage Rates
  • The overall improvement in the economy and job growth

First-time home buyers feel the pressure.

Many first time home buyers and buyers with a price-point under $200,000 are often getting outbid to “Cash” investors.  Many offers that are made by these cash investors are often made sight unseen.  That is because the market has been climbing so quickly that investors could buy a home, hold it and renovate it for a month or two and re-sell the house for a nice profit.  This often leaves owner occupant buyer’s left in the dust, and wondering why they didn’t get the home.  This has lead to buyer’s making “above list price” offers and hoping that they have a chance to get the home.

This activity has fueled the market in a challenging way.  Primarily it causes bidding wars that often leads to people feeling like they are paying too much for a home or even discouraged to the point that they don’t want to bother trying to purchase a home all together.  Another big challenge lends to the circumstances of an appraisal for anyone buying and obtaining mortgage financing.  Often appraisers are now forced to try and justify the higher price on accepted contracts, even though many similar comparable homes that have recently sold, have sold for less.

Opportunity still exists

Despite the rampant price increases, buyers should not be discouraged.  Many investors are realizing that the market can no longer support the quick gains as seen in the past 12-24 months and many are no longer buying.  That will leave plenty of opportunity for first-time buyers and move up buyers to find nice homes that they can purchase and enjoy.  After all- buying a home and getting a 30 year rate in the range of 3.25-3.75% will not be around forever!

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