According to a REALTOR.com study, housing inventories dropped 12% nationally from 2018 to 2019, the largest year over year decline in nearly 3 years. As a result, the U.S. market has a large housing inventory under supply. This is occurring just as 4.8 million millennials are reaching 30 years of age, an age where previous generations have bought homes. Arizona is not immune to the shortage, as according to the study the fifth biggest decline in active listings (-29%) occurred in the Phoenix-Mesa-Scottsdale metro area.
#Scottsdale, Arizona is the best city in the U.S. to find a #job in according to Wallethub.
Live in Scottsdale? You can find information about construction activity, development requests, building permits, code enforcement notices, and crime activity by visiting the City’s online map. Enter an address or intersection and see all activity for the last six months. Or you can zoom in to an area of interest and select a colored pin to learn what is happening at that location. You can also receive periodic email updates about new applications and development activity in the City through the “P&Z Link” – sign up here.
The city and the Federal Emergency Management Agency (FEMA) have reconsidered a designated flood plain area east of Scottsdale Road, from roughly Deer Valley to Happy Valley. Better flood modeling techniques and improvements in infrastructure led to FEMA dropping the requirement that about 800 property owners have flood insurance. Flood insurance policies cost several hundred to several thousand dollars per year, so the eased requirement will result in significant savings – and hopefully make the homes more easy to sell. Its not all good news however, because some other homes nearby were placed inside the flood insurance map boundaries. Contact me if you want to know if your home is affected.
Home prices in the luxury market (at least $1 million) fell in the 3rd quarter for the first time since 2012. The reason for the decline may be that wealthy buyers fear that prices have climbed too high, too quickly. Also foreign investors could be buying less due to volatility in the global markets, and a bigger supply of luxury homes might also be pushing prices down. According to Redfin, the biggest luxury-market losers were Scottsdale, Arizona and Boca Raton, Florida, where prices sunk 15% year over year. Redfin tracks the most expensive 5% of homes sold in more than 600 U.S. cities nationwide and compares price changes to the bottom 95% to make this analysis.
Realtor.com® analyzed medium to large cities for the highest percentage of backyard pools. Six metro Phoenix area cities are in the top 10:
2. Scottsdale, Ariz.: 62%
3. Tempe, Ariz.: 46%
4. Chandler, Ariz.: 40%
5. Glendale, Ariz.: 37%
6. Gilbert, Ariz.: 37%
9. Mesa, Ariz.: 31%
As these stats indicate, sometimes its hard for a buyer not wanting a pool to avoid one in certain neighborhoods in the Valley of the Sun.
Want to get real-time information about construction activity, development, building permits, and code enforcement in your metro Phoenix area city? In Scottsdale, go to www.scottsdaleaz.gov/bldgresources/alerts/services to sign up for the “Scottsdale P & Z Link”, a bulletin that includes information about new planning and development projects. Or search your neighborhood at https://eservices.scottsdaleaz.gov/eservices/dmc/CompleteList.aspx. For Phoenix, some of the same items can be found at the planning and development website at http://www.phoenix.gov/pdd.
If there is something you need that you can’t find, let me know and I will try to help you locate it.
Late last year, Fletcher Wilcox, a well-respected real estate analyst with Grand Canyon Title, prepared a report entitled “Should you Rent or Buy a Single Family Home.” It analyzed whether it was cheaper to pay rent or pay a mortgage on a single family home. Based on the average rental rate and average purchase price in the Greater Phoenix area, his calculations indicated that buying made more sense.
Mr. Wilcox created a common financing scenario – an FHA loan, to acquire a single family home at the average purchase price at the time of $171,500. He arrived at a $972 monthly payment to buy that home, with $200 a month for taxes and insurance, or a total $130 less than the average rental rate of $1,302. A guesstimate of the tax deduction permitted on mortgage interest and taxes lowers the effective mortgage payment to $1,002 per month, or $300 less than the average rental rate.
Using a VA loan increases that advantage, but even a monthly payment under conventional financing beats the average rental rate of $1,302. Since the date of that report in November, our average purchase price in the Greater Phoenix area has declined to $157,800, so if Mr. Wilson prepared his analysis today, he would show even a lower estimated cost of ownership.
Others have noticed the advantage of buying over renting here. Using median rent and values instead averages, real estate search website Trulia came to the conclusion that it makes more financial sense to buy in 72% of the major metropolitan areas. Trulia’s index lists two of the top five U.S. cities favoring ownership as Phoenix and Mesa.
[If you would like to read Mr. Wilcox’s report, let me know at firstname.lastname@example.org, and we will send you it by email. If you would like to read Mr. Wilcox’s report, go to http://www.gcta.com/pdf/2011_April_Buyers.pdf]
Why pay rent when its cheaper to own? Give us a call and we will be happy to help you get out of your rental and into your own home in the greater Phoenix/Scottsdale area. Don’t wait until interest rates rise and inventory becomes scarce, take advantage of our buyer’s market now.
– N. Mark Kramoltz © 2015
Long before our latest market struggles, there has been a history of foreign buyers for U.S. residential and commercial real estate. But figures from the 12-month period ending the first half of last year show that nationally, international investors bought 10 percent fewer homes and condos compared to that same period the year before.
It is my belief that those numbers should turn around, and foreign home purchases will actually increase above historical norms. Why? Because besides the increasing affordability of Arizona homes, foreign buyers have additional reasons to invest in the U.S.
There is no doubt that dramatic drop in home values should be a major encouragement to foreign investment here. For residents of those cities where urban real estate is traditionally highly priced, the bargains in the greater Phoenix area are increasingly attractive. But foreign buyers have other factors to consider that can be just as important as how much a home costs.
For example, our nation’s political and economic stability is better than compared with many other countries. Unstable regimes and economies usually do not encourage investment when opportunities exist elsewhere in more settled countries.
But what could be the biggest positive is the relative value of the U.S. dollar. A favorable exchange rate can make a foreigner’s native currency go farther, and in some instances may determine whether they can buy at all.
Starting primarily in the second quarter of 2009, the U.S. dollar began a descent compared to other major currencies. Since June of 2009, the dollar tumbled by 9 to 11 percent against currencies like the Japanese yen, the European euro and the Canadian dollar, and the Brazilian Real gained 17 percent against the dollar in the last six months of the year.
These exchange differences are especially important to foreign buyers as they pay mostly cash, or supply large down payments – 40 percent or more, because financing is usually unobtainable. For example according to the National Association of Realtors, nearly half of the foreign buyers paid cash in the 12-month period of May 2008 to May 2009.
As a Canadian, I know the difference the exchange rate makes to my fellow countrymen looking to buy in the Phoenix/Scottsdale area. Of course, Canadian buyers looking for second or vacation homes in the U.S. have been familiar to us in Arizona for some time. But I have experienced the increasing activity that results when a strong Canadian dollar makes our homes less expensive.
The strong Canadian dollar and low interest rates should mean that more and more of my fellow Canadians will purchase U.S. vacation properties. But not only will those north of the border buy. Even residents of other nations not contiguous to ours should show increased interest in acquiring properties all over the nation if the dollar continues to weaken. With the dollar hitting a 15-month low in December against the euro, European buyers could buy single-family homes or condos for two-thirds the cost three years ago!
Wondering which state attracts most foreign investment? Florida leads the country in the amount of international buyers, accounting for nearly a quarter of foreign purchases. Arizona generally ranks fourth, behind the other warm climate states of California and Texas.
Comprehensive information on non-U.S. purchases of real estate across our country can be found on the NAR website on their International reports page: www.realtor.org/research/research/reportsintl.
Next blog I will show how my Certified International Property Specialist designation and experience dealing in the international marketplace increases the probability that your Phoenix metropolitan area home will be sold or rented. As always, if you need to reach me, call me at 480 675-0112 or email to email@example.com.
– N. Mark Kramoltz © 2015