What is the opposite of “urgent”? How about the current state of the Greater Phoenix real estate market? Words like quiet and unhurried are often spoken by agents and home buyers these days. It is an unusual statement for our often agitated housing market. Below is our take on the Phoenix Real Estate News for August 2014 with special commentary by Mike Orr of Cromford Report and ASU fame. We hope you enjoy.
The Phoenix Real Estate News will start with thoughts from Mike Orr. As we’ve mentioned in the past… he has a passion for providing quality Phoenix real estate news. This is what he has to say as we enter into August 2014:
The big slump in demand is now 12 months old and as yet is showing very little sign of ending. It has already lasted much longer than almost anyone expected. With that as background it may seem surprising that the market has been improving for sellers over the last 4 months. The nadir was on March 17 when the Cromford® Market Index had dropped to 83.7. The improvement is not large and is almost entirely due to a fall in supply. When buyers are severely lacking in urgency, sellers usually choose to up the stakes by dropping prices. This is NOT what has happened in 2014. Although we have seen plenty of price cuts, these were mostly from levels that were well above market. Very few sellers have been prepared to discount their homes below market. Sellers have chosen instead to either take their homes off the market or simply wait. Neither side is showing a sense of urgency.
Eventually demand will return to more normal levels, because everything in housing tends to be cyclical. It is anybody’s guess when this return will get under way, but we expect to be the first to notice it happening. There is precious little to report yet.
We mentioned earlier that we really like Mike Orr’s take on the market. Most academics who study real estate are behind the market by a month or two. Orr has the uncanny ability to see with numbers what we and other agents witness in the trenches. Here are a few of our thoughts:
- Most home buyers we are working with take more than 6 months to find the right home.
- There are generally two types of properties that attract home buyers.
- – Homes that are in mint conditions, very nicely remodeled and priced at or slightly below market value.
- – Homes that need updating and are priced low enough so when the work is done the home owner is not upside down.
- We work with a lot of historic home buyers and sellers. The home buyer’s seem most captivated by homes that retain their historic charm. They do not want cheap HD cabinets and many detest granite counter tops.
- We strongly advise historic home owners considering a remodel to study period design guides and do what they can to retain the charm that makes a historic home special. Do not toss out the old doors, cabinets and hardware. Use materials that match the vintage of the home. Refinish those old wood floors instead of covering them with Pergo or carpet. Yes. we’ve seen home flippers cover beautiful oak floors with cheap laminate. Study the floor and door moldings of the 20’s and 30’s and match as best as possible. Often some of the arts and crafts molding styles are quite affordable to recreate.
- In some historic neighborhoods, a mid-century makeover works. We’ve seen a few in Coronado Historic that rocked and many of the ranch style homes in neighborhoods like Windsor Square, Woodlea and Campus Vista support classic mid-century or Wright-ish influenced transformations.
- A surprising number of people tell us they hear there is another real estate bubble coming. We do not see this in the 2014-15 Greater Phoenix real estate news. A bubble is generally a response to excessive/non-sustainable market demand and a lack of supply. Most of 2013 and 2014 have been pretty tame with only modest demand and ample supply. This isn’t to say some markets, like San Francisco, are not at risk. We hear about some crazy deal going on there.
- We are often asked, “Do you see home prices rising much this year?” The simple answer is no. We do expect a slight rise of 3-5% in fiscal year 2014 but nothing that will turn heads.
- IMPORTANT NOTE FOR CONDO/LOFT OWNERS AND BUYERS: Most condos in the downtown and central Phoenix region are not FHA or VA approved. Thus, you can not buy or sell using FHA or VA financing. This problem makes these properties impossible for many to buy and likewise difficult to sell. We strongly urge condo homeowners to contact their HOA and find out what it will take to gain FHA/VA approval. Doing so will help gain sales and often increases property values.
Not much else to add for the Phoenix Real Estate News report for August 2014. In mid-August we will get Fidelity National Title’s latest Market Trends Newsletter and will add it to this post. Until then, we have a link to their July Market Trends that may interest those who like good graphs and charts.
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