Is There a Housing Crash on the Horizon
By Scott Gaertner, Associate Broker
Housing prices are rising at what feels like an irrationally fast rate, so it’s very easy to see how it feels like another bubble is on the horizon. It’s at this point you start to look for statistics that confirm your belief, confirmation bias sets in, and some objectivity is lost.
Predictable Economics And Demographics
The pandemic has made this all the more confusing, but this strong market was completely predictable. It is actually a formula that goes something like this: Economic Productivity + Favorable Demographics = Housing Boom.
The years just before the pandemic were some of the largest cycles of economic productivity in history. There has also been talk for many years previous about the coming Millennial housing boom that had to eventually happen. (Even though the Millennials are slower to blossom than past groups, there are so many of them, it had to occur sooner or later.) When you add those two conditions to the lowest interest rates ever, doesn’t a housing boom make sense?
The pandemic changed the way, or possibly the where, of how the boom happened. And Scottsdale North is one of the benefactors of that shift. Working remotely is a norm and it is not going away for many. People really can live where they want to now. Reducing taxes and cost of living, finding better weather, perceived safety and less congestion, or even different politics, are all options if you don’t have to be at an office all the time.
The United States housing bubble that peaked in 2006 was largely due to ridiculous sub prime financing vehicles. It’s very different now. There’s no speculative frenzy and there aren’t any over-easy credit opportunities occurring like last time; and speculation really is one of the requirements and main ingredients for a bubble. Today’s buyers are not underqualified.
Above is the data from the New York Fed in February 2021 showing new mortgage originations have incredibly high credit scores. In fact, the Fed says that the median score for a new mortgage approaches 800. Generally, people with 800 credit scores are those that make good financial decisions.
In 2008, refinances were 90% of borrowers pulling cash out of their homes. Today only about 33% of refinances are taking money out. So the vast majority of refinances are people just reducing their payment, which will make it much less likely that they will lose their home in the future.
In order for home values to drop as they did when the bubble popped, there has to be an overabundance of homes on the market. With the unprecedentedly low inventory of homes on the market right now, the supply would have to increase significantly, just to reach what used to be the record lowest amount of homes on the market.
Distressed sales are not a problem either. Speaking of the current state of foreclosure or short sale listings, Micheal Orr of the Cromford Report says, “Among the currently pending listings we have 99.4% normal, 0.3% in REOs and 0.3% in short sales and pre-foreclosures. These are the lowest levels of distress that we have ever recorded.”
There Is No Bubble.
We have the lowest numbers ever of people losing their homes through distressed sales. The people buying homes now have put money in the house to buy it, and they are the least likely to lose their home due to extremely high credit ratings. People who have a home are now leaving their equity in their homes, and they are reducing their monthly cost by refinancing to today’s record low-interest rates. And we have a huge buffer where inventory can literally triple and we still would be less than half of what is commonly considered to be a balanced real estate market.
Nothing is certain but things are looking great for sellers and tough for buyers for the foreseeable future. But it really isn’t easy for sellers to make sure they get top dollar with the least risk and hassle, or for buyers to even get their offers accepted. No one has helped more Scottsdale North buyers or sellers be successful in this last crazy year than the Scott Gaertner Group. If you’re buying or selling give us a call at 480-634-5000. I promise you will be glad you did.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
An Update On Scottsdale North Park
By Scott Gaertner, Associate Broker and Lifestyle Contributor
It has been a while since we updated you on the park that I like to call Scottsdale North Park but the city calls Sevano or Ashler Hills Park. The proposed park site has existed for many years and is located just east of the Summit Shopping Center on Ashler Hills Road. This will be the first, and as far as I know, only park to be located in Scottsdale North.
I spoke with the City of Scottsdale Director of Parks and Recreation Reed Pryor about the progress that has been made since the bond paying for the parks passed. Reed told me that the city is in the process of preparing conceptual designs. They have taken the comments and suggestions from the two open house meetings that were held in Winfield and are incorporating them into the conceptual design plans.
One of the next steps will be holding a virtual open house in the near future. In the online open house, the city will share the layout of amenities that are being proposed for the park. They will also have venues for public comment. Notices for the schedule of the virtual open house will be shared on the city of Scottsdale website (ScottsdaleAZ.gov) or you can check in at ScottsdaleNorthPark.com to keep informed.
Reed and I also discussed the city’s openness to a public/private partnership to fund additional amenities. This unusual financial alliance might allow a more unique and slightly enhanced park site than would normally be created. An example would be having private dollars pay to add more pickleball courts than the city is comfortable funding. We have shared here before about SPARCAZ.com, a 501(c)(3) corporation headed up by local resident Chris Cummings that was set up exactly for such a purpose. They are drivers in this process and are anxious to hear how they can participate.
Reed said that at this point, the rough park design includes six pickleball courts, two turf areas, a ramada, and picnic tables, along with the usual playground type equipment, and 50 parking spaces. I floated the thought of building Scottsdale’s first multigeneration park.
An Idea to Consider: A Multigenerational Park
We have noted here before that Scottsdale North’s main zip code, 85266, has the unique attribute of the highest percentage of Baby Boomers anywhere in the United States. With that kind of distinction, it seems appropriate to fit the park to the local demographic.
Multigenerational parks have popped up around the country and the world as the Baby Boomers reached retirement age. Some of these new-age parks are specifically geared to seniors and are true senior parks. More often they are multigenerational parks and have equipment for children, seniors, and everyone in between.
Regardless of which kind, I think this should at least be explored and offered as an option to the residents. I believe that Baby Boomers are the largest, healthiest, wealthiest, and most active group ever to pass through America’s population. It makes sense to have age appropriate equipment to keep them moving in the ways to which they have become accustomed.
We have placed some information about multigenerational parks and fitness at ScottsdaleNorthPark.com, and if you are interested, register there for updates.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area
What to Know About “Coming Soon” Listings
By Scott Gaertner
Contrary to popular local myth, I did not invent “Coming Soon” listings. I actually took the idea from a Canadian agent at one of the quarterly mastermind meetings I attend. It was the perfect solution to the problem of one of our clients missing the home of their dreams that sold for far less than they would have paid.
How it happened: the next-door neighbor to the listing had a friend looking for a home in that specific neighborhood. The neighbor noticed the for sale sign the morning it went in the ground and called her friend. The home sold before any other buyers even knew it was available. This quick sale hurt the sellers because they got far less than they should have for the home, and it hurt our buyers because they didn’t get the home they really wanted.
That is when I decided we needed to pre-market our listings and found the Coming Soon strategy. I had seen it used sporadically but until that moment it didn’t make sense to me. Suddenly it did. Since then even the Arizona Regional MLS has embraced the strategy, and it has been used more and more, but not always in a way that benefits buyers and sellers.
The standard of professional Realtors® is to list each home for sale on the MLS to encourage healthy competition. I believe open market forces will determine the real price of any good or service if they are allowed to work. Having one buyer see the home is not allowing market forces to work.
So let’s take a look at the pros and cons of Coming Soon.
Pros
You Know You Get Market Value: If thousands of people have seen your home, and dozens of people come through your open house, and you get multiple offers, I think you can feel that you got market value for your home.
Save Days on the Market: You get early exposure without burning any precious “Days On Market.” Buyers love to use Days on Market as a negotiating tool.
Stops Buyers From Buying Something Else: The buyer that is looking for what you have will wait.
Homes Sell Faster: A recent study showed that coming soon listings sell 33% faster.
Earlier Exposure: The house doesn’t need to be 100% show-ready before you start to get eyes on the property. You get visibility of your home ASAP while the rest of the cleaning, pictures, open house preparation, and advertising is still coming into place.
Better Terms: This type of competitive environment can not only yield a better price but also better terms. Too many of our clients, the terms are equally, if not more, important than the price. Choosing the perfect closing date would be an example. We have gotten folks very fast closings so they can get somewhere they need to be, and we have had our sellers stay in their homes after closing.
Less Foot Traffic: Demand is created before you push the listing live, and there can be a line of showings on day one. By marketing in advance, we can often get the home sold with significantly fewer showings.
Might Get a Premium: If a buyer makes an offer you are considering before going live, they should be paying you a premium. They don’t want the competition, so make them pay for the opportunity.
Cons
I looked hard to find cons, but the only con is when it isn’t really a coming soon listing; it is a “pocket listing.” A pocket listing is any type of real estate listing that a listing broker or salesperson retains and is not made available to other brokers or other multiple listing services (MLS) members. If a Coming Soon listing never enters the MLS or sells before other agents have a chance to make offers, it is effectively a pocket listing. The “Coming Soon” status is the opposite of a pocket listing. Instead of an agent keeping the inventory to themselves, including inventory that is not even on the market yet, they are trying to share it with everyone on the MLS. The pocket listing also has the opposite effect of the Coming Soon in that it reduces exposure.
Beware Of The Wolf In Sheep’s Clothing
As mentioned above, just because someone calls it a Coming Soon, it could still easily be used as a pocket listing. Last year, the Arizona Regional MLS made some changes to ameliorate these types of abuses, but we still see it every day. Talk with your agent to make sure you are all on the same page.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
New Scottsdale North Home Makeover Show
By Scott Gaertner
Those of you who enjoy HGTV, Joanna Gaines or house flipping shows now have a new local show that is a must-see.
It seems like all I’ve been yammering about here the last six months is how crazy the real estate market is. Time for a change of pace and a little fun. If you’re anything like me, you have probably already binge-watched all the great content available on cable. Want to watch a genius home designer transform a Scottsdale North home? Well, we have a show for you!
Here is the backstory: About three years ago I helped an HGTV personality and brilliant home designer named Jeffrey Florentine buy a home in Scottsdale North. If I am being honest, the transaction was a little bumpy because he and I had different investment philosophies. I have always been a big “location, location, location” guy. One of my mantras over the last 30 years has been, “I don’t care so much about the inside because I can fix that if I want to. I can’t fix the location.” Jeffrey strongly believed that the home having “great bones” was much more important. By that he meant that a home with a great floorplan that he can improve and update would outweigh any locational deficiencies. As you might guess, him being the client, and his strong convictions, won out and he bought the home.
The finished product was staggeringly different than anything I could ever have envisioned. The photos honestly don’t do the home justice, but they should give you a hint of the transformation. It was absolutely stunning and unrecognizable from the home he purchased. When he sold the home it set a record for price in the community in spite of the inferior location. Jeffrey taught an old dog a new trick with that transaction, so when he called me this year with a new project, I was all in.
He explained that his new design TV show had been canceled due to the pandemic, and he had decided that his new goal was to “bring the soul back to Desert Mountain.” For those of you unfamiliar with it, Desert Mountain is an amazing golf and lifestyle community built around seven golf courses in Scottsdale North. I worked in sales there back in the late 1980s when it was just three golf courses and a bunch of custom lots. The problem today is that since folks don’t love remodel projects, a number of those homes built back then have great bones, but they need new life brought into them. Jeffrey lives in and loves Desert Mountain, and his passion is reviving homes just like these.
We decided that there were probably a lot of folks out there like me that didn’t understand what a world-class designer can do for a home. We figured the best way to help people learn as I did was to completely reinvent a home and video the entire process. That is what I am inviting you to watch. You’ll watch from start to finish and everything in between. We think hearing Jeffrey’s initial vision and watching his masterpiece come together will be entertaining and enlightening. The home should be complete this month and we’ll have a drawing so some of you can come to the reveal party when we unveil the finished product to the world!
The property is located on Loving Tree Lane in the heart of Desert Mountain a couple of blocks down the street from the extraordinary fitness center. You can follow Jeffrey as he puts the pulse back into the home at RevivingLovingTree.com. I hope you enjoy watching him work as much as I have.
Before
After
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
The Lowest Number Of Homes for Sale Ever
By Scott Gaertner
If you are not actually involved in real estate, there is a very good chance you don’t fully understand how crazy today’s real estate market really is.
As I write this article on December 9, 2020, the active listing count in the Arizona Regional MLS for the greater Phoenix area is 6,544, which is down 19% from this time in November. That is crazy low! How low? A normal market is about 30,000 listings available. In December 2008, there were 56,000 listings available.
Michael Orr of the Cromford Report tells us that the supply situation has recently gone from bad to worse with five cities, including Scottsdale, hitting record lows for the number of homes available to buy:
• Chandler: 140
• Gilbert: 116
• Mesa: 285
• Phoenix: 1,031
• Scottsdale: 725 (The lowest number since we have been keeping track!)
“This is not because of a low number of new listings. The flow of new listings was respectable in November and exceeded the total for November 2019 and 2018. However, it increased by far less than the annual increase in demand, and many of these new listings went under contract within days of listing,” Orr tells us. “We exited November with 15% fewer homes for sale than we entered it. We have run out of adjectives to describe the weakness of the supply situation. It looks almost certain that supply will collapse further during December, so if we had a good adjective, we would need a better one for January 3. Demand is extraordinarily strong for this late in the season, so we currently have a market that is more unbalanced (in favor of sellers) than we have ever seen before, even at the height of the 2005 bubble. But January will be even more extreme.”
“There seems to be a certain amount of denial in some quarters,” he continues in the report. “Concerns about delinquency rates and forbearance are being widely discussed. The idea is often expressed that this can reverse the current situation as if this is a foregone conclusion. We do not think the level of delinquency is anything high enough to seriously disrupt the housing market. For such drama, you probably need to look to the commercial real estate market, particularly the retail, office, and hotel sectors. Housing has been bolstered by the pandemic. This is a worldwide phenomenon, not confined to Arizona or even the U.S.A. At times of medical emergency, people really value their homes across the globe.”
Regarding the often-proposed notion that foreclosures and short sales will come in to flood the market with inventory,” Mike says, “It is likely that we will see more distressed sales in 2021 than 2020, but 2020 was a record all-time low, and reverting to normal would help a bit with the supply situation. In fact, we would have to see a colossal increase in delinquency from current levels just to get back to normal supply conditions.”
If that still doesn’t give you a sense of the critical nature of the real estate market today, consider this: If you are looking to buy a single-family home in Scottsdale North priced under $400,000, as of this morning, you have just one choice. And it isn’t built yet. In all of Scottsdale, you have just seven choices!
In an unprecedented sales environment like this, the stakes for buyers and sellers are higher. Wins and losses can be magnified exponentially. The National Association Of Realtors statistics tell us that 87% of real estate agents fail in the first five years. That means that the vast majority of agents have never worked in a market anything like this.
In real estate, experience isn’t expensive – it’s priceless. We have been your Scottsdale North trusted lifestyle experts for over 30 years and we can help. On the back page of this newspaper we have included some tips to help buyers be more successful. But if you or someone you know is looking to buy or sell a home, give us a call at 480-634-5000.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
Todays Real Estate Market Explained
Today’s Real Estate Market Explained
By Scott Gaertner
Without a doubt, the most common question I get these days is: “Why is the market so hot in the middle of a pandemic?” With the help of Mike Orr and The Cromford Report, I will give you some thoughts on this.
Housing Opportunity Index
The Housing Opportunity Index (HOI) for a given area is defined as the share of homes sold in that area that would have been affordable to a family earning the local median income, based on standard mortgage underwriting criteria.
As you can see in the chart above, the Valley HOI is more affordable than most areas of the United States, and it’s trending higher. When you then factor in that our weather is better than much of the country, our taxes are lower, and job opportunities stronger, I think you can see why folks might want to come here.
We don’t have enough homes. Above, you can see that the blue population growth line is badly outpacing the red housing unit growth line. The market crash of 2008 put many home builders out of business and dissuaded those who survived from overbuilding. They are working now to catch up but land, lumber, steel, and labor are all in short supply and getting much more expensive.
How Has This Impacted Our Market?
The market keeps setting new records for dollar volume sold. The monthly figure for all areas and types is $4.518 million as of November 14. This is up an astonishing 54% from the same time last year.
To put this in context, the dollar volume at the peak of the bubble in 2005 was $3.339 million which occurred during June that year. By June 2005 peak, demand had already been detected and the market was sliding toward disaster as a slew of supply came onto the market from wise speculators getting out early. The current situation has market dynamics that bear little resemblance to 2005. Demand for single-family homes in all 17 of the Valley’s largest cities has increased, and while supply crept up in early October, it is now trending down in almost every market.
The Luxury Market Is On Fire
Despite the pandemic, our luxury real estate market is seeing exponential growth way beyond expectations. Last month we had our highest number of sales for luxury real estate, priced $1 million and over, in the past 20 years with almost 400 sales, beating the highest record set the previous month.
During October there were 101 closed listings across Greater Phoenix with prices over $2 million. This is a genuinely colossal total, given that the previous record for October was 38. In fact, it is quite rare for the over $2 million count to exceed 50 during any month. The monthly total has exceeded 66 only three times. All three of those times have been during the last four months. We had 41% more closed listings over $2 million this year than in 2019. Also, in October, we saw 37 closed listings over $3 million. This is not only the highest total for any October in history, it is the highest total for any month in history.
Let’s Put Talk Of A Bubble To Bed
All the info above bodes well if you are a Scottsdale North homeowner. But it also might bring up concerns about the market now resembling the run-up and subsequent crash of 2005. The short answer is that we are in a very different demand situation. Investors buying with fake loans oversaturated the rental market back then, driving rents down to historic lows. Today rentals are in such demand we set new rent rate records every month. Consider the chart below:
I hope that answers some of your questions, but if not, just give us a call. If you are wondering what your home is worth, go to ScottsNorthHomeValue.com for a free valuation.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
A New Style of Second Home Ownership Model
By Scott Gaertner
Scottsdale North has always been a great second home and vacation destination but lifestyle changes due to COVID-19 have made it even more desirable. More people now realize that they can work remotely for part of the year. Others realize that they want to spend more time with loved ones or want room to breathe.
There is a new product available that may revolutionize the way we look at second homeownership the way Uber, Airbnb, and Netflix changed the way we look at their industries. The product is a company called Pacaso and it makes second homeownership available to many more people via co-ownership.
About Pacaso
Pacaso (pronounced like “Picasso”) creates a more accessible category of second-home ownership by building a marketplace around co-owning a second home through a property-specific LLC, and reduces the cost and hassle of ownership. Pacaso manages the property and uses proprietary technology to make scheduling easy. Pacaso was founded by Zillow executives, including co-founder and former CEO Spencer Rascoff and founder and former CEO of Dotloop, Austin Allison.
As people rethink how and where they want to live during and after COVID-19, Pacaso offers the best way to buy and own a second home. Pacaso modernizes the generations-old practice of co-owning a second home, creating a marketplace that makes buying and selling easy, and adding professional management and technology to make scheduling dates and owning the home seamless and simple.
Buyers considering a second home can tell Pacaso where they want to buy, how much they want to spend, and how much time they expect to spend in the house. Pacaso and The Scott Gaertner Group will help them find the perfect home and set up a professionally managed LLC uniquely designed for co-ownership. The buyer will purchase their desired share — for example, half of the home, which will guarantee them access to the home for half the year — and Pacaso will briefly purchase the remainder of the home, before reselling the remaining portion to vetted buyers. Pacaso will manage the property, and owners will use Pacaso’s mobile app to make scheduling easy and equitable. Buyers will pay a 10 percent fee at the time of purchase, and then will pay an annual property management fee equal to 1 percent of the purchase price.
“The co-ownership concept for second homes has been around for decades,” says Allison. “But the traditional process is difficult, high risk and onerous. Pacaso is an easy button for co-ownership. We bring together and organize the ownership group; manage the legal process; provide the tech tools so owners can easily and equitably schedule time, and manage the home itself.”
“Pacaso also makes the process more accessible, allowing buyers to purchase anywhere from one-eighth to half of a second home, depending on their occupancy needs,” Allison continues. “It dramatically reduces the hassle. And finally, owners can sell with ease through Pacaso’s marketplace and our network of real estate agent partners — without having to build consensus among all owners.”
Want To Sell Just Part Of Your Home?
Are you not using your home as much as you thought you would? Many Scottsdale North second homes are only used a few weeks or months a year, creating a carrying cost burden that some owners no longer want to shoulder. For current second homeowners who love their home but want to right-size their ownership and lessen the hassle, Pacaso will purchase part of the home, then resell as shares to vetted buyers. The pandemic has changed a lot of thinking about where folks want to live and for how long. Many have now discovered that they can work from anywhere for at least part of the year, why not have options?
If this might make sense for you or anyone you know contact The Scott Gaertner Group at 480-634-5000 to see if the home of your dreams aligns with Pacaso’s home standards and see if this homeownership model is an option to help your family achieve your real estate goals.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
Growing Preference to More Open Environment Helps Scottsdale North Real Estate
By Scott Gaertner
For years we read about how Baby Boomers in particular were loving the idea of urban living. Being close to absolutely everything seemed to be a trend that would change the dynamics of where buyers were heading and what kind of homes they wanted. Stories of this fad became so popular I began to wonder if it would hurt Scottsdale North home values because of the area’s more rural nature.
But since the pandemic, there has been much talk around the possibility that Americans are feeling less enamored with the benefits of living in a large city and now may be longing for the open spaces that suburban and rural areas provide. Two new surveys seem to prove that point.
In a recent Realtor Magazine article, they discussed the issue and addressed comments made by Lawrence Yun, chief economist for the National Association of Realtors (NAR): “While migration trends were toward urban centers before the pandemic, real estate thought leaders have predicted a suburban resurgence as home buyers seek more space for social distancing. Now the data is supporting that theory. Coronavirus and work-from-home flexibility is sparking the trend reversal. More first-time home buyers and minorities have also been looking to the suburbs for affordability.”
NAR surveyed agents across the country asking them to best describe the locations where their clients are looking for homes (they could check multiple answers). Here are the results of the survey:
• 47% suburban/subdivision
• 39% rural area
• 25% small town
• 14% urban area/central city
• 13% resort community/recreational area
According to real estate agents, there’s a strong preference for less populated locations such as suburban and rural areas.
Real Estate Brokers and Owners Agree
Zelman & Associates surveys brokers and owners of real estate firms for their monthly Real Estate Brokers Report. The last report revealed that 68% see either a ‘moderate’ or ‘significant’ shift to more suburban locations. Here are the results of the survey:
There are many reasons I can think of not to live in one of our larger cities these days. But there are even more on why it makes sense to live in Scottsdale North. You have all the benefits of being away from the congestion and still being close enough whenever you feel like you need some larger city activities. Recent sales statistics see to bear this logic out also.
The number of homes sold in the Northeast Valley is up 15.5% in August 2020 when compared to August 2019. That is almost three times higher than other sections of the Valley. (To learn more, search online for “Scottsdale North: Connecting Forgotten Territory.”)
Bottom Line
No one knows if this will be a short-term trend or an industry game-changer. For now, there appears to be a migration to more open environments and that can only help Scottsdale North home values.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
Is Scottsdale North A Good Place For Real Estate Investment?
Scottsdale North’s appreciation rates are some of the highest in the country
The chart below is a chart of the annual average. The updated annual median appreciation is over 12 percent.
Experts overwhelming believe 2021 will see more homes sold nationally than in 2020.
More Reasons Scottsdale North is a Hot Place for Investment
Arizona’s COVID-19 rates are down. As I write this on August 15, Arizona’s COVID-19 case counts are now some of the best in the country. Scottsdale’s main feeder markets such as California, Washington, Minnesota, Illinois, and Oregon, are just becoming comfortable enough to travel due to lower COVID-19 rates.
Buyers shift to rural. Due to COVID-19, buyer preferences have shifted from the urban living trend of living in the city close to everything to more rural locations after the pandemic. Scottsdale North has a rural feel but is a short drive to fantastic shopping, dining, sports franchises, and world-class golf.
We are popular. Relocation reports consistently show the Phoenix area is becoming a top destination for people living in high-cost cities like Los Angeles, Portland, Seattle, and Chicago.
Lower taxes. Scottsdale North taxes are much lower than most of our feeder states.
A strong economy. The Scottsdale area had the lowest unemployment rate of all the Metropolitan Statistical Areas (MSA’s), with more than 1 million in population. The area has reasonably priced housing, lower cost of living, available workforce, and stable climate forecast a growing economy and stronger housing growth.
Job growth. Job growth has been vigorous for the past few years, while single-family building permit activity has been relatively modest. There are simply not enough homes to feed demand. Low supply with high demand equals higher prices.
Luxury sales are the highest ever. July 2020 had the highest number of sales over $500,000 we have ever seen in the Greater Phoenix area, with 1,788 sales. Much higher even than the funny money days of 2005. At the same time, Maricopa County currently has the lowest number of pending foreclosures we have ever recorded.
A better investment. The record stock market makes many nervous these days, but where do equities go to find any kind of ROI? Many believe real estate is safe and are moving from other equities to real estate. Metro Phoenix tops the nation in rent price growth of single-family homes.
Still a good value. If you consider inflation, Phoenix home prices are still 20% below the inflation-adjusted peak in 2005. The Scottsdale North monthly median price is still just 76% of the peak. There is plenty of room to grow and homes to safely appreciate.
Do you want to know your home’s value?
With the market so hot, would you like to know immediately what your Scottsdale North home is worth? Here are two ways:
• Not ready to sell but like to watch the market? Become a Nosey Neighbor. Receive just one email per week with all listing activity in your community. IAmANoseyneighbor.com will keep you up to date on the homes in your specific community that went on the market this week, under contract or sold. It’s free.
• Want an immediate evaluation of your Scottsdale North home? Go to ScottsNorthHomeValue.com.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
The Next 90 Days Might Be the Best Time Ever to Sell Your Home for Years
By Scott Gaertner
Surprisingly, Valley real estate markets are even hotter than the temperatures this summer. But many see troubling signs on the near horizon, and this could be the very best time to sell your Scottsdale North home.
The included chart documents the amazing recovery the local real estate market has made since the COVID-19 pandemic began in March. By any measure the recovering has been stunning, but might this be irrational exuberance? Describing his thoughts on the statistics displayed in this chart, Valley real estate authority Michale Orr of the Cromford Report says, “To be honest, I find this rather scary. This is not the behavior of a normal well-behaved market and it feels to me a little bit like the upward climb of an even bigger roller coaster than the one we rode in March and April.” Obviously his thoughts don’t spell a sea change in the market but, combined with other factors, this fall it is possible.
Cromford Market Index™ is a value that provides a short term forecast for the balance of the market. It is derived from the trends in pending, active and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyer’s market, while values above 100 indicate a seller’s market. A value of 100 indicates a balanced market.
Foreboding For This Fall
The concerns for events coming this fall vary, but they are all wrapped around the national economy.
Presidential Election: For many, this election is viewed as a game-changing tipping point for the country. The consequences are viewed as dire and/or even catastrophic for the economy, the real estate market, and life in general as we know it.
COVID-19 “Second Wave”: The government incentives and CARE programs are running out very soon and, with or without more bailouts, a second wave could be devastating. There are so many easy examples. A fiscal cliff for families. Rolling business failures. In healthcare illnesses and surgeries have been delayed. Patients are suffering, and hospitals need these “elective” procedures to survive. The airlines and hospitality industries can’t indefinitely continue to provide service at the vacancies levels they have endured. Small retailers and restaurants are hanging on by threads. A second wave could be terrible economically and we are already seeing signs it could happen.
Irreparable Economic Damage Already Done: The bailouts and loans have been a temporary bandaid solution but what damage has already been wrought? We are just beginning to see which business will never reopen and thousands of others that will be claiming bankruptcy protection. State and local governments across the nation are experiencing budget crisis. The ripple effect on all the providers of those industries has to be enormous. And finally, what will trillions of dollars in bailouts do to the economy?
If you have been considering selling your home it is possible that right now—in the next 90 days –could be the best time to sell your home. Competition and interest rates are at all time lows. The available inventory of homes is 31% lower, and mortgage applications to buy a home were 33% higher than they were last year. If you are ready to sell you could be one of those people who sell at the very top of a market right before a major correction.
If You Aren’t Quite Ready To Sell But Would Like To
If this makes sense to you but you don’t feel you are ready at this moment, we can help. We have the people and resources to get your home ready quickly. We also have sold almost twice as many COVID-19 listings in Scottsdale North than anyone else and we are now seasoned in ensuring that we can get your home sold safely. Even with no in-person showings in your home.
If You Still Aren’t Sure
While the market is good you still can’t just throw your home on the market. There is much you can and should do to ensure you get top dollar for your home. If you are more of a self-starter and would like one of our free reports like “27 Tips On How To Sell Your Home Fast And For Top Dollar” or if you have been listed with no luck selling, “How To Sell A Home That Didn’t Sell,” go to QuickSellerTips.com.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
Local Real Estate Before COVID-19, and Now
By Scott Gaertner
A Case-Shiller report released April 28 showed that Phoenix topped the nation in home price growth immediately before the COVID-19 crisis hit. According to the report, Phoenix’s 7.5% year over year growth beat out Seattle and Tampa for the top spot in the nation. While the report was released at the end of April, the data used was through the end of February. (Note: February 27 was the night of our 2020 market forecast event discussing the unprecedentedly good real estate market.) That honestly seems like a lifetime ago now.
Early-Pandemic Panic
The COVID-19 pandemic hit fast and hard, catching real estate buyers, sellers, and certainly this real estate broker, flatfooted. We are blessed to be selling in Scottsdale North with communities so many people want to be a part of, but March and April were brutal months. Buying or selling homes with no clue where the national economy is headed, to buyers who often can not even physically enter the home, is challenging. Everyone was on edge and cancellations were higher than I can ever remember with terrible reasons for canceling. Due to the prolonged seller’s market, buyers saw the pandemic as an opportunity to have the upper hand in negotiations for the first time in months. But for many, that same uncertainty that created the opportunity proved too large of an obstacle and they backed out of the purchases.
Another reason for higher cancelations is that out-of-state buyers are making offers without actually visiting the properties. Often the buyer’s agent does not share the fact that the buyers have not visited the property with the seller’s agent. This is important information to know when evaluating the strength of the offer, particularly if you have multiple offers.
Pro tip: If the buyer’s agent only communicates via text and e-mails, and never speaks to your agent, there is a good chance this is the reason. They are afraid a conversation will reveal the weakness in the offer. We are having every agent attest by e-mail whether the buyer has been in the home or not.
Speaking of this early pandemic phase, Tina Tamboer, senior housing analyst for The Cromford Report, says home sales in the existing resale market were sharply lower in April, reflective of the six-week decline in accepted contracts following the stock market crash at the end of February. Tamboer says, “Travel restrictions caused by stay-at-home orders and struggling investment portfolios put a damper on the luxury market and retirement communities, which were benefiting the most from inbound migration.”
Things Are Beginning to Turn
I write these articles almost three weeks before the newspaper hits your mailboxes, but as of this writing, things have begun to turn. The country’s economic future is still unclear, but the road ahead for real estate is looking good.
The state dropped the stay-at-home directive and mortgage applications are up significantly, which means buyers are gearing up. The listings under contract statistics have stopped their free fall and also begun to go up. The Cromford Chart below shows that they reached the bottom on April 15 and began moving up.
What Comes Next?
Even though housing supply is 28% higher than it was seven weeks ago, metro Phoenix is still in short supply of resale homes, with under 13,000 active listings. At this time of year, anywhere between 25,000 and 30,000 listings would be what we consider a “normal” market. Clearly there is more demand than what we have for sale right now.
As Michael Orr from Cromford says it: “A clear case can be made that the housing market will not be dramatically affected by the pandemic over the long term, no matter how severe the jolt may be in the short term…Even with the gloomiest of forecasts, Central Arizona has more demand for homes to live in than it has homes available. This is not 2006.”
So if you are looking to buy, the pandemic has created a window of opportunity. If you are looking to sell, now is a great time while the world economy sorts out the real-world effects of all these unprecedented job losses and the acquisition of unheard of governmental debt. Either way, we are here for you.
For more updated information or suggestions on how to succeed in the market as it exists today, give us a call at 480-634-5000. Now more than ever, nobody sells more homes in Scottsdale North than the Scott Gaertner Group.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
Find Confidence in Real Estate Experts in These Unprecedented Times
By Scott Gaertner
Thirty days ago, I wrote my article for the April edition of this paper on the topic of how to evaluate multiple offers on your Scottsdale North home. I wrote it because, at the time, we were in the best real estate market I had seen in my 30+ year real estate career, and multiple offers were reasonably common. I thought it would be helpful for you to have some tips on best practices. As of this writing – just 30 days later – not only are we no longer seeing multiple offers on homes, sellers are lucky to get multiple people to tour their homes! Incredible.
Above is the “Cromford Supply v Demand Index” for Valley real estate. This snapshot was taken roughly two weeks after Governor Ducey issued a statewide Stay At Home order through the end of April. At the time of this writing, demand is slightly below normal and supply significantly below normal, but the lines are moving toward each other.
The lines at this point are still pretty far apart, but if they continue to come together or actually cross, prices will be affected. What the supply and demand chart above will look like in the coming months is anyone’s guess. Many believe that the unprecedented national business shut down due to COVID-19 will drive our economy into a recession, or even a depression, later this year. If that is true, how long it will last, and how much that would affect the housing market, is open to debate. But I think we can all agree that our world is changing.
That statement couldn’t be more relevant than it is right at this moment, especially when it comes to buying and selling a home. Amid all this uncertainty, some home buyers and sellers still find themselves needing to buy or sell right now. What do they do? We believe it has never been more critical to work with a professional than it is at this very moment.
The Future of Real Estate is Now
At the Scott Gaertner Group, innovation is our niche. It is who we are. Our entire team of professionals focuses on being better every day by continuously seeking the newest and best practices. For the past 15 years, we have traveled to quarterly conferences around North America to meet and collaborate with the best brokers. We are capitalizing on the relationships we have created by talking with those brokers via teleconferences. We have been, and continue to be, coached by one of the largest coaching firms in North America on current trends and newest technologies. Our company, Keller Williams, is the number one real estate franchise in agent count, closed units, and closed sales volume in the United States. Company collaboration is key. The Scott Gaertner Group has always been industry leaders, and these technologies are nothing new to us.
We have implemented the ability to have a 100 percent paperless experience, from when a home is listed, to when the buyer signs his final John Hancock. Removing the need for paper means you don’t have to physically meet a single person to sell your home. You can do it all; the listing, the showings, and even the signing of the contracts, from the comfort of your couch because we can handle everything online. The only visitor you will have from us is our professional videographer or photographer. And you don’t even need to be there for that.
Despite the uncertainty and the stay at home orders, we are still selling homes. Some of our recent sales are to buyers who have never physically been in the property. Having buyers commit to a sale sight unseen speaks volumes about the clarity and quality of our visual marketing.
Virtual tour usage is up over 495 percent, and when it comes to photo and video marketing, we have always been at the forefront. We offer our services with state of the art equipment and can perform it all; professional twilight photos, videography, drone footage, and even 3D and 360-degree tours. We can’t tell you what is going to happen to our economy or our real estate market in the coming months. But what we can say to you is, “We got this.”
Contact us today to schedule a no-obligation virtual consultation to see when the best time will be for you to get the process started.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
How to Evaluate Multiple Purchase Offers when Selling a Home in Scottsdale North
By Scott Gaertner
When selling your home, receiving multiple offers is the ideal situation. With fewer homes available in Scottsdale North, multiple offers are more likely than you might think. There are a few things to keep in mind when reviewing the offers.
The following tips will help you to evaluate the best offers and decide without emotion which offer is best for you.
Ideal Buyer
Don’t get distracted by dollar signs. Often the highest offer isn’t coming from the best buyer. The ideal buyer has friends who live in the neighborhood or perhaps has secured a new job nearby. This buyer is likely pre-qualified by a great mortgage company, already working with a smart agent, and has been searching for the perfect home for some time. In Scottsdale North, many buyers have real cash to purchase and can provide proof of funds. These are preferred because we avoid the financing and appraisal contingencies. In a market as dynamic as ours, homes frequently will not appraise for the sales price. We have ways to mitigate these contingencies in financed offers too, but cash is still king.
Is Your Agent A Good Communicator?
Your agent should be communicating with all potential buyer’s agents. Their job is to inform them that there are multiple offers on the table and request that they provide their “best” offer. It seems like a no-brainer, but your agent needs to let them know what is most important to your specific needs. I am consistently shocked by how many agents write offers without even talking to the listing agent. This is not a good strategy for anyone. By contacting all offers, your agent can then coach the other agent on how to shape their offer to give their buyer the best chance of success. This also gives you the best chance for success.
Keep an Eye Out for Red Flags
Again, it isn’t always about the highest offer. It is important to know that the standard ARMLS purchase agreement has a 10-day inspection period which many buyers interpret as a “Free Look.” This makes offers where the buyers haven’t seen the home risk-free for them. Your agent should be able to ferret these issues out by talking to the offering agents.
The Contingencies (Buyer Beware)
There are several types of contingencies that sellers need to consider when selling their home.
Home Inspection: The most important contingency could easily be the home inspection. The buyer has a right to have the home inspected by a professional and do any amount of inspections within the designated time frame. If they find any needed repairs or replacements during the inspection, the buyer can request that it is fixed or that you cover the cost of said repair upon closing. These are becoming more contentious as buyers often feel they are overpaying for the home due to market conditions.
Appraisal: As I mentioned earlier with the quickly changing market in Scottsdale North, this can be a tricky piece of the home sale. If the appraised value of the home is less than the sale price, the buyer can back out of the deal or request that you lower the price of the house to meet the appraisal. A good local agent can give you a leg up when working with the appraiser, and with how to powerfully negotiate with the buyers.
Financing: As mentioned above, you don’t want to sell your home to someone who can’t pay for it. Your agent should be in contact with the loan officer to make sure the buyer is qualified and that the chances of any surprises are at a minimum. An experienced agent will know how to ask the lender the right questions to get as much information on the buyer as possible. They can also negotiate out much of the risk upfront and this is particularly true in the Scottsdale North market.
Have a Great Relationship With Your Realtor
When you work with our team, we will treat all other agents/buyers in the process with the utmost respect. We will be readily available for questions during the offer process, promptly returning calls and emails, and will be professional and courteous when notifying the parties whose offers were not accepted. Our team has established deep and strong ties to other agents in the markets we serve; we know that when ‘second opportunity’ scenarios arise, it can often hinge on how the losing buyer and buyer’s agent were treated when trying to put a second offer in place without having to relist.
Nobody sells as many Scottsdale North homes as we do. If you are ready to get started, call us at 480-634-5000.
Scottsdale North Property Taxes
By Scott Gaertner
We are in that visitor time of year in Scottsdale North and many of you will have friends visiting. Some of those friends will be coming from higher-tax states and they may be curious about how your property taxes compare to their s…and you are going to have a tough time answering them.
Oh, it will be easy enough to tell them what you pay – but beyond that, it will get complicated. If you don’t know it, you can certainly lookup the effective tax rate formula. Google has plenty of information for you. But that is based on the assessed valuation of the home and that is a whole other formula you will need to find. And you have to know what the values are in your neighborhood.
Not to worry. As always, we are here for you. We’ve got this.
Rather than bore you with formulas and guesses, I just went right to the source: the county assessor. (Actually, my administrative assistant Ashley did. She smarter and much more detail-oriented.) She tallied all of the closed escrows over the last six months in the heart of Scottsdale North and used the sales prices, as well as the taxes for each property to give us some real-world averages.
Over 182 sales (over one sale a day!), the average sales price was $890,823 and the average tax for that home was $3,724 for the year. For you formula lovers, that would come out to .0042 of the home’s actual value. (We assume here that the home sold for its actual value.) So, if your rich friend wants to buy a million-dollar home in Scottsdale North, he should expect to pay about $4,200 in taxes. If he wants to downsize financially and choose a $500,000 home, he could expect to pay about $2,100. To give an even more real-world feeling, we pulled out two examples of each:
If this tickles your friend and they seem to have an interest in the area, you might also tell them about Connecting Scottsdale North. Either the Facebook group or the website ConnectingScottsdaleNorth.com can help them get a better feel for what we all fell in love with, besides just the great weather. The dark sky nights and the rich Sonoran Desert, the lessor congestion, the mountain views, the amazing hiking and golf opportunities. Those are some of the things that make Scottsdale North stand a bit above the rest.
So now you have a good answer for your friends if they ask you about taxes. You also have a good answer if they ask where they can go to learn more about what makes Scottsdale North so great. And finally, you have a good answer if they have an interest in buying a home – The Scott Gaertner Group. Nobody understands the Scottsdale North way of life better or helps more people to discover their new lifestyle in Scottsdale North than we do. Please call us and let us show them why this might be the next best place for them to live. They will thank you, and so will we.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
Real Estate Report: “The Lack of Supply Can Only Be Described as Shocking”
By Scott Gaertner
This month we are having a guest speaker! Each month you hear my opinion on the market and
I thought it might be good to give you another view.
The thoughts below are that of the man I think of as the “Master of Math” here in the valley, and whom I am pleased to consider a good friend. Mike Orr holds a master’s degree in Mathematics from the University of Oxford and is the founder, chief analyst, and editor of the Cromford Report. It is one of my favorite sources of real estate data.
Below are Mike’s thoughts on the greater Phoenix real estate market:
“The lack of supply can only be described as shocking. A 30% decline since this time last year to reach the lowest level since August 2005. This to satisfy a population that has grown more than 20% since 2005. Anyone who thinks this severe shortage will not result in a significant rise in prices is going to have another thought coming pretty soon. The median sales price is already up 11% over the last 12 months and the average price per square foot is up almost 9% and probably heading for a double-figure appreciation rate.
We note that December 2019 contained 21 working days and December 2018 contained 20, giving 2019 a 5% advantage. However, unit sales were up more than 20% so making an allowance for the advantage still gives 2019 a win by 15%. The listings under contract count is less impressive. While it is almost 20% up from last year, it had been almost 24% up at the start of December, so gave back a little of its lead. Only a little mind you. We are clutching at straws here to find something indicating a little cooling in the market.
Demand remains higher than normal but the Cromford® Demand Index has eased from around 107 to around 103 over the past four weeks. This will not make much of a difference while supply remains under half of what is needed for a balanced market.
The big hope for buyers must be for a surge in new listings arriving over the next 12 weeks. Perhaps sellers will be tempted by the higher pricing they can achieve. However, if they are staying around Phoenix, they will have to pay more for their new home too. Phoenix is currently the strongest large-city housing market in the USA, and this is fueled by inter-state population movements. Retirees are a big part of that, but so are people moving here from California and other Western states for work and the lower cost of living. Demand is likely to remain healthy despite the rising prices.
The primary question is whether we will see any change in the meager supply of homes for sale. If this is to take place, it is likely to be visible over the next few weeks. There has been no sign of an improvement in new listing flows in the last several weeks of 2019. But 2020 is a new year, so we will be watching closely for signs of change.”
Cromford measures dollar volume on a weekly basis for all areas and types, shown in this latest weekly chart below.
On this chart, the lonely dark brown dot at the left represents the first week of 2020 and has a value of $2,742,696,250. This is the highest dollar volume we have ever measured for the beginning of the year, and it is up a massive 26% from this time last year. Coming second and third are 2018 and 2019 with 2006 in fourth place.
The 2020 real estate market shift is important enough that we have decided to have a Housing Forecast event with the top statistics person in the valley on February 27 in Scottsdale North. For details, see our ad below or give us a call at 480-634-5000.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
Let’s Connect Scottsdale North!
By Scott Gaertner
Last month’s cover story “Scottsdale North: Connecting Forgotten Territory” described how the very best part of Scottsdale has been ignored and neglected (check out ScottsdaleNorthNews.com if you missed it). That story was really just a description of something I perceive as an injustice. The purpose of this article is to try and do something about it.
This is an appeal for your help to create an identity for the furthest most beautiful section of North Scottsdale – Scottsdale North.
Consider the comparison to Arcadia in Phoenix. Those who know the valley hear the name Arcadia, and it immediately calls to mind gorgeous, mid-century homes built on grassy lawns with mature landscaping and lots of foliage set in the middle of the city. Arcadia was built on citrus groves and low scrub desert that was scraped and bladed 100 years ago. If you were magically transported into Arcadia, you would have no idea where you were – it could be anywhere in the Midwest or even California.
Scottsdale North is not that.
Scottsdale North is the thickest of High Sonoran Desert that has been carefully preserved in a rural setting, with lighting restrictions to protect the starry dark sky nights.
Apart from the city, Scottsdale North is a place of majestic beauty, quiet solitude, abundant wildlife, ancient artifacts, exhilarating exercise and, most of all, community pride. Transporting you here would leave no doubt where you landed.
If you love SN and believe that it hasn’t gotten a fair shake – or maybe you just want people to know that you don’t mean McCormick Ranch when you tell them that you live in North Scottsdale – please, join our cause. Help the rest of the world to recognize the unique and extraordinary qualities that we all love and cherish about this area. This is a call to Connect Scottsdale North to the rest of the city by creating a new, distinct identity – let’s become Scottsdale North!
While we love that Scottsdale North News has been generous in sharing our plight, we need a bigger platform than our beloved community newspaper. We have started contacting the media, requesting to get this story told and begin the word of mouth we need – but it will be much more powerful coming from you! If this issue resonates with you and you would like to see a change, ask the media outlets that you enjoy to help. You could say something like, “We are here too! Despite what the mapping programs show, we are here. We are Scottsdale North.”
GET A FREE CONNECTING SCOTTSDALE NORTH T-SHIRT!
Let the media and the world know that Scottsdale North is here and then tell us who you notified. The first ten people to notify us will get their own Connecting Scottsdale North t-shirt.
Some Media Resources to reach out to:
KPHO-TV CBS 5 And KTVK 3TV
Kevin James General Manager
kevin.james@azfamily.com
Facebook.com/arizonasfamily
KSAZ – FOX 10
Steve Levi Assistant News Director
steve.levi@foxtv.com
Facebook.com/fox10phoenix
KPNX 12 News
George Davilas News Director
gdavilas@12news.com
Facebook/12news
ABC15, KNXV-TV
Patrick Costello – News Director
patrick.costello@abc15.com
Facebook.com/ABC15
Arizona Republic, azcentral, USA Today
Greg Burton Executive Editor
greg.burton@azcentral.com
Facebook.com/grburton
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.
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