May 2, 2022

Many of you have asked me to let you know when we see a change in the market. Please allow this eblast to serve as your official notification. The local and national markets are shifting, and at a somewhat slower trajectory, so is the Terravita market.

This week, Michael Orr, a Cromford statistics whiz whom I regularly follow, and discuss with you guys, issued a Red Flag Warning. He said, “The housing market is changing more rapidly with rising supply and falling demand. While it remains far above normal for now, the Cromford® Market Index is dropping fast.” He also posted this chart to evidence the described change:

For those of you less familiar, The 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.

This chart is for all areas and types of residential homes in the Greater Phoenix area. As you can see, the values on the chart are all far above 100, indicating a balanced market. But the balance is trending significantly downward at a rapid pace.

The Cromford Index is a leading indicator that clues us in to where the market is heading. Another is rent prices, and we have seen those trending downward for the last few months, so it is clear that a change is coming.

Prices Are Not Dropping

Although the market is cooling, prices are still on a strong upward trajectory that will last several months. Supply is increasing while demand is falling, but the gap is so large that it will take a long time for these two elements to achieve balance, even if the current trend continues. And there is no reason to assume it will. We are simply going from a white-hot seller’s market to a strong seller’s market.

The shift in demand described above is healthy for our local real estate market. Over time, we may see a decrease in activity (closed sales), but home prices will remain buoyed by the limited supply of available homes. One thing is constant in our local real estate market – we remain a desirable destination. While demand may be cooled slightly due to higher borrowing costs, I anticipate a solid performance in the months ahead.

So to be clear… I see no reason to panic. Buyers should not wait for bargain-basement deals. Sellers, there is no reason to rush. Unless, maybe, your home has a wart. If it does, I suggest you do something sooner rather than later. In fact, I suggest that you read my article for this month’s edition of the Scottsdale North Newspaper, “A Huge Opportunity for Homes With Warts.”

A Huge Opportunity for Homes With Warts

Here are April 2022 Terravita Real Estate Market Statistics*:

*Please note this report is created as of the first of the month and is prone to changes.
**The term “Contracts Accepted” means that there was a new contract accepted on this home this month. This is to say that this listing has moved from an “Active” status in the MLS to a “Sold” status and has begun the escrow process and is heading toward “closing”.
*All information is provided by the Arizona Regional MLS and is deemed reliable, but not guaranteed.

April 2, 2022

Happy April indeed all! This is my kind of weather! I have to say that since I have moved these updates to the 2nd of the month, I do miss doing an April Fools joke. 😞 But maybe your guys don’t…

With only 6 properties going under contract and 4 homes closing escrow in March, the Terravita Real Estate Market was a very quiet month. Historically, March is one of the best months of the year where we have seen 3 times as many homes under contract and closings as we did in 2022. So it was a quiet month. But if I am being honest, it has really been a quiet year!

Only 15 properties have closed escrow in the entire first quarter of 2022. That’s less than half of last year’s total, and it’s one of the slowest first quarters I can remember. Despite the apparent slowdown and a slew of doom-and-gloom real estate market headlines, there is no reason to panic. (I’ve included a few Doomy pieces below.) This is a supply problem, not a demand one.

I believe sales will just come a bit later in the year this year due to rising prices. I won’t speak for others, but we have been holding many of our listings back this season to let them appreciate in value before we take them to market. We are just now beginning to bring them to the market, so let’s wait and see how the stats look after the second quarter!

Since I mentioned one of the things we do to help our sellers maximize their sales prices, my article in this month’s Scottsdale North Newspaper touches on that subject. Although the article talks a bit about the darker side of real estate, it is really about one of my favorite books. Click here to read the article: Does Your Real Estate Interest Have Your Best Interest In Mind?

The newspaper also did a fantastic article on Connecting Scottsdale North this month. Take a look at it here: Connecting Scottsdale North Newspaper Article

New Assisted Living & Memory Care Facility With Availability!

We have a number of clients who would love to sell their homes now in the hot market, but many of the local senior living communities are completely full and don’t have room for them. The other night, Keller Williams had its awards banquet at a beautiful, brand new senior living facility that still has plenty of room for new residents. It is just 11 miles from Terravita, as the crow flies, and just a couple of miles from the Noterra Mall Commercial District. Here is a website if you are interested: The Retreat At Alameda

And finally, below are some things we thought you might find of interest:

Would-be home buyers may be forced to rent the American dream, rather than buy it.

Doom and Gloom Articles

Home Sales may drop 25% by Summer?

Home sales see broad nationwide drop

Interesting Stuff

Hawks For Hire

Maricopa County had nation’s largest population growth last year

Here are March 2022 Terravita Real Estate Market Statistics*:

March 2, 2022

This month’s story might be all you need to know about our market.

A quick glance at February’s stats above might command a comment like “Oh Wow. A Luna listed for $1.25m sold for $1.335m. That seems like a lot.” or Wow another sale over $500 per square foot” or something like that. But that isn’t why you guys read these updates every month. You want to know the Rest Of the Story as Paul Harvey used to say.

That Luna is the same Luna that sold back in September for $1.1 million!!

So to be clear, the Luna model came up for sale in September and sold above list price with multiple cash offers for $1.1 million. The owners made no substantive improvements to the home and listed it for sale 4 months later, in January, for $1.25m. The result was 3 cash offers and it was bid up to a $1.335m sales price. Meaning that the market had two opportunities to vote on the value of that home and said that the home was worth $235,000 more just 4 months later.

Those sellers had no idea and were shocked at the price today’s market was willing to pay for their home last month. We can all learn from their good fortune.

Cautionary Tale

As a side note and a cautionary tale for sellers, take a look at the Days On Market (DOM) in the February stats graphic above. Do you see those first two sales with 0 Days on the Market? That means that the market had 0 days to vote on the value of those homes. And that was in the very same month when the market voted to buy the Luna for $235,000 more than the market had said the home was worth just 4 short months earlier. If those 0 DOM homes had actually given the overall market a chance to vote on the value, do you think the homes might have sold for more money? Maybe a lot more money? Just sayin…

We Are Seeing Early Warning Signs

That kind of appreciation in 4 months is not sustainable. How long will this go on? No idea. We are seeing the first signs of the craziness beginning to slow. Rental and home inventories in most places in the valley are beginning to increase. Also, On February 19th, the days of inventory moved higher than this time 12 months ago. The Cromford Report indicates “This is the first time we have seen a year over year increase since June 2019.” A small sign indeed, but a possible early indicator of a market peak.

And finally, the market is beginning to shift away from primary home purchases to investors. Primary home purchasers are the critical drivers of demand. When investors perceive that the primary buyers are slowing, they quickly cut back on investing in those areas. Cromford said that “Purchasers of homes as primary residences are down 15% compared to January 2021…”

But… if you hear this as prices dropping, you are wrong. Michael Orr of the Cromford Report recently said,

“We can safely conclude that anyone anticipating home prices falling in 2022 is kidding themselves. They have not understood how slowly the market changes direction, even at its maximum rate of change.”

Unlike the equities markets, the real estate ship is very slow moving. In the worst market shift we have ever seen, back in 2008, it took over 2 years for prices to be affected, and over 3 years for the crash.

This article also has the following input: What rising home prices mean for affordability in metro Phoenix

“Expect another sizzling hot spring shopping season,” Bachaud said. “If buyers finally balk at unaffordable prices, sales volumes could wither. But if homeowners finally start listing their homes en masse, we could see a sales bonanza, cooling the pace of appreciation.“

Right on cue, here is my article in this month’s Scottsdale North Newspaper:

Want Top Dollar for Your House? Now is the Time To List It.

Scottsdale North Park Update

Nick Molinari with the City of Scottsdale gave me this park update on January 25th:

“So we are going to have another virtual open house/community input session that should be available in the next few weeks. We are taking the relevant feedback we received in the first open house and incorporating it into updated conceptual designs, along with a presentation with FAQs and other info about the “why” to what we are presenting. We had lots of “build a dog park” feedback, which I’m only using as an example. We will show a number of dog friendly amenities, as all our parks are intended to be used by dog owners, but we won’t be building an off leash area. Noise, traffic, etc. were areas of concern and an off leash area would create a ton of that.”

Four weeks later I checked back on the next virtual open house with no response yet.

And finally a few articles that I thought you might find interesting:

https://golf.com/travel/pga-national-match-course-emphasis-fun

https://www.msn.com/en-us/sports/golf/how-used-refurbished-golf-balls-may-affect-your-next-round/ar-AATDLr4http://

Here are February 2022 Terravita Real Estate Market Statistics*:

February 2, 2022

February is Phoenix Open Month

February is here, and that means the Phoenix Open, the Superbowl, and the beginning of the Terravita Super Selling Season! (And for those you around last year, no, I am not playing in the Phoenix Open Pro AM this year.)🙁

Terravita had another good month averaging over $435 per square foot on 5 closings and having 4 contracts accepted. Only having 4 contracts accepted in January is actually low. But there have only been 2 or 3 homes available to buy the entire time, so I think it is still good.

Speaking of how few homes there are for sale . . .

Why Right Now Is a Once-in-a-Lifetime Opportunity for Sellers

If you’re thinking about selling your house in 2022, you truly have a once-in-a-lifetime opportunity at your fingertips. When selling anything, you always hope for strong demand for the item coupled with a limited supply. That maximizes your leverage when you’re negotiating the sale. Home sellers are in that exact situation right now. Here’s why.

Demand Is Very Strong

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), 6.18 million homes were sold in 2021. This was the largest number of home sales in 15 years. Lawrence Yun, Chief Economist for NAR, explains:

“Sales for the entire year finished strong, reaching the highest annual level since 2006. . . . With mortgage rates expected to rise in 2022, it’s likely that a portion of December buyers were intent on avoiding the inevitable rate increases.”

Demand isn’t expected to weaken this year, either. In addition, the Mortgage Finance Forecast, published last week by the Mortgage Bankers’ Association (MBA), calls for existing-home sales to reach 6.4 million homes this year.

Supply Is Very Limited

The same sales report from NAR also reveals that the months’ supply of inventory just hit the lowest number of the century. It notes:

“Total housing inventory at the end of December amounted to 910,000 units, down 18% from November and down 14.2% from one year ago (1.06 million). Unsold inventory sits at a 1.8-month supply at the present sales pace, down from 2.1 months in November and from 1.9 months in December 2020.”

The reality is that the Scottsdale North inventory increases every year, beginning in January. That’s just how the typical seasonal trend goes in our real estate. However, the following graph emphasizes how this January was the lowest number of active listings ever in Scottsdale North. Even more amazingly, the number is even lower than that as of this morning!

Right Now, Sellers Have Maximum Leverage

As mentioned above, when there’s strong demand for an item and a limited supply of it available, the seller has maximum leverage in the negotiation. In the case of homeowners thinking about selling, there may never be a better time than right now. While demand is this high and inventory is the lowest ever, you’ll have leverage in all aspects of the sale of your house.

Today’s buyers know they need to be flexible negotiators that make very competitive offers, so here are a few areas that could tip in your favor when your house goes on the market:

An Above Market Sales Price
Flexible Closing Date
Few To No Repair Requests
Potential For A Leaseback To Allow You More Time To Find A Home
Minimal Offer Contingencies
Minimal To No Showings

Bottom Line

If you’re thinking of selling your house this year, now is the optimal time to list it. Historically, the best months of the year are February, March, and April and for the last 3 years, May has been huge too. If getting the most for your home is important to you the agent you choose has never been more important than it is right now. And I can prove it. Let’s connect to discuss how much your home is worth in this crazy market, and see if the time is right for you.

Here are January 2022 Terravita Real Estate Market Statistics*:

January 2, 2022

Hello 2022!!!

WOW! 2021 was a record-shattering unprecedented year and went out with a bang. The way things look right now, 2022 will be just as insane. There is a massive imbalance in the market, and it will take an earth-shattering event to change that any time soon.

Before we get into that, let’s acknowledge the passing of a person without precedence.

Here’s to you, Betty White! Thank you for adding so much to our lives for almost 100 years.

December Update

The December Terravita real estate market had 11 homes close escrow that averaged over $400 per square foot and included a $572 per square foot sale. You really have to let that sink in. In this ascending market, that means that there will be higher price per foot sales than that coming soon. We are headed to $600 per square foot sales in Terravita. If you have been a long-time observer of this market, that statement may have you feeling like Dorthy in the Wizard of Oz, “Toto, I’ve got a feeling we’re not in Kansas anymore…”

Possibly just as amazing, also in December, Terravita had a $258 per foot sale! That is over a $300 per foot difference in the same month! That used to be the total cost per foot that was the holy grail for Terravita home sales. The absolute pinnacle of pricing for the perfect homes in perfect locations was $300 per square foot. Now it is the difference between the high and the low sale in one month! Are you kidding me?

If you would like a very conservative value for your home, go ahead and multiply your square footage by that $258 figure. It is going to be worth more than that for sure.

The Market Ahead

I talk about the Cromford Market Index (CMI) a lot because it is easily the best leading indicator we have for the market ahead. Without going into too much about how the sausage is made, the CMI value is a short-term forecast for the market balance. 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.

Previous to the insanity of last year, the highest value we had ever seen on this index was 312 back in the fake money days of 2005.

Today the index for Scottsdale sits a 497.

Comparisons to the peak market back in 2005 have been commonplace for many years. I think we can safely put those comparisons to rest. 2020 is the new gold standard for market tops.

But not for long. This market is going up.

Past performance is no indication of future results, but for comparison’s sake, let’s take a look back at where we stood at this same time last year.

As you can see, we are starting this year with a higher CMI than last year and on almost exactly the same trajectory. Strap yourselves in. It looks like we will be on the ride for a while.

ADVICE?

Buyers: Find a way to get in as quickly as possible. In a market like this being picky is an expensive luxury.
Sellers: Relax. Time is your friend. If you do need to sell be careful with pricing. My Scottsdale North Newspaper Article for this month will explain how we price into today’s market. Due to the holidays, the online version is not ready yet! But we will send it to you ASAP.

Connecting Scottsdale North

Our latest video from Connecting Scottsdale North. We visited The English Tea Room in Carefree and had the pleasure of getting to know Jo. We think you will love this place!

Check out the video below 👇

Lastly, I found a number of articles that I thought you might find interesting this month:

https://www.insider.com/interior-design-trends-going-in-and-out-of-style-2021-12?utm_source=copy-link&utm_medium=referral&utm_content=topbar

The 3 hottest neighborhoods in Arizona

https://www.cnbc.com/2021/12/29/what-will-the-2022-housing-market-look-like.html

https://www.forbes.com/sites/brendarichardson/2021/12/13/experts-predict-what-the-housing-market-will-look-like-in-2022/?sh=1e8748ab3942

2022 Housing Market Forecast and Predictions: A Whirlwind Year

Here are December 2021 Terravita Real Estate Market Statistics*:

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2022 Terravita Market Update