Category: Sun City Real Estate (page 6 of 8)

by Greg Swann

Sun City Real Estate Broker

Author website

This is my column for this week from the Arizona Republic (permanent link).

 
Do you own a home in Metropolitan Phoenix? Trying to sell one? I feel your pain. But for investors and first-time home buyers, prices and interest rates are low and incentives abound.

It can hurt to be a home seller right now. Buyers are thin on the ground, and the fire-sale prices available for bank-owned homes makes holding out for more very tough.

It’s really not all that pleasant to be a home owner for now. Whatever equity you had is gone, and every time another one of your neighbors loses a home to the bank, values go down even more.

If you keep making your payments, you’re probably throwing good money after bad. But if you let your house go by short sale or foreclosure, your credit’s wrecked.

Is there anyone for whom the housing market is not a disaster?

There is, actually. Two groups of consumers have a lot to gain from this real estate market.

The first group is rental home investors. Prices in Metropolitan Phoenix are very low, as are interest rates, but rents have held steady for the past five years. And Fannie Mae just raised the limit — from four houses to ten — on the number of homes investors can buy.

The second group — first time home buyers — has things even better. FHA loans require only a 3.5% down-payment. And the newly-passed stimulus bill includes an $8,000 tax-credit for first-time buyers.

That’s a true credit against taxes owed, not a deduction from taxable income. Buyers will be credited 10% of the purchase price of the home, up to $8,000.

So let’s go buy an $80,000 house — which can be a lot of house in Metropolitan Phoenix right now.

You’ll need $2,800 for the down payment. But since we’re going to get the seller to pay closing costs, that’s all the money you would need to buy the house.

Principal and interest is going to run $463 a month, and taxes, insurance and the HOA fee will add another $193. A three-bedroom home in the suburbs is going to cost you less per month than a three-bedroom apartment.

And next April, $8,000 cash is going to come back to you from the tax credit.

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by Greg Swann

Sun City Real Estate Broker

Author website

Here’s the news, a short, sharp shock: Home prices are down by 5.79% in the February Market Basket of Homes. A total of 125 homes in the market basket sold, down from the trend of recent months. Days on market was up.

Were it not for the machinations going on in Washington right now, I would say that the market is arguing that prices are not done declining. Given the manipulations being proposed by the president and the congress, what will actually happen is anyone’s guess.

We produce the Market Basket of Homes every month. It is always available from this link, with the new month’s addition usually be available on or before the seventh of the month.

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by Greg Swann

Sun City Real Estate Broker

Author website

I’m not going to link to the news story, because this poor sap’s got troubles enough.

But the headline itself is perfect like algebra:

        man + beer_festival + cop = man_hits_cop

That’s as perfect an outcome as any math can achieve.

But wait. There’s more:

        man_hits_cop = arrest

Easily understood. But consider this:

        arrest = jail = bail

Not quite so obvious, but, given that proposition, this outcome must follow logically:

        jail = bail = marriage_counseling

It’s the math of suburban life gone awry…

by Greg Swann

Sun City Real Estate Broker

Author website

In its on-going effort to waste as much tax-payer money as possible on the pretense that Phoenix is a city, the Downtown Phoenix Partnership blew $160,000 on a new image campaign for our fair suburb.

The result? Downtown Phoenix is to be known, henceforth, as “Arizona’s urban heart.”

That’s the best they could do.

I admit the job is a challenge, since Phoenix is not and never will be a city. It’s the world’s biggest suburb, and, if you like suburban life, it is heaven on earth. But if you’re looking for hustle and bustle, thrills and chills, action and crowds — you’ll have to look elsewhere. We don’t do that.

Consider the points made in the Republic article, though:

“The brand touts Phoenix as the best place to have a cosmopolitan experience in Arizona.” Damn betcha. In fact, I think I might prefer this as a slogan: “Phoenix: The cosmopolitan cow-town!”

More from the article: “A new brand alone won’t draw more tourists overnight.” A very safe prediction.

“Phoenix has a long way to go.” Wrong. It’s perfect the way it is. Only our city government hates it.

“For a brand to work, it can’t just be a lofty goal, marketing experts say. A successful brand must spotlight something unique about the city and deliver on what was promised.”

Indeed. I agree completely, so I thought I’d chip in my ideas for a motto for Downtown Phoenix — for free!

How about this? “Downtown Phoenix: Even the bad guys go home by six!”

Or this? “Downtown Phoenix: The city with elbow room!”

Or this? “Downtown Phoenix: As much fun as Omaha — but no snow!”

Or this? “Downtown Phoenix: More government boondoggles than Egypt!”

But for a motto that really works for Phoenicians, we need to isolate the one fact about Downtown that matters most to everyone. So this is my idea for a perfect slogan:

“Downtown Phoenix: Where the hell do I park for jury duty?”

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by Greg Swann

Sun City Real Estate Broker

Author website

So says Arizona Republic reporter Catherine Reagor. A home is said to be “pending” when it is under contract to be sold, but the sale has not closed.

The bad news? Many of those pending sales are short sales — they are “pending” the lender’s approval — and the contracts will never close. The agents mark the listings as “pending” while the lender deliberates to keep the number of Days on Market from accumulating.

The worst news? The Republic’s Craig Anderson has it that the inventory of unsold homes in the Phoenix area may be as high as 86,000 domiciles.

The implication? If you’re an investor, cash-flow positive rental homes are yours for the picking.

And if you’re a would-be homeowner who is renting now, with a 3.5% down payment you can buy a lot more house than you ever thought you could afford.

But there is a caveat: With this much available inventory, and with the foreclosure pipeline still very full, appreciation in home values may be a distant dream.

Investment homes for income? Doable, but growth may be a long way off.

A very nice home for you and your family to live in for at least five years? Very easily done.

Thinking of selling? You’ll need a strong motivation and a stronger stomach. We’re a long way from being done with this market.

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by Greg Swann

Sun City Real Estate Broker

Author website

What kind of price trend can we expect in the Phoenix-area real estate market going forward?

My bet is that the houses that sell in metropolitan Phoenix will tend to sell below $500,000. The reason is that the conforming loan limit for Phoenix is $417,000. Anyone borrowing more than that has to qualify for a jumbo loan, paying at least 1% more in interest. The Obama rescue plan announced last week puts the middle of the market in doubt, but the top of the market — or the upper-middle — will tend to stagnate until the market turns.

When will that happen? My guess would have been this year, perhaps even now, before last week’s announcement. But by buttressing home prices above market demand, the plan the president announced last week seems likely to delay the turn of the market by quite a while.

And as Arizona Republic reporter Craig Anderson points out, FHA loan limits are also putting a squeeze on the middle of the market.

Despite Obama’s promises, this is all pretty bad news for sellers. It should be good news for buyers, but how good depends on which type of sellers those buyers are approaching.

There are three kinds of sellers right now, depending on who owns the home.

Lender-owned homes are easy to get, and easy to get for fairly low prices. They often need help, but there are loan programs that can be used to refurbish a home on the way in.

Homes owned by owners with equity are a crap shoot. If they need to move, they’ll negotiate. If not, they’ll waste a lot of your time. They want the December 2005 price, and they will happily wait until December 2015 to get it.

Homes owned by owners without equity — short sales. These can be very tough to get, since the lender wants to maximize return despite the trend of the market. You can wait four months to get permission to buy a house that is now worth 10% less than what you offered for it.

Those are generalizations. Everything boils down to working house-by-house, figuring out what the situation is and what might make a difference in swinging the deal. Complicating everything, appraisers are as risk-averse now as they were risk-tolerant in 2005. I’ve had two buyers’ houses fail to appraise, despite both offers being deliciously low. In both cases, the buyers got to take even more money off the table, but that’s not a guaranteed outcome.

I used to tell people that they would have to plan to stay in their homes for three years before that could anticipate selling at a profit. In 2004 and 2005, it was possible to move on in three months. By now, my projection is at least five years, possibly longer.

Phoenix should do better on the way up than other markets, as long as it keeps snowing in the Great Lakes. But we don’t know when the market will turn, nor with what velocity, nor do we know what other spanners the federal government will forge to throw into the works.

On the sunny side of the street, homes in and around Phoenix have not been this affordable in many years. Buying the right home at the right price is as close as you can come to a good gamble right now.

So, do you feel like taking a chance on the Phoenix real estate market? I’m at your disposal if you have any questions, or if you’d like to see some homes at first hand. Give me a call at 602-740-7531 and let’s go snag a bargain.

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by Greg Swann

Sun City Real Estate Broker

Author website

This is my column for this week from the Arizona Republic (permanent link).

 
Are you planning on making expensive changes to your home? Make sure they’ll make sense to future buyers

I was in a house once where the sellers had spent $20,000 remodeling the kitchen. Black Corian countertops with lime green trim. A black sink with gold-plated fixtures. Black and green marble flooring. And all of it was set off by dramatic spot-lighting, blinding where it hit, gloomy everywhere else.

That kitchen was gauche by Las Vegas casino standards, but the owners could not understand why their house wasn’t selling.

If you’re going to spend money improving your home, be sure your work results in real improvements.

Updating kitchens and bathrooms can be a good idea, but make sure your design decisions fall somewhere in the middle of the bell curve. A bathroom pleasing to a king — or to a gangster — might suit your tastes, but it could make your home hard to sell.

Adding a second story to a ranch home is usually a pretty terrible idea. Like them or not, ranch homes are what they are, and if you violate the low, sleek lines of your home, you may end up with something that looks like the neighborhood goiter.

If you decide to convert that patio into living space, do it in a way that makes architectural sense. A huge family room leading, through the removed double-doorway to yet another huge family room won’t make sense to future buyers. And whether you call it an Arizona room, a Florida room or a Lanai, if it’s not ducted to the main HVAC system and insulated to the same rating as the rest of the home, appraisers will not count it as livable space.

Likewise, a converted garage can be a great way to get a overgrown teenager to move out, but it’s not really a bedroom. The garage is probably worth more as a garage, on resale.

Here’s a useful question: “Would this make sense to me if I were buying this house?” If the answer to that question is not an obvious yes, don’t make the change. No matter what you might want, if your house doesn’t make sense to buyers, it won’t sell.

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by Greg Swann

Sun City Real Estate Broker

Author website

There are a lot of cool places to live in Downtown Phoenix, but few that fall within the financial reach of mere mortals. Renaissance Park, a condo community on 7th Street just north of Washington is the exception.

Check it out:

View Larger Map

You’re seconds from the Diamondbacks and the Suns, right across the street from the Science Museum, and you’re just a skip away from the Herberger Theater, Symphony Hall and Arizona Center. Plus which, you’re new home is right on the brand new Phoenix Light Rail line. You can’t get any more downtown than this for less than half-a-million bucks.

Even so, you’re not sacrificing luxury. Renaissance Park is a sweet place to live, with shady, verdant grounds:

Refreshing pools and spas:

And all the comforts of home:

The unit you’re seeing here, #142, is being offered by Elite Desert Realty for $185,900. There are several others for sale, also at very aggressive prices. The language of real estate is photography, so see more of Renaissance Park by clicking this link.

And if you’re dying to live downtown but didn’t think you could afford it, give us a call at 602-740-7531 and we’ll take a closer look at Renaissance Park and some other Downtown living options you may not have considered.

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by Greg Swann

Sun City Real Estate Broker

Author website

This is my column for this week from the Arizona Republic (permanent link).

 
Remodeling your home — if you do it right — can add to your enjoyment now and to your resale value later

Removing interior walls and low ceilings can make your house feel more open — and more modern. Combined with other improvements — kitchen and bathroom remodeling and energy-efficient windows — opening up your floorplan can add substantially to your enjoyment of your home now, and to its resale value later.

Simply opening the kitchen up to the living and family rooms can make a huge difference. Modern homes are built around the “greatroom” concept, where the kitchen leads to an island which in turn leads to the entertainment space. Whether people are cooking, hanging out or watching television, family and guests are all together, rather than being isolated into separate spaces by function.

A common upgrade people will make to older homes is converting the carport into a garage. This is not a difficult change to make, but there are safety considerations: The door leading from the garage to the house should be fire-rated and self-closing to keep exhaust fumes out of the home.

People also try to convert carports to livable space, often to the home’s detriment. When you step down off the slab, you are stepping out of the house. If you want to convert a carport — or an existing garage or a patio — to livable space, you should start by pouring new slab to the same level as the rest of the home. This is not just a cosmetic issue. You need a better footing for the extra weight the slab will have to bear.

But that’s just the beginning. The walls will need to be built to the same insulation factor as the other exterior walls of the home. And the roof will need reinforcement — and insulation.

It’s not uncommon to see homes that have doubled in square footage by means of converting outdoor spaces to indoor spaces, sometimes with one vast converted patio leading to another. But if these additions are not built to the same standards as the rest of the home — and if they are not ducted to the central heating and air conditioning systems — appraisers will not evaluate them as livable space.

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by Greg Swann

Sun City Real Estate Broker

Author website

This is my column for this week from the Arizona Republic (permanent link).

 
Looking to make changes in an older production home? Within limits, you can do just about anything you want

We talked last week about how production homes are put together in the Phoenix area. Here’s why it matters:

Within limits, you can do just about anything you want to do within your home.

What limits? Whether it is block-construction or wood-frame, the exterior walls of your home are the load-bearing walls. Without expert advice — which includes plans and permits — you should not remove or adapt exterior walls.

You will almost always have a shear wall running through the center of the home, parallel with the peak of the roof. The shear wall prevents lateral motion on the roof. It should only be adapted with the advice of a structural engineer.

Water, sewage and sometimes gas lines are contained within wet walls, and these should only be altered with expert advice.

What’s left? Interior walls. These consist of wood framing covered by drywall. Power lines will run along at about 18 inches above the floor, and cable and telephone lines may have been dropped in from overhead.

That’s it. An interior wall is a drywall curtain dropped in to separate one room from another. Working with appropriate care, you can move or remove interior walls at will.

This can be a big help in older homes. Floorplans from the fifties and sixties can seem byzantine and dark to modern eyes. By blowing open the rooms, you can open up the sight lines and improve the fenestration.

Older homes also lack anything that we might think of as a master suite. The master bedroom will be small, with a small three-quarter bath. You may have to work around wet walls and the shear wall, but it is often relatively simple to combine two bedrooms into a mater suite: Master bedroom, a more-expansive Master Bathroom, a walk-in closet, even a sitting room.

Here’s one more that can be common in older homes: The ducting, especially in hallways, will result in very low ceiling heights. This can all be ripped out and thrown overhead into the truss, resulting in a much more open feel to the home.

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by Greg Swann

Sun City Real Estate Broker

Author website

This is my column for this week from the Arizona Republic (permanent link).

 
A pocket history of production home-building in the Phoenix-area

Production building of homes in the Valley of the Sun began in 1938. Before then, homes were one-off affairs, each one built like a tailored suit. If you tour these old homes, you can see builders playing with the techniques that would lead to production building.

The big breakthrough was the concrete slab foundation. Older homes in the Phoenix area are constructed on built-up foundations, just like homes back east. But because Phoenix doesn’t suffer hard freezes in the Winter, it was possible to pour a slab, then build the house atop it.

The benefit? If you could grade the land to a level plane, you could use the same plans over and over again. Starting in 1938, production homes — you might call them subdivision or tract homes — began to spring up all over the Valley.

Two-bedrooms, one-bath at 900 square feet was a common footprint. The move-up model was three-bedrooms, one-bath at 1,100 square feet. An evaporative cooler on the roof and a wall heater in the hallway between the living room and the bedrooms. The walls were plaster at first, but this soon gave way to drywall.

These building techniques were perfected just in time. The end of World War Two was the beginning of the huge and on-going growth surge in the Valley, and production builders could not put up tract homes fast enough.

There was a mason’s strike in Phoenix in the mid-seventies, with the result that builders switched from block-construction to wood-framing.

“Stick” houses were even cheaper to build, and wood-frame roof trusses made possible the kind of soaring vaulting and unimpeded sight-lines we expect in modern homes. Generally speaking, the interior walls in a production home can be moved or removed at will.

People can be hypercritical of the sameness of production home construction, but it was of a piece with twentieth-century mass manufacturing. Because builders learned how to contain costs and build efficiently, it was suddenly possible for ordinary people to be able to buy brand-new homes.

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by Greg Swann

Sun City Real Estate Broker

Author website

This is my column for this week from the Arizona Republic (permanent link).

 
Doing the right kinds of repairs and remodeling to your home is the key to maintaining its resale value

Cleaning, painting and doing small repairs around the house are just about unlimited virtues for homeowners.

They’re a matter of necessity for people who hope to sell their homes. Only the best-prepared homes are selling at premium prices right now, with the rest going at or near the lender-owned price.

But even if you’re not selling, staying on top of the little things promotes your enjoyment of the home, and it helps to sustain its resale value. At a minimum, regular maintenance will help you catch small problems before the become big, expensive problems.

But if doing little jobs matters a lot, what about doing big jobs? Should you redo the kitchen and bathrooms while the market is low? Should you convert the carport into a garage and the patio into a family room? Should you add on a brand new master suite?

The definitive answer to all these questions is: Maybe.

Remember that the Phoenix real estate market may be down for years to come. It’s possible you won’t see a return on your investment for quite a while.

On the other hand, if you know you’re going to be in the home for the next five years, and if a new kitchen will substantially improve your enjoyment of the home, it might be worth doing.

Labor can be very cheap right now, and money is easy to obtain if you have equity in your home. But you have to resist the urge to over-improve for your neighborhood. Brazilian Blue Marble is gorgeous, but it probably won’t be worth more than Corian or Formica countertops on resale.

Serious additions are a bigger question. If you know you’re going to be in the home for five years, you’re probably okay. If the addition makes sense — if you live in a neighborhood of two bedroom homes, adding a master suite makes great sense — then go ahead.

Build with permits and follow the building codes, though. The worst thing you can do is spend money and time on supposed improvements that actually reduce the resale value of the home.

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by Greg Swann

Sun City Real Estate Broker

Author website

This is my column for this week from the Arizona Republic (permanent link).

 
If selling is not a viable option, you need to fall in love with your house all over again

The foreclosure market dominates the news, but it remains that good old-fashioned American homeowners occupy the overwhelming majority of Phoenix-area homes. That’s the good news.

And here’s some even better news: If you have significant equity in your home, you can probably refinance right now, reducing your monthly payment.

But here’s the bad news: Unless you absolutely have to, you probably won’t be moving for at least five years.

Don’t believe the number you see on that refi appraisal. At most, your house is worth the same amount as a comparable lender-owned home, plus the net cost to bring that home up to the livability of yours.

Swallow hard. You may have read in the paper that Americans lost $2 trillion in real estate equity in 2008. That’s a specious number. Money is the stuff you can fold up and spend. The equity in your home is unrealized money. You weren’t rich when your home was worth a lot, and you’re not poor now that it isn’t.

But what you are is stuck, practically speaking.

You don’t want to sell your house for what it can bring right now. If you do, you will lose money. But, refi or not, you’re making your payments.

If your home really was purely an investment, like a stock, it might be wise to dump it, take your lumps and move on.

But your home is not only where your heart is, it is very probably where most if not all of your savings are. You need to wait for the market to turn so you can sell at a profit.

So what should you do?

My advice: Paint.

Patch that stucco and paint it. Caulk the wood at the eaves and the trim and paint it. Clean out the house one room at a time and patch and paint the walls, repairing and painting the molding.

You’re stuck in your house for the next five years. It’s time to fall in love with it all over again. When there’s nothing you can do to improve the real estate market — paint.

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by Greg Swann

Sun City Real Estate Broker

Author website

This is my column for this week from the Arizona Republic (permanent link).

 
“U.S adults” may not want foreclosed homes, but homebuyers sure do

Did you see in the news where only 47% of U.S. adults would consider buying a foreclosed home?

An amazing number, isn’t it? What does it mean?

Almost nothing, of course. The real estate market in Phoenix, along with many, many other cities, is dominated by foreclosed homes right now. They are virtually all that is selling.

So how could so many homes be selling if so many people are averse to buying them?

This is a nice lesson in the uselessness of public opinion polls. “U.S. adults” are not homebuyers. Homebuyers are homebuyers. Asking U.S. adults how they feel about sushi or blackberry wine will tell you nothing about their sales, either.

What the survey does tell us is that the news has gotten out about the sometimes difficult process of buying a foreclosed home — especially a short sale — and about the often dismal condition of those homes.

And yet, foreclosed homes are selling and virtually nothing else is.

Why?

Because they’re cheap, that’s why. Even in the nicest neighborhoods, a lender-owned home will sell at a discount of 50% to 80%, compared to owner-occupied homes. In not-as-nice communities in the West Valley, you can pick up a stucco-and-tile 3 bedroom, 2 bath, 1,500 square foot home with a two-car garage for $50,000.

As I write this, there are 120 homes like that, all built 1995 and later, listed for $75,000 or less.

Let the price rise to $100,000 and there are 690 available right now.

Last month, 191 of those homes sold for $100,000 or less. That’s an implied absorption rate of 3.61 months, arguably a seller’s market.

So on the one hand an undifferentiated population of U.S. adults, who may or may not be in the market to buy a home, has a generally negative opinion of foreclosed homes.

And on the other hand there is a land-office business in foreclosed homes.

We will see many years’ worth of foreclosures in our market. How we feel about that in the abstract makes no difference.

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by Greg Swann

Sun City Real Estate Broker

Author website

Here are four great ways you can take in the holiday goodness of the F.Q. Story Historic District Home Tour this weekend:

1. Get thee hence. The tour is on Lynwood Street this year and runs Saturday evening and Sunday afternoon.
2. Tour our past F.Q. Story listings. We’ve listed a number of stunning historic homes in Story in the past. Here are a few of them:
   • 909 West Culver Street
   • 1134 West Culver Street
   • 1142 West Willetta Street
   • 1110 West Culver Street
   • 922 West Culver Street
   • 901 West Willetta Street
   • 1102 West Culver Street
3. Tour the F.Q. Story Historic District house-by-house. We love these homes. We have photos of hundreds of F.Q. Story homes. You can wander through the neighborhood from home, taking a peek at everything.
4. Join us at Open House. We don’t have a home listed in Story right now — our listings are selling in 43 days, on average, in 2008. But we have an amazing home for sale just a few blocks east, at 56 West Willetta Street. The home is a 1926 Craftsman, roomy and comfortable, with a heated pool and spa. Even better, you’re just a short walk from the new light rail line, which opens at the end of the month. If you’re coming down to Story for the tour, be sure to drop in and see us. We’ll be there from 11 am to 5 pm.

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