That’s right.  After managing other people’s property for nearly 4 years on a full time basis, I have decided to close the doors, metaphorically speaking.

I actually made this decision a few months ago, but I’ve waited to put it on the blog until all of my landlords and tenants have had a chance to hear the news for themselves, make the decisions that are best for each of them individually, and wrap up all of the formalities associated with those decisions (primarily the transfer of repair funds and security deposits).

Why did I close my business?  For a reason I never expected: my personal health.  You see, with the current economic climate (and I absolutely hate that phrase, by the way), I was having approximately one unexpected vacancy every month.  Whether it was an eviction; a tenant calling and saying they cannot pay; a tenant moving out in the middle of the night, never to be heard from since; or even the strangest of cases: a tenant that was kidnapped from his home and is presumed dead; at least one property a month was experiencing an unexpected vacancy.

Although I don’t actually think these vacancies were my fault, at the moment of crisis I would consider it such, and worse, would consider myself a failure.  If you look at my tenant placement stats, they are kind of sick.  90% of the time, I personally find the tenant through my marketing efforts.  So if I wasn’t to blame (since I found this bad apple tenant), who was?  Certainly not the landlord.  But we all need someone to blame, so the easy answer was me.

Unfortunately, I typically found I was nearly unable to face or discuss the situation with the landlord, often going a week or more without ever answering my phone directly.  This is a horrible behavior in the face of crisis, which would further make it look like I was to blame.  In reality, though, I would plummet into a state of depression that I never, ever expected of myself…and it was happening every month.  Worse, the problem was affecting the way I managed every single property, not just the one in crisis.

Nine or Ten months of this scenario, and a very, very agonizing day on the sofa with my dear wife Jan, and I came to the realization that I had to stop the problem, before it stopped me.  And thus, I’ve closed it down.

I am now back to managing just my own properties.  And while I’m certainly not immune from the occasional bad apple tenant, I don’t fret talking to myself about the need to clean up, repair, re-market, or in other words, pay for the acquisition of the next tenant.  I mention my own properties, because I’ve already had a few people say, “Hey!  I thought you were closing this down, but I see one of your ads on craigslist!”  Rest assured I’m not playing favorites, but rather, just trying to fill my vacancies like any other landlord.

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

It’s a simple fact of living in Phoenix that the water here is hard.  And by hard water, I mean it is loaded with minerals.  It’s safe to drink, if not particularly pleasant tasting.  Region by region throughout the city, the level of unpleasantness does tend to vary from “that’s almost tolerable” to “there’s no way I could even boil potatoes with that”.

A consequence of the hard water, is that it’s also hard on plumbing fixtures.  Recently, a rental property I manage had two simultaneous failures, which resulted in the entire house flooding.  The first failure was of a shut off valve for one of the two washing machine supply lines (I never did find out if it was the hot or the cold).  When the last tenant moved out and took their washer with them, they suspected a problem, so they turned off the water supply at the house main shut off.

The second problem, however, developed a few days later, when the landscaper came by to mow the front yard.  Being a normal mid-May day (aka hot), he wanted to soak his hat in some water, so he turned on the water at the main shut off valve.  He soaked his hat at the adjacent hose spigot, then thought he turned the water back off.  Unfortunately, that valve broke exactly at the wrong time.  The result, was that the water wasn’t turned back off, the valve in the laundry failed, and thus water began flowing into the vacant house for approximately 10 hours.  It was around this time that a neighbor called me (thanks to the for rent sign in the yard) and informed me there was water running out of the garage, beneath the garage door.

I asked the neighbor to turn the water at the shut off valve, which she informed me she did.  Except 30 minutes later, she called back again saying there was still water coming out of the garage.  At that point, I asked her if she was able to turn the water off at the street.  Fortunately, another neighbor was able to help with turn the water off at the street, and finally the flow of water in the home ceased.

The total damage:  $17,500 to dry the house out, replace all of the carpet, replace most of the baseboards in the home, paint, and various drywall touch ups.

My plumber came out to fix the problems with the valves, and alerted me to a problem that I want to share with everyone.  Here is a picture of the inside of the valve that broke:

Feel free to click on the picture to enlarge it.  What you should notice in this picture is the thin round piece of metal that appears to be sheared in half within either side of the interior of this valve.  That metal is supposed to be connected.  But the hard water, combined with this valve now being 9 years old, caused this to break in the open position.  The design of this valve seems to be one in which failure is almost certain, and probably right around the time you need it to work the most.  The plumber noted that this type of valve will start to fail about the same time as the other fixtures within the home fail, meaning when you need it most, it’s as likely as not to let you down.

If you have a home that is 10+ years old, and this is the type of main shut off valve that you have, you might strongly consider changing the valve to a newer ball valve like this:

These ball valves only take 1/4 turn to full open or close and the connection between the valve and the handle is a much thicker, sturdier metal, which should last a much, much longer time, even with the hard water here in Phoenix.

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

Across all of Maricopa County, there are currently 22,790 single family homes for sale, down by 1531 from 2 weeks ago. There are 10,094 sales currently pending, down by 712 from a week ago. And 8073 homes closed escrow in the last 30 days, up by 700 from a week ago. As a result, broader Maricopa County now has 2.8 months of inventory, based on this week’s numbers.

Let’s both take a second and look at those numbers again, because if you are like me, the numbers must look unreal.  I know they look unreal to me.  Ok, digested them?  Or do you need another second or two?

A quick export to Excel, shows me that the median price paid for a single family home in Maricopa County was $130,000.  That’s higher than the median price of $120,000 quoted by Jeff Butera via Case-Schiller as part of the news report I was interviewed for.  The price discrepancy makes sense, if you believe we have entered a buyer’s market in which prices should be going up, coupled with the fact that even the most recent Case-Schiller number is from 2 months ago.

Now, let’s look at the 12 city by city breakdown.  As you look at these, notice the months of inventory for most of the cities.  Months of inventory hovering in the 2-3 months range indicating a STRONG buyer’s market.  I’m going to start monitoring the median price and see if it edges up over the next few months, as this supply imbalance indicates that it should.

*All data comes via ARMLS, and is presumed to be reliable, but is not guaranteed. All numbers represent single family detached homes only. Condos, townhouses, timeshares, vacant land lots, and manufactured homes are not represented in these numbers. All sold properties were sold in the last 30 days.

The following trend indicators are relative to the previous week’s update:

Positive move upward Positive move downward

Negative move downward Negative move upward

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Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

Yesterday afternoon, as I was departing from a rental home that had recently had some serious water damage, due to a faulty washing machine supply valve, at the same time it had a faulty whole house shut off valve, I was contacted by Jeff Butera from CBS 5 KPHO, here in Phoenix, regarding my recent blog post Thinking of making an offer on that Phoenix house?

Jeff let me know he had read the article, found it intriguing, and asked if he could meet me later that day to interview me.  Now, I’ve been phone interviewed in the past by the Wall Street Journal and USA Today, and even did a lengthy interview with a group from Australia that was producing a documentary on the foreclosure market in the US, but I have yet to do a local TV interview, despite my late night dreams of being discovered locally.  So naturally I jumped at the chance.

I had to jump through a couple of tiny hoops, but here’s the news story, presuming you missed it live:

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There is also a news story on KPHO’s website entitled Housing Going From Bust To Boom? The information in the news story on their website is quite similar to, but not exactly the same as what aired on the news, so it’s worth a look as well.

After the camera was off, Jeff asked me a couple of great questions related to market timing, and whether now just might be the perfect time to buy, given my opinion that prices seem artificially low, and quite probably impossible to sustain at this level, without additional foreclosure inventory.  My response was that now just might be a great time to buy a home, if you qualify for necessary loan, if you can comfortably afford to live in the home you are buying, and if the home offers you the amenities you’ve wanted, but aren’t getting where you currently live.  When all of those factors are present, yes, now is probably a very, very good time to be a home buyer.

I also think that 6 months or even 1 year from now, it will probably still be a very, very good time to be a home buyer.  I think there is a reasonable chance housing prices will be higher 6 months from now, but probably not substantially higher.  Mortgage rates, however, may be substantially higher, so that might be a factor in determining whether now is indeed the very best time to purchase.  I do not, however, believe there is a huge rush to buy right now, but I think for those that are considering it, now is a good time to perhaps consider it more seriously.  Naturally, the first step in getting serious would be to talk to a lender and make sure if you did decide to get serious about buying a home, that you would indeed qualify.

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

If you look up at the top of the blog, there’s a menu bar with a choice for Property Management.  That link is there, because even though I don’t mention this very often, I am a property manager for homes in the Northeast part of the valley.  I wouldn’t say being a property manager is a glamorous, glorious, or even fun job that a REALTOR can take on, but I do personally own 9 rental homes in the Phoenix area, and thus managing property for other landlords began to make sense as sales dwindled to a near stand still 3 years ago.

My office is located right at the apex of the Loop 101 in North Scottsdale where it transitions from being a north/south freeway to east/west.  From my office, I can easily get to almost any portion of the northeast valley within 30 minutes, which is what I consider to be a requirement as a property manager.  I’ll explain why:  Often, I need to drop by a rental property with very little or no notice.  For example, when someone calls me after seeing the for rent sign in the yard.  A tenant prospect that is interested in seeing the inside of the home may wait 20-30 minutes, if I’m able to I rush over to let them in.  But they won’t wait an hour, or even 45 minutes.  At best, in cases where the home is further than 30 minutes away, a tenant prospect will agree to make an appointment for some time later.  Here though, we take the big risk that the tenant prospect will simply rent the next house they see…as the price and features of many rentals in a given area are really quite similar, the difference can quite literally be the house they see first.

Another reason I keep homes that I manage within 30 minutes, is because if there is a problem at the home that requires my presence (like the busted circuit breaker that wouldn’t reset yesterday or the air filters that needed changing the day before), I don’t want my schedule and needing to carve out 2 or 3 hrs of drive time, just to get to a rental property, to be the reason something important couldn’t be dealt with today, but had to wait until tomorrow.  When you manage 50+ homes, having an outlier that can potentially take 2+ hours in drive time to visit, simply isn’t practical.

For homes within my feasibility range (Tempe, most of Phoenix, Scottsdale, Paradise Valley, and Fountain Hills), if you are looking for a property manager, I’d love to talk to you about what I do, and how I might be able to help.  In the mean time, feel free to click on that property management menu link, and check out what I do, and how I might be able to help you if you own are considering owning a rental property in the Phoenix area.

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

My friend, and fellow Realty Executives agent, Artur Ciesielski was noting the other day that he is seeing sales prices as much as 40% over their list price for homes in parts of the greater Phoenix area.  This got me thinking once more about the frenzy of 2005, where it seemed as though every home that sold, sold for over list price.  The big question back then wasn’t would it sell for the asking price, but how much over the asking price a home would sell for.

Naturally, I’m extremely curious how selling prices are relative to asking prices right now, in 2009, so I pulled some numbers.  Wanting to look at the most active part of the real estate market, I decided to pull every sale of a single family home listed below $125,000 that has sold since 4/1/2009.  That resulted in 5699 homes sales to consider.

So of those 5699, how many do you suppose sold for above asking price?  I had my own guess, but what I found still surprised me.  To get the most accurate picture possible, I pulled all of the data out of MLS and plopped it into a spreadsheet where I could do some crunching on it.  Now, you might not believe this, but surprisingly, there are a number of data inaccuracies in the data that is within MLS.  It’s rather easy, for example, to enter $599,000 when an agent intends to enter $59,900, as there aren’t any data entry police, watch-dogging the numbers.  Since it as important to me to get the data at least somewhat accurate, I looked for the big outliers, and made corrections/adjustments to help clean up the most obvious of these data entry mistakes.

A couple of hours of scrubbing, and I think what I have is reasonably accurate.  At least, without doing a complete comparison of MLS to tax record recordings.

What was your guess again for how many of the 5699 homes sold above asking price?  2118 would have been a very good guess.  Over 1 in 3 homes are currently selling for more than their asking price right now.  Or rather, they sold for more than their asking price at the time they went under contract.  Not quite satisfied with that statistic, I looked at how many homes sold for above their original list price.  Here, the number is less staggering, but still impressive, with 1288 homes selling for more than their original asking price.  So, price reductions are still happening at the bottom end of the Phoenix real estate market, and these price reductions are resulting in encouraging buyers to make more aggressive offers.

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Looking at the homes that sold above asking price, I wanted to explore further just how much over asking price they sold.  A few of the homes were priced somewhat auction style, with asking prices of $1 or $500.  Including a list price like that into the calculations throws the numbers all out of whack, so these sales had to be ignored, or you get things like a home selling for 635000% of it’s asking price.

What I found, is for the 2118 homes that sold above asking price, on average, they sold for 9% above asking price.  For the 1288 homes that sold above their original asking price, they sold for 11% above their that original asking price.

Throwing out the most extreme examples, a decent number did indeed sell for 20%, 30%, 40%, and even 50% above their list price, just as Artur was finding.  It wasn’t a high percentage of homes, but it certainly was a good number of them.  Overall, however, homes below $125,000 are now selling on average for 98% of their final asking price, but just 81% of their original asking price.

Have a question of your own about the current real estate market in Phoenix?  Feel free to leave that comment below, hit my question form on the side, drop me an email, or give me a call.  I’d love to explore what’s on your mind as well.

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

I want to start off with the numbers today, then dig in a tiny bit deeper afterward. Across all of Maricopa County, there are currently 24,321 single family homes for sale, down by 981 from a week ago. There are 10,806 sales currently pending, down by 13 from a week ago. And 7373 homes closed escrow in the last 30 days, up by 361 from a week ago. As a result, broader Maricopa County now has 3.3 months of inventory, based on this week’s numbers.

So let’s look a little closer at these numbers, since they seem absolutely stunning, and find out just what is selling today.  748 homes were sold as a short sale, meaning the lender had to agree to less than a full pay off on the loan, rather than accept the reality the home was going into foreclosure.  4893 of the sales were bank owned homes (foreclosures).  The remaining 1732 homes were “normal” sales, presumably not under duress.

From a price standpoint, 3840 homes sold below $100,000.  Another 1588 sold between $100k and $200k.  Then another 1323 homes sold between $200k and $350k.  Only 622 homes sold for a price above $350k, which is roughly where the FHA loan limit currently stands.

Again, there simply cannot be any doubt that price and available financing are what is driving the Phoenix real estate market today.  Now, let’s look at the 12 city by city breakdown.

*All data comes via ARMLS, and is presumed to be reliable, but is not guaranteed. All numbers represent single family detached homes only. Condos, townhouses, timeshares, vacant land lots, and manufactured homes are not represented in these numbers. All sold properties were sold in the last 30 days.

The following trend indicators are relative to the previous week’s update:

Positive move upward Positive move downward

Negative move downward Negative move upward

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Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

Ok, yesterday I had some extreme examples of irrational housing prices, so today, I wanted to come a little closer to center.  A little closer to what the average home owner may be feeling is happening to the value of their own home.  Again, with a couple of specific examples.

North Phoenix Example

This is a Brady floor plan, built by DR Horton in the Dynamite Mountain Ranch subdivision, which is found in North Phoenix, near I-17 & Happy Valley Road.

Sold: 1/29/2003  $199,885

Sold: 9/15/2006  $420,000

Sold: 4/17/2009  $210,000

Size: 2313 Square Feet, 3 bedroom, plus den, 2 bath, granite counters, maple cabinets, pool

DR Horton built this floor plan in a number of locations throughout the valley, but Dynamite Mountain Ranch is a personal favorite of mine (I manage a number of rental properties there, along with owning 2 rental properties there myself).  The home’s layout results in a very practical and efficient use of space, with each room being large enough to breath in, yet no room being excessively large or tiny.

When this home sold last month, it was as a foreclosure.  All of the appliances were still in the home along with the cabinets (not always the case with a foreclosure).  The flooring was in good shape (mix of tile and carpet) and the walls were custom painted throughout, which was also in good shape.  Oh, and I shouldn’t forget the pebble tec swimming pool with water feature in the back yard.  Overall, this home was actually in better condition, than when it was purchased new (when considering the addition of the pool and painting).

North Scottsdale Example

This is another Brady model by DR Horton, but this time in the Scottsdale subdivision of Horseman’s Park near McDowell Mountain Ranch.

Sold: 5/23/2003 $338,729

Refinanced in 2005 & 2006

Sold: 3/26/2009 $385,000

Size: 2313 Square Feet, 3 bedroom, plus den, 2 bath, granite counters, maple cabinets

Once again, this home was in pretty good condition, without any glaring deficiencies like missing appliances and/or cabinets.  As you can see, Scottsdale’s prices are higher than Phoenix for an equivalent home, but the price changes over the last 6 years are not much different.

Again, for this look at prices, I chose what I consider to be average homes for the area.  These are not homes way on the outskirts of town, miles and miles from a freeway.  These are both homes within a few minutes of major shopping and dining, freeways, employment centers, and entertainment venues.

(PS- McDowell Mountain Ranch currently has a woefully limited supply of quality homes for sale.  If you are a home owner in McDowell Mountain Ranch, with a well cared for, move-in ready home, that is considering selling, you will find there is actually pretty strong demand for your home.)

Is there a point here?

Hopefully the point here is obvious.  Once again, I’m only showing a couple of homes, but these sales are very typical of subdivisions sales results throughout the central part of the valley, rather than the outlying areas.  The majority of homes selling today are selling for prices approximately equal to their price back in 2003.  Nearly all of the massive run up in valuation that was experienced in the 2004-2006 time period has at this point been wiped away.

Looking for a deal, when it comes to buying a home today?  Take out your box of darts.  Stand opposite a map of Phoenix and its surrounding suburbs.  Put a blind fold on.  Throw a dart at the map.  Wherever it lands, that’s a good deal.

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

If you look at my latest market update, it’s blatantly obvious that many parts of the Phoenix area real estate market have shifted dramatically over the last 7 months from a strong buyers market to a strong sellers market.

When you consider how quickly this change has occurred it nearly defies logic, what with as tight as the credit markets are, in the face of a recession, we are seeing new housing inventory get gobbled up at a startling pace (particularly foreclosures).  Where financing is practical (homes priced at/below $250,000 and/or properties well below $100,000, purchased with cash) and prices are low (again, primarily foreclosures, in which the banks are willing to sell at whatever price gets a deal done in 30 days), multiple offers above asking price is now commonplace, just like the frenzy of 2005.

What does this have to do with appraisals?

It’s going to take a bit of explanation, but bear with me, I’m getting there.  Back in the day, an appraiser was hired more or less directly by the buyer, through the buyer’s mortgage advisor.  The cost of doing the appraisal was (and still is) born by the buyer.  As a result of who paid the appraiser, in my opinion, they felt some sense of obligation to justify the buyer’s price.  Frequently appraisers would work together with the principles in the transaction to help “find the value”, to justify a sales price.

More recently, however, lenders have started to seriously scrutinize appraisals.  It is now commonplace for an appraisal to go through an initial review upon receipt, and then later in the underwriting process a complete re-review of the appraisal, closer to when the loan docs are being prepared.  In a fast paced market, underwriting may determine that the appraisal is no longer valid, and kick the whole deal out, just days before the buyer and seller are set to close escrow.

As well, lenders that feel an appraiser is too buyer friendly have started black balling these appraisers, removing them from their list of approved appraisers.  If we thought appraisers in the past were too conservative, they are now even more conservative, as their own valid concern about their livelihood continues to be in jeopardy.  Add to this HVCC, which has distanced the appraiser from both the buyer, buyer’s agent, and loan originator, while at the same time reducing the amount of money an appraiser can expect to earn per appraisal by as much as 50%, and appraisers today are now more conservative than ever before.

Isn’t a conservative appraisal a good thing?

If you are a bank or lender, absolutely it’s a good thing.  The point of an appraisal is to mitigate some of the risk that the bank is undertaking, by having an independent party verify the value that a willing buyer and seller have agreed to.  However, some properties are themselves not good candidates for a conservative appraisal.

Consider, for example, a historic home in a subdivision with just 50 other similar properties in it’s own subdivision, but surrounded by homes of similar size and age that are not considered historic.  I have seen the conservative appraiser assign no value whatsoever to the historic/unique nature of the home.  Their viewpoint: no recent comparables justify a higher price for the historic home.  Reality: There have been no recent sales of any sort in the historic neighborhood, so there was nothing recent to compare to.  I was absolutely mind boggled.

Or consider the custom home in Fountain Hills, where very few transactions are taking place right now, of any sort, much less multi-million dollar custom homes.  Getting an appraisal that is fair for the buyer and seller, but aligns with current underwriting guidelines (3 comparables of similar size, within 1 mile, sold in the last 3 months).

As the market pendulum swings, with demand outpacing supply, prices should rise.  In fact, housing prices in many parts of the Phoenix should rise substantially, given the strong demand there is.  However, I’m concerned that the appraisal process and extremely strict underwriting guidelines that are in place now will result in artificially keeping housing prices lower than the natural marketplace would otherwise bring them to, essentially choking the market, and allowing it to breath.

To be continued…

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

Happy Mothers Day!

I’m cutting straight to the chase today, it is Mothers Day after all. Across all of Maricopa County, there are currently 25,302 single family homes for sale, down by 4785 from a month ago. There are 10,819 sales currently pending, up by 748 from 2 weeks ago. And 7012 homes closed escrow in the last 30 days, up by 784 from 2 weeks ago. As a result, broader Maricopa County now has 3.6 months of inventory, based on this week’s numbers.

Lets look at the 11 city by city breakdown. I’ve added a Months of Inventory column. I’ll talk more about the meaning of months of inventory during this upcoming week.

*All data comes via ARMLS, and is presumed to be reliable, but is not guaranteed. All numbers represent single family detached homes only. Condos, townhouses, timeshares, vacant land lots, and manufactured homes are not represented in these numbers. All sold properties were sold in the last 30 days.

The following trend indicators are relative to the previous week’s update:

Positive move upward Positive move downward

Negative move downward Negative move upward

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Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.