Russell Shaw's All Phoenix Area Homes Blog

May 21, 2020

Double D Estate Cleanout and Packing Let Us Help You!

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4 men and 1 Box Truck Rate $100.00 per hour

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Box Packing services are the same rate per hour plus cost of materials.

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Double D Estate Packing

Posted in Community News
May 15, 2020

To Russell, Wendy, JC, Andrew and all the fine folks at Realty One – THANK YOU!

After 19 offers we have accepted what we thought fit our objectives best. Thanks to Wendy for all of your counseling and advice. Outstanding job of taking things a measured step at a time and explaining  the process in detail. We appreciate that. We haven’t sold a home in 15+ years. Your patience with us was so genuine and sincere and after your counseling we felt like old pro’s. Andrew, I hope we didn’t make you work too late dealing with those offers! You can blame it on JC.  JC’s initial consultation and telling us how to stage the house was priceless. And I can’t leave out the big guy….I loved the personal calls from Russell. I felt like I was talking to a movie star!

After a whirlwind 55 showings and 19 offers it sold in 4 days with a SUBSTANTIAL premium! We aren’t at the finish line yet but we are sprinting towards a quick appraisal free close with the Shaw Team leading the way. I’ll make sure my neighbors know that the experience and professionalism of Wendy Shaw just increased the value of their homes (comps) by thousands of dollars due to her negotiation skills and getting such a magnificent price for my house.

This has been a life changing event for my wife and I and it looks like our dream of living in northern New Mexico is one BIG step closer. To all he Dream-makers at Russell Shaw Realty One, thank you all.

May 5, 2020

1990 - 2020

April 22, 2020

Interview About the State of the Market - COVID 19

Posted in Market Conditions
April 16, 2020

See our newest market update through YouTube as Wendy Shaw discusses the effects COVID-19 has had on the marketplace.

April 16, 2020

The Housing Market Isn't Stopping!

The real estate market is still alive and functioning –despite social distancing and stay at home orders. Like food, shelter is not optional. Understandably there have been changes. The number of transactions has dropped, but prices are not dropping as supply continues to be much lower than current demand.   

2020 began with such a disparity between supply and demand that many buyers were shut out of the housing market trying to compete against multiple offers (we would receive as many as 10-30 offers on homes). Add to that the iBuyers and investors trying to pre-empt the purchasing of homes prior to coming to market and you can see why normal buyers had a very tough road to obtain housing. The extreme lack of homes for sale resulted in accelerating prices – causing many to compare it to 2005 (erroneously I might add, as 2020 had very different traits from what was fueling the 2005 marketplace).

And then came COVID-19. To quote Tina Tamboer, Senior Housing Analyst with The Cromford Report:

“The COVID-19 pandemic came in like a wrecking ball in March shutting down tourism and crashing the stock market single-handedly over the course of a few weeks. Hedge funds and iBuyers (funded by Wall Street) bowed out of purchases and vacation rental buyers put their plans on hold.  This is providing much needed relief to normal home buyers, if only they could leave their house. Stay-at-home orders to stem the impact of the pandemic has “pinched the hose” on what is arguably one of the hottest housing markets in the country.  This is causing a build-up of pent up demand that will undoubtedly return with some gusto when travel restrictions are lifted and a level of stability returns. Do not expect prices in Greater Phoenix to drop like they did in 2008, however. Back then when investors pulled out of the market, prices were so high that families making the median income could only afford 27% of what was selling. This time around as investors once again pull out of the marketplace, families making the median income can afford 68% of what’s selling with today’s incomes and interest rates. This is well within normal range and puts regular home buyers in a better position to pick up the pieces left by Wall Street and vacation rental investors.”

As usual, housing markets are not only local in nature but different price points within that local market behave differently.  While the under 500K price point seems to be functioning well, the luxury market has felt a larger impact.  Tina Tamboer further explains: 

“… The effects of COVID-19 span the job market, stock market, corporate profits, and exchange rates. This has had the highest impact on high-end luxury market buyers. Not only are these buyers restricted from leaving their home cities at the moment, they have instability in their portfolios as well.  Under these circumstances it should not come as a surprise to see that weekly contract activity over $500K has slowed down by 64% since their peak on February 24th while price points under $500K have only seen a 30-40% slow down.”

If you are struggling to understand whether to buy or sell in this market, and the changes we have put in place to do so safely, please contact us. We are here to answer questions with facts and advice.

April 1, 2020

Officially a Frenzy: 11% More Contracts Than Listings For Sale Contracts Over $1M Up 60% Over Last Year

 

The COVID -19 virus and the housing market are squaring off.  It is early in the fight, so we are loathe to predict too much at this point.  In our 42 years of practicing Phoenix real estate in all its iterations - a pandemic virus is one we haven’t lived through.  But “disasters” whether war or terrorism or a housing bubble - all have one thing in common.  They do not survive long term.  So really, what is the worst case?  Demand drops until the virus abates or is medically solved (vaccines, medication etc.) Demand can only be suppressed for so long.  In the long run, the basic needs of man – food and shelter, always prevail.
 
Given how strikingly low the valley’s housing supply is – our market has the potential to weather a significant drop in demand.  Let’s look to the Tina Tambour of the Cromford Report for some interesting statistics.  Tina points out the number of active homes for sale is running chronically below the number that have contracts on them – i.e. the active supply is being gobbled up by contracts:
 
“For every 100 active listings in the Arizona Regional MLS there are 111 that are already under contract.  Greater Phoenix is officially a frenzy and it’s only March.  We can expect to see this continue at least through May without relief as buyer demand is typically highest in the Spring.

It’s even more dramatic in the Southeast Valley, West Valley and North Phoenix and all areas where prices land between $175K-$300K.  For a stark example, on March 7th in Glendale there were 3 properties for sale between $175K-$200K and 25 under contract.  In Chandler there were 3 properties active between $200K-$250K and 37 under contract.  In the North Phoenix Moon Valley area there were 8 properties for sale between $250K-$300K and 30 under contract. 

There is a reason why people continue to pounce on what’s available for sale.  The average price for a 1,500-2,000sf home is now $331K and continues to rise.  That may seem alarming considering it was $324K at the peak in 2006, but contrary to popular belief it’s more affordable today because of the interest rates.  In April 2006, with an average of 6.51% the monthly principle and interest payment on a 30-year fixed loan with 10% down was $1,854.  Today at an average of 3.45% the same home is $1,331, a savings of $523. More recently, over the last 16 months despite prices having risen 9.4% for median-sized homes the monthly payment dropped by approximately $112/month.”
 
In short, whatever the impact to the market – we will keep you informed.  We would urge you to not be overly concerned at this point.  We have one of the strongest housing markets in the country and any change to that would be a temporary one.  This too shall pass.

Feb. 20, 2020

Sellers drag their heels

The market is on the cusp of the “spring buying season” and early prognostications are beginning to form.  As with all economic markets, supply and demand determine our market forecasts.  Typically we see one side of the equation having a bigger impact than the other – a situation that our market is currently experiencing. 

Demand  

Demand is staying in a normal range – about 1-2% above average.  This is always good news – given that it is the more elastic of the two factors.   It is all the more impressive considering the last quarter of 2019 saw a push up in price per square foot, typically a dampener of demand.  As Michael Orr mentions “…this comes after a rise of over 7% over the 4 months between September 15 and January 15. The market is generating strong upward pressure on prices.” A rise of 7% in 4 months is a fairly remarkable number. The fact that demand remains strong despite this rise, is fairly remarkable as well.

Supply

Supply is a very different story.  It should not be surprising that since demand is in a normal range, supply must be well below normal to see an upward push in pricing.  Exactly.  In fact supply is less than half of what is needed for a balanced market.  New listings are arriving to the market in much smaller than usual numbers.  Although it is a bit early to confirm a trend, the first two weeks of the year had 15% fewer new listings than 2018 did.  Add that to an already very low base supply of homes for sale, and 2020 is running at a 30% deficit of homes for sale compared to early 2019.  Obviously different price points can have different supply issues – but this shortage is impacting all price levels up to one million.  In fact it is the weakest start to a year since 2005.   No one comments on this issue better than Michael Orr of the Cromford Report:

“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.

…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.”

Seller Motivation

This lack of inventory has spawned some interesting theories as to why homes are not coming to market as usual –with theories ranging from “shadow inventory” (the theory that floated around erroneously during the mortgage meltdown years) to interest rates and pocket listings.  But let’s remember why people sell at all.  People sell for one of two reasons – personal motivation and market conditions.  Personal motivation encompasses things like job changes, household formation or disintegration, and retirement. The second reason -market conditions - encompass things like home values, interest rates, and consumer sentiment (fear/greed).   It is worth remembering too, that homeowners are keeping homes longer than in years past.  Why?  The average number of people occupying a home is less than in earlier decades and homes are generally larger.  Meaning they are staying longer because there is less personal motivation to move.  The average home today can accommodate the average number of family members.  If it is suitable, why move?  Hence, market conditions are left to impact home selling.  At some point pricing if it continues its move upwards will spark selling (i.e. market conditions) and ultimately dampen demand.  We saw that in the 2006/2007 market.  The real question is when.

At the moment, 2020 looks to be firmly a seller’s market.  As always, we will keep you informed on market changes as they manifest.

Posted in Market Conditions
Jan. 20, 2020

2020 Begins

“…if you don't know where you are, you don't know where you're going.”  Terry Pratchett.

2019 was an unusual year.  It began as a gentle seller’s market which was decidedly shifting towards a balanced market.  Until it wasn’t.  Once the spring buying season got underway, the direction changed rapidly.  Active inventory hovered at 24,000 active properties for sale February through April – well above 2018 levels.  But by June that reversed course dropping below 2018 numbers.  Supply continued to drop while demand held strong throughout the rest of the year. Despite the typical seasonal pattern of more supply and less demand (i.e. end of year slowdown) - 2019 ended with contract and seasonal trends looking much stronger than normal. Contracts were up, supply of homes was down.  As of this writing, supply stands at 15,746 properties for sale (12,682 if we remove homes under contract).

Not surprisingly, prices responded to the low inventory and rose in the closing months of the year.  The fact that, as of yet, demand is not diminishing due to this rise in pricing, signals 2020 is likely headed towards a very strong spring selling season.

Summarizing the end of 2019, is Michael Orr of the Cromford Report:

“We have a situation that favors sellers to an almost alarming degree. Supply is down 25% compared to this time last year, when it was already well below normal. Demand has retained strength much later into the season than normal.

Pricing has moved higher over the last 2 months, but we are only at the beginning of the latest leg upwards. A rise of $10 per square foot represents an increase of almost 6% in just 2 months.

Things will not get easier for buyers in the weeks ahead. Supply always falls during December as many sellers take their homes off the market for the holiday season. Even without this effect, we have wholly inadequate supplies for the current level of demand. The real test will come in January when we see which ramps up faster from the low point of January 1, 2020 - will it be active listings or the under contract counts. Comparing these 2 numbers using the contract ratio will give us a good forecast of how the spring selling season will turn out. At the moment it looks as though sellers will be firmly in control.”

As Michael Orr further states “Active listing counts have been low for so long we have started to feel like low numbers are normal. But they are not normal”.  We couldn’t agree more – so to reacquaint yourself with normal, take a look at the chart below for long term comparisons.

City                  Active Dec 11, 2019    Long Term Average    Difference

Avondale                   89                                 370                     -76%

Gilbert                      360                            1,168                      -69%

Chandler                  354                             1,028                     -66%

Glendale                  332                                 957                    -65%

Mesa                       584                               1,665                    -65%

Phoenix                 2,021                              4,682                    -57%

Tempe                      134                                 305                    -56%

Surprise                   438                                  949                   -54%

Peoria                      442                                  924                   -52%

Queen Creek / STV  515                              1,000                   -49%

Scottsdale             1,323                               2,375                  -44%

Goodyear                 337                                  574                  -41%

Maricopa                  273                                  439                  -38%

Cave Creek              173                                  270                  -36%

Fountain Hills           177                                   260                 -32%

Buckeye                   397                                   507                 -22%

Paradise Valley        276                                   333                 -17%

So was 2019 really just 2006 all over again?  No.  But not surprisingly the low inventory combined with healthy demand has allowed for a few records to have been set.  In June, we set the highest monthly record of number of home sales at 11,705 (compare that to the low record set January of 2008 at 2,517).   We should be mindful, however that there are more homes to sell in 2019 than existed in 2005/2006. Active listings price per square foot also hit a record of $242.95 per square foot on 12/29/19.  But before we celebrate, it is important to note the sold price per square foot record is still held in 2006.  Asking prices are not “getting” prices – but they can be a leading indicator of the future trend.  2020 could very well be the year to break the 2006 record.

To summarize, we expect 2020 to intensify the patterns of 2019.  Of course, supply and demand is a scale that will balance eventually.  Prices rise which eventually dampens demand, dropped demand allows for more homes on market equalizing the balance of power between buyers and sellers.  The only question is when will the rebalance occur?  As soon as the market answers that question, we will share it with you.  In the meantime, here’s to a wonderful 2020.

Russell & Wendy (mostly Wendy)

Posted in Market Conditions
Jan. 10, 2020

Rummage Sale Sat, Feb 22 2020

Posted in Community Events