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Status Of The Phoenix Housing Market Heading Into 2019

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The Phoenix housing market has seen stable growth over the last several years. This stability has been a welcome change from the turbulent times that are still fresh in everyone’s mind.   The housing market in the phoenix area started growing at unsustainable rates in 2005, this unsustainable growth eventually lead to a collapse in 2008 that caused the housing crisis and great recession.  The phoenix area was hit particularly hard during the recession. Since 2012, we have seen a very different picture, instead of huge rises and crashes the market has seen steady sustainable growth.

Recently however, Troy Reeves and “The Reeves Team” have started getting questions on whether or not we are starting to enter another bubble.  So, are we entering a bubble?   Or are we just suffering from a case of recency bias that is making homeowners, and potential buyers nervous that the past is doomed to repeat itself?

To answer these questions let’s start by taking a deep dive into some of the metrics that determine the health of the phoenix housing market.

We will start by looking at the Absorption rate of homes in the Phoenix metro area over the last 12 months.  Absorption rate is a very important statistic to measure the health of the overall housing market.  The absorption rate is calculated by looking at the current number of homes sold in a month versus the number of total homes on the market.  The result is the total amount of months it would take to sell out of the current inventory.  Three months is the ideal number for a healthy housing market.  We were around the 3-month mark in March of 2017 however we have been dipping under that number since that point.

So, what does it mean that our absorption rate has been steadily under 3 months?  The biggest takeaway is that there is not an ideal supply of homes on the market to meet the demand from the buyers looking to purchase a home.  This points to a rise in housing prices in the short to medium turn.  While the current absorption rate is not dramatically under the ideal mark if it continues lower look for even sharper price movement upwards.  If you are looking for additional insights into the absorption rate and what it means for your housing situation please reach out to “The Reeves Team” for an even further in-depth analysis.

Next let’s look at the most straight forward metric of them all, price.  While price may not give us as good of a gauge of what’s going to happen in the future as absorption rate, it gives us a great idea of what has happened in the past.  While the past in real estate doesn’t necessarily repeat itself, it does often rhyme.

So what does the price analysis over the last 12 months tell us?  The biggest take away is that we have a great deal of stability in the market.  Unlike from 2005 to 2012 these lines are fairly smooth instead of having huge spikes upwards and huge drops downward we have slow sustainable growth.  As you can see towards the end of the chart there has been a recent uptick in the median listing price and in the median sales price, this is to be expected as we continue to see an absorption rate of under 3 months.

As a side note this pricing graph demonstrates something we at “The Reeves Team” always explain to our clients.  If you want your home to sell quickly and for the highest possible value, it is important to price your home correctly when you put it on the market.  Look at how close the <strong>new median list price</strong> and the <strong>sold median list price</strong> are. This tells us that the homes that are priced correctly are selling and the homes that are overpriced are sitting on the market.  In the Phoenix housing market buyers have options so it’s important to be competitive if you want your home to sell for top dollar.  If you are interested in putting your home on the market or just want to have an idea of how much your home is worth, contact “The Reeves Team“.

Next up let’s look at inventory.  Inventory is a measure of how many homes are on the market, versus how many are being sold.   As with price you can see that the number of new listings and sold listings are very similar.

What is striking about inventory going into 2019 is how stable is has been since the housing market started recovering around 2012.  Take a look at this article written by “The Reeves Team” in July of 2012.  This was one of our most viewed articles ever as you can see by the over 30 comments that were posted when it was written.  Troy Reeves correctly predicted that the housing market was returning to normal and that normalcy has continued on until today.

The last item we are going to look at before we zoom out to the big picture overview is the Sold Days On Market.  This metric takes a look at all the homes that were sold during a given month and averages how long it took those homes to sell.  There are a couple of takeaways from this data over the past year.  The first takeaway is that the metric has been under 90 days for the entire last year.  The Sold DOM under 90 days for a span of an entire year reinforces what the absorption rate told us above, that buyers are wanting homes faster than sellers are listing them.  While the margin is not to wide at this point, it is something that could lead to a run up in prices in the short term if it continues to fall.

The second take away from the Sold Days On Market is that buyers want to buy homes during the summer.  As you can see the days on market dips dramatically during the summer months when kids are out of school.  You can expect this pattern to repeat for the foreseeable future.

After reviewing the detailed short term metrics we can see that prices and inventory seem very stable, and point to continued sustainable growth.  Now that we have looked at the short term lets take a look at the bigger picture and zoom out and look at prices before and after the run up and crash of the housing market.

 

Looking at this chart that began in 2000 and runs to today we can get a great perspective on just what happened and where we are today.  First you can see that we had sustainable growth from 2000 until 2005 when the housing boom, fueled by the rise in subprime mortgages, took off.  As you can see by the parabolic rise in prices from 2005 and peaking in 2007 these prices were not sustainable.  In 2008 the housing prices absolutely fell off a cliff and bounced around at the bottom until around 2012.  Its clear to see looking back that during the 2010 to 2012 time period we were clearly in oversold territory and a rebound back to normal prices was needed.  This rebound was accurately predicted by Troy Reeves” in November of 2012.  To give you some perspective “The Reeves Team” drew a red line that continued out from the original sustainable growth between the years of 2000 to 2005 up until today.  What is remarkable is, even with the parabolic run up and huge crash and recession that followed, the market has stabilized back to where it would have been if the slow sustainable growth had continued from the beginning.

Reasons to be optimistic.

There are many reasons to be optimistic about the housing market moving forward.   The biggest reason to be optimistic, is that it does not appear that we are in a bubble.  While housing prices have had growth at a slightly faster than average pace over the last few years, it is mainly fueled by the fact that prices previously were to low and we have been catching up to where we need to be all along. With that being said, it is always a good idea to keep an eye on prices in the future, and if you see another parabolic jump in prices be cautious.  However, looking at the data we have reviewed, including the absorption rate, prices, sold days on market and inventory a bubble does not appear to be an immediate threat.

Reasons to be concerned.

Wouldn’t it be great if there were no downside and everything was looking positive?  Unfortunately we are not that lucky.  Interest rates have been on the rise in recent years and the Fed Chairman Jerome Powell has indicated he plans on continuing to raise them, possibly even increasing the rate at which we see rates rise.  So what does this mean for the Phoenix Housing Market?  The biggest takeaway is that if rates go up, the amount of money home buyers will be able to finance will go down, as more of their monthly payments will be eaten up by interest.

Final Thoughts.

The effects on the rising interest rates may take time to play out, but for now “The Reeves Team” remains cautiously optimistic that we will continue seeing long term sustainable growth in the Phoenix Housing Market.  The market appears to have completed its return to normalcy and the deep dive that we did on the short term numbers appears to say the same thing.   If you want any additional analysis on the market or your home in particular please reach out to “The Reeves Team“.

Let us know what you think of the analysis below!

When will the huge water park being built in Gilbert open?

Gilbert Arizona has announced it will be opening one of the worlds biggest and best water parks in the nation.  As families look to find any way they can to get outdoors during the summer months, aquatic centers and splash pads have been popping up all over the valley.  We haven’t seen anything quite like this before however.  The town of Gilbert recently announced the park will called The Strand @ Gilbert.

What is it?

The Strand will be a massive new Gilbert Regional Park.  This park will be unique in that it will be operated by a private company once built.  The park will encompass more than 270 acres and the water park itself will be 25 acres in size.

Where is it?

The Strand @ Gilbert is being built at the intersection of Higley and Queen Creek roads.

What activities will be there?

This is where it gets really exciting.  Current plans include some incredible attractions.  A cable ski lake is being built that will allow skiers and wakeboarders to be pulled by an electrically driven cable.  This will be a huge advantage for all those that love water sports.  Currently Gilbert residents flock to the lakes that surround the phoenix metro area, but soon they wont have to leave the neighborhood, oh and don’t forget you wont need to buy a boat either! A surf lagoon is also being built.  This isn’t your standard wave pool as there will be rideable waves for those brave enough to give it a go. There is also going to be a massive inflatable water park for kids of all ages.   There will be multiple swimming areas of varying depths for kids and adults of all sizes to enjoy.  Another very unique feature to be included will be real sand beaches to give you the feel of the ocean without the 5 hour drive to the coast.  There will also be restaurants and clubhouse to relax at.

When will it be ready?

The Strand is expected to open in the summer of 2020.  Stay tuned to RelocateAZ for updates when an exact date is announced.

How can we expect this to affect Gilbert housing prices?

This should have a very positive affect on housing prices in the Gilbert area.  While we at The Reeves Team expect it to help all Gilbert housing, the impact will be felt most for houses directly surrounding the new park.  If you are interested in purchasing a house near the new park let us know and we will be happy to find your dream home.

So what do you think of the new park being built?  Are you as excited as we are or do you have reservations? Let us know in the comment section below.

Bitcoin, Blockchain and Cryptocurrencies Will Upend Real Estate Market

A few months ago we are The Reeves Team wrote about the potential that exists in the blockchain space.  At the time of writing many people were declaring bitcoin and cryptocurrencies dead.  Unfortunately we live in a media age where a majority of what you read online and hear from “news” outlets is either clickbait or at worse fake news.  Since the time of publication the price of Bitcoin has more than doubled and people are starting to come to the realization that cryptocurrencies are not going anywhere.

Like any revolutionary technology it seems like something that is nothing more than a curiosity to the casual observer.   If you need a reminder of how people viewed the internet in the 90’s here is a clip of Katie Couric asking “What is the internet, Anyway?

It is safe to say that 20 years later you can replace internet with blockchain and that will let you know where we are with the adoption of the new technology.  It is safe to say that the internet has changed our lives on a daily basis but will blockchain and cryptocurrency do the same thing?

In the previous article we discussed how blockchain will revolutionize the title company industry and also a different ownership model.  Now that Bitcoin is back in the mainstream news we would like to present a few more ways that blockchain technology will revolutionize real estate as we know it.

Property Managment

Property management can be a pretty hectic process.   Often times there are multiple applicants that want to rent a particular property.  A management company will typically ask for an application fee upfront as well as extensive information from an applicant including personal information such as address and social security number.  More times than not this private information is sent to companies with varying levels of security and the applicant will not successfully sign a lease. Blockchain technology offers transparency that is not typically associated with the property management world.  What if you could see a persons rental history right on the blockchain?  What if the tenants could see if a lease was already signed directly on the blockchain instead of waiting weeks for the property management company to respond? What if you could share your credit history with someone without giving them your social security number? These are just a few of the efficiencies that will be provided when the blockchain revolution comes for the real estate market.

Real Estate Investment Trusts

We recently discussed REITs as a potential real estate investment vehicle. In this article we will dive into the implications that blockchain can provide for REITs.   To give a bit of a background a REIT is a company that owns, operates or finances income-producing real estate. These REITs allow anyone to invest in real estate in the same way they would invest in an ETF or a mutual fund.  The downside of REITs is there is typically high management fees.  With smart contracts blockchain technology could all but eliminate these hefty fees and will also allow for more transparency when investing.  There will also be more liquidity in the market as people will be able to buy and sell smaller increments of the property.

These are just a few ways in which the real estate industry will be disrupted by blockchain technology. Do you agree with us here at The Reeves Team or are you still a blockchain and cryptocurrency skeptic? Let us know in the comment section below.

How To Make Money Investing In Real Estate

It is well documented that fewer and fewer people are owning the homes they are living in.  It is a harder decision than ever before if you should own a home outright or rent.  Millennial’s notoriously are choosing the flexibility of renting over owning a house in historic numbers.  While many people people are choosing to rent there is another question you should be asking yourself.  Should I invest in real estate?  For many owning a home is the single biggest investment they will ever make, but is real estate investing a strategy that fits your goals?

Even if you chose to rent for the flexibility of being able to pick up and move whenever you want, it still may be a good decision to invest some of your capital into real estate.  Making an investment into real estate can seem like a huge undertaking but here at The Reeves Team we will show you that it doesn’t have to be the case.  Below are four different ways to invest in real estate ranging from the traditional to the unique.

Option #1 Owning a rental property

When people think of investing in real estate this is typically what they think of.  Owning a rental property can be a great investment.  Housing for the most part appreciates over time and you can also gain cash flow if you are able to collect more in rent than it costs to own the property.  There are some things to consider before deciding to purchase a rental property. You will either need to plan on spending a significant amount of time handing matters related to your rental unit, or you will need to hire a property management company which can eat into your profits.  Another great thing to remember when purchasing a rental property is the possible tax deductions.  Expenses are tax deductible and if there are any losses related to the property they can offset gains from other investments.

Option #2 Investment Groups

If you want exposure to the real estate rental market but don’t want to get your hands dirty by being a landlord you always have the option of an Investment Group.  Typically if you are investing in an investment group you will be investing in a company that purchases, or sometimes builds real estate.  Often the type of real estate you are investing in will be condos or apartments. Similar to owning your own rental property and hiring a property management company their is typically management overhead that will eat into your profits.  The benefit of an Investment group over a rental property is that you are more hands off in a way that you would typically see with a mutual fund or stock portfolio.  The negative side is there are more fees and you have less control than you would if you had your own rental property.  You will also need substantial capital to start investing in investment groups.

Option #3 Real Estate Investment Trusts

If Investment groups are similar to mutual funds or stocks then REITs are nearly identical.  REITs like many stocks will pay dividends and are basically the same as owning stocks.  This is good if you are familiar with owning stocks but you are not comfortable owning large amount of real estate.  REITs can be a great investment and can help you create a diversified balance sheet when you are investing.  You are however, less likely to hit a home run with REITs because unlike Investment Groups and rental properties they are not leveraged.  This means you don’t have the option of taking out a loan on a property so the gains and losses are not going to be as large as if you invest on a large property by taking out a loan.

Option #4 Flipping Homes

This one is not for the faint of heart.  We do not recommend flipping homes unless you know exactly what you are doing and have lots of experience in the real estate market.  If done right you can make a great deal of money flipping homes, but there is also a lot that can go wrong.  When flipping homes you typically have high interest short term loans on a property.  If you are not able to turn the home around and sell it quickly your profits could very quickly turn to losses. Also if the real estate market takes a turn you could be left holding a home you never wanted and paying extremely high interest rates on it.  However, if you are handy and know how to spot a good deal flipping homes can be a very lucrative business.

So what do you think about these 4 options for investing in real estate?  Do you use any of these strategies? Let us know in the comments section below.

Here We Go Again: No Income, No assets? No Problem

Back before the financial crisis we had some very exotic loan types that people considered standard.  We had 110% loans where the lenders would actually give borrowers money to close on their house.  We had no document loans where the borrower was not required to provide any documentation at all and was often discouraged from doing so.  Most people are also familiar with the ARM loans or adjustable rate mortgages that would adjust to the current market rate after 3 or 5 years, before 2008 many of these had payoff clauses where the entire amount would come due after 15 years.  The NINJA loan however was one of the most exotic we saw at The Reeves Team.  The NINJA loan stood for No Income, No Job and no assets required, this loan took off pretty heavily in the hey day as a large portion of the population could qualify.

Well would you believe not much more that 10 years after the financial collapse we are back at it again.  360 Mortgage group just announced its plans for the NINA loan.  This loan does not include a requirement for a borrower to prove their income or their assets.  They are calling this a pilot program, but its going to be pretty large for a pilot as they intend to allow for as much as 1 billion in these NINA loans.

So with these very loose requirements you would expect only the borrowers with the best credit scores to be approved right? Well you would be wrong as the program is allowing credit scores as low as 620 to be approved for these new loans.

One thing to note is that these loans will not be backed by Fannie Mae or Freddie Mac, these loans will instead be backed by private capital.  If Fannie or Freddie decided in the future to back these types of loans again that would open the flood gates for other lenders to start offering similar mortgages.  360 Mortgages have been on the forefront of pushing the lending envelope since the financial crisis.  They were also one of the first banks to offer 97% loan to value options in 2015.

So the question is, are we heading down the same path we did previously with reckless lending standards that will inflate the housing market again an cause another giant bubble?  The reality is one of the biggest problems that caused the bubble last time was that lenders were able to get rid of their sub prime mortgages and were not left on the hook if the borrower defaulted.  Now that the credit default swaps have been cleaned up and lenders are more responsible for borrowers that default we shouldn’t see as much of a bubble.  This still doesn’t mean that lenders wont get over exuberant and lend to much money to those who shouldn’t be purchasing, but it does mean that if things go bad it shouldn’t be as catastrophic as last time.

So what do you think?  Have we learned our lesson and this is just one example of a lender getting a little carried away? Or are we poised to make the same mistakes again only a decade later?  Let us know what you think in the comments section below.

How Quantitative Tightening and Quantitative Easing Affect Gilbert Real Estate

We have been on a wild ride financially speaking since the last financial crisis in 2008.  The crisis and the ensuing years were no picnic for the American Public.  The financial hardship that was felt could have been far worse if it were not for a tactic the federal reserved used called Quantitative Easing.  This is a phrase that sounds harmless, and also pretty confusing.  Quantitative easing is the introduction of new money into the money supply by a central bank.  The federal reserve buys up government bonds and other securities and puts what it owes on its “balance sheet”.  Central banks have the unique ability to purchase without actually having the money and this is what is sometimes refereed to as “printing cash”

 

Did quantitative easing affect real estate prices

Yes it did.  Many economists will say that quantitative easing is a new methodology and we don’t know yet if that is the reason for the economic upswing. However, we have years of data that show a correlation between the money that was injected into the economy and the prices of housing as well as the stock market.  Take a look at the chart below and you will see just how correlated the money the fed spent and the stock market prices have become. 

You can see that the fed was able to propel the economy forward and continued to do so through February of 2015. From February of 2015 the federal reserve stopped injecting money when the balance sheet hit 4.5 Trillion dollars.  The economy continued to do well for some time beyond that as the federal reserve also kept interest rates are near zero.

So isn’t the federal reserve reversing quantitative easing now?

Well yes and no.  The federal reserve began to raise interest rates and sell off some of its assets in 2018.  If you followed the stock market closely in 2018 you will know that the dow jones was down over 5 percent for the year.  So the first time that the United States economy didn’t have near zero interest rates and money being pumped into it from quantitative easing it lost money.  The federal reserve raised interest to 2.5 percent less than half of what the rates were before the economic crisis of 2008. When the markets began to freak out the announced they would not raise rates for the remainder of 2019.  They have been vague about quantitative tightening but many economists believe they will put that on hold as well. 

So what does this mean for real estate prices?

We are at an inflection point in the U.S. Economy.  We have what looks to be very weak economic data.  We can’t get the federal funds rate above 2.5 and when the federal reserve reduces the massive balance sheet it has, the economy starts to tank.  So this sounds bleak right?  Well its slightly more complicated than that.  The trump administration just recently stated that it would like to see a half a percent drop in the interest rate. This would bring the federal fund rate down to 2 percent.  If the economy shows signs of weakness the federal reserve could also just start to ramp up quantitative easing again.  It would stand to reason that easing will not be as effective as it was last time, but it would be foolish to think it would have no effect at all.  So it really comes down to judging how weak the economy is and how much the federal reserve is willing to do to keep a recession from becoming a reality.  Another thing to keep in mind is that we have an election being held in November of 2020 and we are already seeing signs that the administration wants the federal reserve to keep the easy money party going at least that long. 

So what do you think?  Are we going to continue moving up like we have been for the past 10 years?  Or are we due for a recession? Let us know in the comments section below. 

 

 

 

How blockchain will affect the real estate market

Blockchain has the potential to change the financial industry as we know it.  If the bitcoin crowd has their way the worlds monetary policy, and banks along with it will be turned on their head.  While we might not see that kind of global revolution, blockchain has disruptive potential.  Even the real estate industry could see some massive changes as the adoption of blockchain technology grows over the coming years.  

The blockchain revolution reminds people of the internet revolution.  The internet was a new technology that had a lot of potential but nobody knew what to do with it.  30 years later and now the world would not be able to live without it.  The blockchain revolution feels very similar.  This is technology that is very powerful but it hasn’t found out exactly how it will reach mass adoption yet.  So lets take a look at how blockchain could affect the world of real estate.  Even though blockchain is still in its infancy, there are already plans underway to disrupt real estate.  Lets take a look at some of the possibilities we may see in the future.

Property Titles

In recent years many cities and counties have put tax records online.  This has been a major convenience to residents and anyone seeking the public records in general.  However, blockchain has something much bigger in mind.  A blockchain is at its core a decentralized ledger with no central authority to trust.  Another aspect is that its possible to prove ownership of an asset of something.  When these properties are combined its easy to see how all ownership of properties could be stored on a blockchain.  Before we get into all the ways this can help reduce friction in the real estate world, lets first talk about who the losers would be if this gets implemented. Title Insurance is a 15 billion dollar a year industry.  This means the business of guaranteeing a valid deed is costing individuals that much per year.  If properties could be verified via the blockchain using a private/public key solution that number goes to zero.  Talk about disruption, implementing this solution would destroy an entire industry overnight. The good news is that other industries would spring up and property owners would have much more control over their assets.  Imagine being able to add verified information about your property to the blockchain in real time with no fees.  You get a new roof?  You can have the roofing company sign all the details of the type of roof, the warranty and all other information into the blockchain for anyone to see.  Any other sort of changes to the house could be logged onto the blockchain as well.

Smart Contracts

Put simply, blockchain technology is great at cutting out middlemen.  Banks and Lawyers in particular come to mind in terms of a real estate transaction.  Smart contracts are contracts that are recorded on the blockchain and will not execute unless all terms a met, the most amazing part of this transaction is that no human intervention is needed in order for the contract to execute.  So lets paint a picture of what the future could look like.  You work with The Reeves Team to find your dream home.  You come to an agreement with the seller on terms.  The Reeves Team writes a smart contract that you and the seller both agree too.  The contract states that within 10 days the buyer must sign off that they have inspected the home and approve, it would also state that the agreed upon amount of funds must be deposited into the smart contract by a specified date.  Once those funds have been added and the buyer and seller have both signed the smart contract on the date of closing the smart contract would automatically move the deed from the seller to the buyer and move the funds from the smart contract to the seller.  If all terms were not met the funds would simply be returned to the buyer.

Democratization of ownership

Imagine if you wanted to invest in a new casino being built in Las Vegas.  Unless you are very wealthy and well connected your dream is not going to come to reality.  With blockchain that all changes.  If the builder wants to raise funds they can issue tokens that represent ownership stake in the property.  Investors can then purchase those tokens at very small increments.  Right now if you were to invest in a Las Vegas casino as its being built you would potentially have to wait years to liquidate.  With the blockchain you could sell your shares to another willing buyer instantaneously on a secondary market.  

While blockchain is still very new hopefully this article helps you to see the potential that exists to drive efficiencies and create friction-less transactions in Real Estate and every other financial marketplace.  We believe you will start to see a major shift in the real estate market to blockchain based solutions in the coming decade.

Do you agree that blockchain is a game changer or is this all just hype?  Let us know if the comment section below! 

Is The Arizona Housing Market Slowing?

All seems well with the Arizona economy and the housing market in particular.  Home valuations have stayed fairly strong and mortgage rates have came back down from the highs we saw in the last quarter of 2018.  So everything is great then, nothing to see here right? Well that might not be the case.  The Reeves Team has decades of experience in the Arizona housing market and we are starting to see some early signs that point to a potential downturn in the near future.  We are going to dive deep into the indicators we are looking at that point to some troubling times ahead. While the prices are currently maintaining at current levels, other key levels are starting to slip.  The days on market, inventory and absorption rate are all trending in the wrong direction.  We will break down what each of these means and show the graphs to help explain what we are seeing.  You can always count on Troy Reeves and The Reeves Team to keep you informed in an always changing market. 

 

Sold Days On Market

Days on market takes a look at how long it takes a home to sell.  This is a key indicator of the housing market because it shows how long the average house is sitting before it is sold.  As you can see from the chart above the days on market is trending upward at a fairly sharp pace.  We went from around 60 days on market during October to nearly 75 for the month of February. This is certainly something to be concerned about.  This is however only one data point we use to judge the market on The Reeves Team.  It is also worth noting that this only takes into account homes that actually sell. If a home is listed for a long time but doesn’t actually close it will not be considered in this metric.  So to get a better understanding of the big picture we also need to look at inventory.

Inventory

As you can see from the chart above the Inventory has spiked up significantly as well in the month of February.  Inventory lets us know how many homes are currently on the market in Arizona.  If more people buy a home in a current month than list a home the inventory will go down.  If more people put their home on the market than sell their home the number will go up.  The inventory chart lets us know that more people have been putting their home on the market than there have been sales since April with a significant jump up in February.  With more availability buyers will be able to be more choosy and prices could sink down. 

Absorption Rate

The absorption rate does a great job of showing us the larger picture.  It shows how long it would take for the current inventory to be sold off if there were no more listings.  We had a low of about 2.2 months.  Since then we have jumped up to nearly 3 months in February.  The most concerning portion of this graph is the largest jump was from January to February. When you see large jumps like this its highly possible the trend may be reversing and we could soon be entering a buyers market.

Prices

Now lets take a look at prices.  As we mentioned previously prices are holding up pretty well at this point.  If this were the only metric you looked at you would think things may continue on like this for the foreseeable future. Unfortunately it does not tell the whole story.  Prices much like days on market only show the homes that were sold.  What this chart shows us at The Reeves Team is that sellers have not caught on to the changing market yet.  Sellers have not started cutting prices yet, and because of that less homes are being sold which is causing the spike in the Inventory.  In the coming months if there is nothing that changes you can expect the prices to start dipping as the inventory and days on market continue to climb.

What do you think of our analysis of the current market? Do you agree we could see a dip in prices or do you think we will continue to maintain our current levels? Let us know in the comment section below. 

 

 

 

Mortgage Rates In 2019: What To Expect

While home prices have stayed relatively steady over the past year, mortgage rates have been rising more rapidly.  There are currently many factors at play that make the mortgage interest rates uncertain in the near future.  The federal reserve pausing the federal fund rate, the recent government shutdown and the trade war with China all contribute to the uncertainty moving forward. Potential home buyers should pay close attention to the mortgage rates and what the possibilities are in the future.  A small bump in interest rates can severely reduce your purchasing power when trying to close on a home.  So what should you expect in the future and when is the best time to lock in a rate?  The Reeves Team is here to help uncover the truth.

What could make the rates to up?

There are quite a few situations in which the mortgage interest rates could increase for the rest of the year.  Right now a typical mortgage rate is around 4.5% if you have excellent credit and are buying an average home.  It is easy to think that because the federal reserve decided to pause rate hikes that the mortgage interest rates will stay steady as well. Unfortunately, we know that is not the case.  Currently rates are about as low as they have been for the past 9 months, this is due to soft demand for mortgages in the last couple of months.  However, the most recent homes report came in and surprised many with an increase in mortgage applications and home purchases.  Due to the recent increase in demand its probable we will see rates increase in the short term.  The stock market is also surging back after a huge dip in the month of December, this is instilling confidence in potential home buyers and could also push the rates up.  It also looks like a China Trade deal may be on the horizon which would more than likely increase economic activity and put further upside pressure on mortgage rates. 

What could make the rates go down?

If the economy falters in a major way the housing market would suffer.  If less people have money to purchase homes there will be fewer mortgage applications.  If there are fewer people applying banks will need to compete harder for the applicants and rates will drop.  If the economy gets really bad and the federal reserve actually starts lowering rates instead of maintaining the current trend then we would really see mortgage rates drop through the floor.  So this one is pretty straight forward, if the economy slows, mortgage rates will go down. While earning season is upon us and we are seeing slower growth from some of the biggest companies in America, they are still growing.  Only time will tell if we see a recession in the United States in the near future.

What do the experts think?

Many different agencies forecast mortgage rates each year.  Last year the average was around 4.8% for the end of the year and that was pretty much dead on.  These agencies get it right more often than they get it wrong.  So what do they see happening in 2019?  They see mortgage rates rising slightly but not jumping in a major way like they did in 2018.  The average of all agencies is 5.17%  The National Association of Realtors predicts 5.3% so they are slightly more optimistic about the housing outlook than the consensus but still close.  The most bullish prediction comes from Realtor.com who is predicting 5.5% at year end.  The lowest prediction comes from Fannie Mae at 4.8%. As you can see multiple agencies who are experts in the field don’t see any significant drop off in rates from where they are presently. 

What should I do if I want to purchase a home in 2019?

If you are looking to purchase a home in 2019 now is as good of a time as any to lock in a mortgage rate.  Rates around 4.5% are lower than they were at the end of last year and have a better chance of going up than they do down.  Even if you look at the most bearish prediction from all of our experts the rates would still be up a quarter of a point from where they are now by year end.  We have a lot of year left and there are lots of possibilities but if you believe in the strength of the U.S. economy then its a good time to lock in a mortgage rate.

What do you think?  Do you agree with our assessment that now is as good of a time as any to lock in an interest rate?  Or do you believe we are in for a recession in the near term?  Let us know in the comment section below. 

Extending Your Pool Season In Gilbert Arizona

Its never to soon to begin thinking about extending your swimming season in Arizona.  Gilbert Arizona is an amazing place to live and during the winter months it is one of the best places on the earth.  However when summer rolls around it can be challenging.  The extreme heat drives away the snowbirds and traps residents indoors.  One of the best ways to cope with the Arizona heat is to own a swimming pool.  If you have a swimming pool in your back yard you can find reasons to go outside during the summer months and also provide some entertainment when there isn’t much else going on.  

One problem with owning a pool is how short the actual swimming season can be.  It takes a long time to for the pool to heat up naturally, especially if you have a deeper diving pool.  For larger pools it can be late May or even June before the pool if comfortable for many to swim in.  Another problem many encounter is that once the pool is swimable it isn’t long before it heats up to an uncomfortable temperature.   

These issues leave the ideal swimming season in Arizona to only a few weeks of the year.  Here at The Reeves Team we are here to help you get the most out of your pool.  With only a few small tweaks you can get in your pool earlier, keep your pool temperature reasonable during the peak of the heat, and stay in your pool longer so you can enjoy your investment as long as possible. 

Use a Solar Pool Cover

Solar pool covers can be purchased for less than 100$ and they can make a huge difference.  These Solar covers or “blankets” are designed to heat up during the day and also retain the heat at night. These solar covers can be trimmed to fit any size pool and will add weeks or even months to the usable time of your pool season.  A side benefit to these covers is that it will also help keep your water from evaporating as quickly, so who knows you might even be saving money by purchasing one of these.

Keeping Your Pool Cool During Peak Summer

Another problem many of our clients talk about is that the pool becomes so hot during the peak season that it is not enjoyable. There are a couple of quick tricks that will help you keep that pool reasonable during the hottest months.  The biggest tip is to run your pool filter at night.  If you run the filter at night when the air is cooler it will help the water to evaporate and make the pool more enjoyable when you enter it the next morning.  Another practical tip is if you are planning on having a party and want the pool to be refreshing dump some ice in it.  It may sound strange, but once you get past the silliness of it, it makes sense doesn’t it?  Just be aware, its going to take a decent about of ice to make a dent in the temperature if you have a large pool. The last tip to help cool down the pool is to install a water fountain in you pool.  Moving the water will keep it cooler and more refreshing.  In addition to installing a fountain a pool slide or waterfall will also accomplish the same thing.  Adding these features will also make your pool more fun and add to your property value.

Do you have any other tips for extending your pool season?  Let us know in the comments below!

 

The Future of Real Estate In Gilbert

The real estate market has been rapidly evolving over the last decade. The next decade will be more of the same. At The Reeves Team we are here to help you understand what some of the changes may bring to Gilbert Real Estate.

Technology has changed our lives dramatically and given us access to information the previous generation would have never though imaginable. Yet technology shows no signs of letting up and these changes will continue and will alter the way we buy and sell homes as well as how we interact with our home. So lets dive right in and show you some of the ways Gilbert Real Estate will be changing.

Virtual And Augmented Reality Listing

Stay with us on this one. Many times when people think of Virtual Reality they think of strapping a VR headset onto their head and walking around banging into things. While a growing number or people are purchasing expensive virtual reality headsets it is still a very small segment of the population. Instead we are talking about virtual reality home tours you can view on any type of device you would like. There are already companies doing a good job of this. This technology used to be very expensive and bulky to get into a home, but as with everything in technology its getting cheaper, faster and smaller by the year. These virtual reality tours will become more and more common in the coming years. Augmented Reality is similar to Virtual Reality except you use AR to interact with a real environment. Have you ever been in a home you were considering purchasing and not knowing how to arrange the furniture? Or if the furniture will fit at all? Imagine using your phone to be able to position couches and other pieces in the room in real time to see if they would fit and how they work together. Together VR and AR will be game changing technology for home purchasers and its coming sooner than you might expect.

Self Driving Cars Will Enable Longer Commutes

No one enjoys commuting. Spending an hour or more in stop and go traffic dealing with thousands of other people that don’t want to be there either is not how anyone wants to start their morning or spend their evening. That all will change when fully self driving cars carve out a large chunk of the traffic on the Arizona highways. Imagine being able to read a book or even start your workday on the way to your job. Commute time will also be reduced as congestion will be minimized when self driving cars are more prevalent. Self driving cars will be able to communicate with each other to maintain higher speeds and react in real time, this will allow for much less stop and go traffic and reduce the amount of time passengers will need to spend on the road. A quicker commute and the ability to do other activities while on the road will make homeowners more comfortable with moving into the suburbs. This will help areas like Gilbert increase in value. We will also continue to see the Phoenix Metro area expand its footprint as it will be easier to expand horizontally than it will be vertically.

Real Estate Agents

Real Estate has been changing at a rapid pace and will continue to change in the future. It has never been more important to work with a Real Estate Agent that is forward thinking and keeps up with the technological trends. The Reeves Team was one of the first teams in Arizona to use an interactive website to provide insights into the Real Estate Market. When websites like Zillow were growing in popularity many agents feared the trend. At The Reeves Team we went the opposite direction and put MLS listings on our website for anyone to access. We didn’t just show our listings but any listings around the value. We were also one of the first teams to incorporate video tours into our listings to help provide a better understanding of our listings before potential buyers came to view the home in person. Change is not always easy but at The Reeves Team we are committed to giving our clients as much power as possible.

What do you think of these upcoming Real Estate trends? When do you think VR tours will be prevalent? Let us know in the comments below.