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The Finest Estate In Mesa!

If you are looking for the best property in the East Valley then you can stop your search here. This home located at 8361 E Echo Canyon CIR, in Mesa is the most prestigious home located atop Echo Canyon.  This home has spectacular views of the city that you must see in person to believe, and has an award winning courtyard.  If you are looking for that wow factor when hosting guests or clients you simply must visit this home.

This Home

The stunning views from this home both inside and out are second to none. Your guests jaws will hit the floor when they walk in and see the entire valley.

From the moment you walk into this award winning courtyard with its custom water feature to its perfectly located fireplace you’ll know that no expense was spared in this luxury retreat.

From the Wolf/SubZero gourmet kitchen to the automatic full wall side to the outdoor kitchen. This home was built to entertain clients & family with numerous ultimate custom touches.

Built with entertainment in mind you will love the openness of the floor plan and ample room to move about.

Sit on the rooftop overlook with its own fireplace!

The courtyard is a must see as it seamlessly integrates with the interior of home to provide an amazing experience if its just a relaxing evening or a night of celebration with guests.

The 7 bathrooms include hand carved stone.

Try the Spa that’s set perfect to watch the Stars and City Lights, Maybe play a mini round of golf.

Las Sendas

Las Sendas is a premier community offering healthy lifestyle opportunities, multi-generational activities and superior services to homeowners in a comfortable, beautifully-maintained desert environment with scenic mountain and valley views.

Las Sendas is situated at the base of the Tonto National Forest and features some of the most beautiful desert landscape in Arizona.

There are incredible opportunities for outdoor recreation in Las Sendas including tennis and pickle-ball courts, bocce ball, hiking and mountain biking trails, two community pools and multiple parks throughout the community.

Outdoor recreation, community events and numerous resident-led clubs are just some of the reasons why people love to live in Las Sendas. Some of the popular events each year include Mesa Food Truck Friday, The Las Sendas Classic Car Show and Breakfast with Santa.

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Dedicated Website

How Much Down Payment Do You Really Need To Purchase A Home

There are some very significant benefits to owning your home instead of renting.  If you own your home, when your homes value appreciates your net worth goes up instead of your landlords.  Another benefit to owning is you can count on your mortgage payment not doing up drastically as rents rise and inflation continues.  One of the most daunting aspects for most prospective home buyers is saving up for the down-payment.   With traditional homes in Gilbert going for an average of over 300 thousand dollars a 20% down payment is over 60,000.  What not everyone knows is that there are other financing options that allow for a lower down-payment than the traditional 20%.  Here at The Reeves Team we are here to give you your options.

What is the least I can put down to purchase a new home?

You can purchase a home for as low as 3% down.  If we take that 300 thousand dollar home and do the math again that is only 9,000 instead of the traditional 60,000.  To first time home buyers 3% is much more attainable than 20%.  The FHA or Federal Housing Administration helps home buyers get approved and they are even willing to guarantee a portion of the balance to the lender.  FHA loans can be as low as 3.5% and have some of the lowest rates available to potential homeowners.  You can still find some lenders willing to do zero percent loans but those are hard to come by and you need to make sure you are looking over the details very carefully and are comfortable with the loan documents.  Active and retired service members, and residents in rural areas also have access to zero percent down loans through the department of Agriculture’s Rural Development program.

What are the downsides to not putting the traditional 20% down?

If you put less than 20% down when you are purchasing a home the government will back a portion of that loan so they lender will be willing to loan you the money.  Unfortunately that government backed portion isn’t free and it is known as mortgage insurance.  There is typically an upfront fee and a monthly payment that will be added on to the mortgage.  On the bright side is if your home appreciates in value and goes above the 20% down-payment threshold you can refinance to remove mortgage insurance.  Some loans also may allow for the removal of mortgage insurance without refinancing once the property value is high enough. Check with your lender to see if this is an option for your loan.

So what do you think? Is it best to save up the 20% before purchasing a home?  Or should you get into a home as soon as you can to start building equity?  Let us know in the comments below.

Will The Next Recession Hurt Phoenix Housing Worse Than The Rest Of The Country?

Housing in the Phoenix Metro area was hit harder than most in the 2008 economic downturn.  Once we got through the multi year downturn we also had some of the sharpest rises in value over the next decade.  According to a recent report from Redfin the roller-coaster ride may not be over yet.   The study looked at 7 different factors to determine which of the 50 major metro areas housing markets would be the most affected in the next recession.  Some of the factors included in the study were, sale price to household income, loan to value ratio, home price volatility, percentage of flips, as well as others.

So how did the phoenix metro area do?  Not well, unfortunately this is one list you do not want to be at the top of.  While Phoenix wasn’t number one, we did come in a close second to Riverside CA.

Rank Metro Area Home Sale Price-to-Income Ratio Average Home Loan-to-Value Ratio Home Price Volatility Flips Share of Sales Overall Score
1 Riverside, CA 6.3 65.3% 17.9% 6.3% 72.8%
2 Phoenix, AZ 4.7 64.8% 17.7% 8.1% 69.8%
3 Miami, FL 5.9 50.4% 15.2% 7.5% 69.5%
4 San Diego, CA 8.1 65.6% 16.9% 5.9% 68.2%
5 Providence, RI 4.5 70.6% 16.8% 4.4% 67.1%
6 Tampa, FL 4.5 59.2% 17.1% 7.5% 66.8%
7 Las Vegas, NV 5.1 61.0% 16.7% 8.3% 64.6%
8 Los Angeles, CA 10.9 62.6% 15.7% 7.7% 63.7%
9 San Antonio, TX 4.1 N/A† 15.7% 5.8% 63.2%
10 Orlando, FL 4.8 61.2% 16.0% 6.1% 59.1%

It is interesting that the study found Phoenix would suffer more than Los Angeles and New York as many people have viewed these markets as extremely overpriced for quite some time.
Another important topic covered by the survey is that this study is looking at the greatest chance that home values will decrease and it is not looking which market will have the largest decrease.  In fact the survey concluded that it is unlikely that prices will be dramatically lower during the next recession.  There are multiple reasons for this conclusion.  The main reason is that the next recession will not be driven primarily by a housing market collapse like the last one.  Also it is unlikely the next recession will last as long or be as bad as the previous “great recession”.

 

Recession Start Recession End Duration Real Home Price Change Peak Unemployment
1980-01 1980-07 7 months -2.6% 7.8%
1981-07 1982-11 17 months -5.8% 10.8%
1990-07 1991-03 9 months -6.7% 7.8%
2001-03 2001-11 8 months +4.4% 6.3%
2007-12 2009-06 19 months -16.7% 10.0%

The above chart takes a look at how long the previous recessions have lasted and how much the affected housing prices overall.  As you can see the last recession was the only recession that saw double digit losses in housing prices and it was nearly 3 time as bad as the next recession.  Another point of interest is that the recession that lasted from 2001 to 2003 actually saw a nearly 5% increase in housing prices.  This just shows it is not necessary to panic about a your houses value if you believe as many do that a recession is near.

This is also a good indication that if you are looking to purchase a house in the near future, it may not be the best idea to hold off and wait for prices to come down. Its possible prices will not drop at all, and even if they do it may not be enough to make up for the time spent waiting for the best buying opportunity.  If you are looking to buy or sell your home or if you just have questions about the real estate market in general you can contact The Reeves Team.

So what do you think?  Is Phoenix housing set up for a monumental collapse in the next recession or will it just be a bump in the road?  Let us know in the comment section below.

How Rising Oil Prices Can Affect The Value Of Gilbert Housing

As Americans we have enjoyed historically cheap oil for the last 5 years.  While many Americans may not keep it at the forefront of our mind, oil does have a big impact on our actions.  It was only little more than a decade ago when everyone was worried about the price of oil spiking to crippling prices due to “Peak Oil”.  Peak oil was was the concept in the early 2000’s that we had reached the peak level of oil production due to earths oil reserves being depleted.  While it is true that oil is a finite resource and once its gone we wont be getting more, this theory forgot to take into consideration one important factor, Human Ingenuity!  As prices rose and technology progressed we found newer and safer ways to get to oil deposits that had previously seemed impossible.

The United States has been a leader in the new oil revolution.  We used to be dependent on foreign oil suppliers where now we actually produce more oil than we import.

Another huge benefit for Americans is our strategic oil reserves. America has the largest oil reserves of any country in the world. While these reserves were steadily depleting for over 35 years, from the early 70’s until the mid 2000’s we have recently been adding to the reserves and are nearing an all time high.

Americas rise in production and increase in the reserves is great news and allows us much more independence from Middle Eastern oil producing countries. However, just because things have been going our way does not mean we are immune price fluctuations from those countries. After a recent drone attack on Saudi Arabia’s largest oil production facility oil prices have been driven up 15%. The attack which took out as much as 5% of the worlds oil production could prompt even higher prices in the days to come.

Here at The Reeves Team we want to let you know how these increases can affect your housing prices, as well as other potential scenarios that can come from this surge in oil price. We will detail some of the most important ways that housing can be affected by oil prices below.

Disposable Income

As oil prices rise so does the cost of gas an pretty much all consumer goods.  This hits Americans pocketbooks as quickly as anything can.  If you want proof just look at Americans driving habits. In the early 2000’s Americans were driving massive vehicles with almost no regard for gas mileage. However, as oil prices rose and the recession hit practicality took over and those big vehicles were traded in for smaller more fuel efficient vehicles.  Now after 5 years of low prices you are hard pressed to find an American made vehicle that is not a SUV or truck.  Will we see that trend reverse itself again if oil prices rise?  Because oil prices take a huge chunk out of a families budget it means they have less to spend on housing.  When thinking about how much mortgage a potential home buyer can afford it could be hundreds of dollars less if gas and other consumer goods rise in price.  This equates to lower purchase prices and puts downward pressure on the housing market.

Location, Location, Location

As gas prices sore people may also be hesitant to purchase homes farther away from where they work.  When oil prices are low distance to work is less a factor of cost than it is time, however if the prices of gas doubles or more as it has in the past, people will start considering how much extra per month it is to live further away from work than to buy in closer to there company.  This phenomenon will affect houses on the outskirts more so than homes that are in the more urban areas.

Recession

Yes that big scary word.  Oil prices can be a cause of recession.  As Americans we live in a consumer driven economy, as our pocket books struggle and we stop spending it can lead to a vicious cycle that ends in recession.  As we have seen in the past if we do enter a recession you can expect to see a modest pullback in home prices.  Because housing would not be what leads us into recession you should not expect to see any drops as significant as we saw in the great recession.

So what do you think?  Are we set to see oil prices spike even higher or is this a temporary blip that will come back down to normal soon? Let us know in the comment section below.

What happens to mortgages if interest rates go below zero?

We have been living in interesting financial times.  Over the last decade plus we have been in a financial experiment and nobody knows how the results are going to turn out.  Since the great recession we have have very unique monetary policy from the federal government.   In the wake of the financial crisis driven by the housing market the federal reserve reduced the effective interest rate to 0 and also pumped trillions of dollars into the economy in the form of quantitative easing.  The main reason the federal reserve started the Quantitative Easing experiment is because they felt that interest rates could not be lowered below 0.   Experts have always said that 0 is the lower bound for interest rates and cannot be crossed.

That was then, this is now.  We now have federal reserve members actively talking about interest rates below zero.  The International Monetary Fund also suggested that central banks including the United States government should consider allowing interest rates to drop below zero.  With the current economic concerns weakening both in the United States and in the world abroad this would normally be the time that central banks would begin to ease interest rates to lessen the impact of a recession.  There is just one problem,  central banks were not able to raise interest rates during the boom times of the last decade.  While there were a few interest rate increases the current federal funds rate sits at 2.5%.  This does not give us very far to fall before we go to zero.  The federal reserve already started cutting rates in June of this year by .25% and some expect a cut by as much as .5% in the September meeting.  If we do slip into a recession as many experts predict in the next 18 months the federal reserve will not have many proverbial bullets in the gun to lower rates before the hit the zero mark.  Here at The Reeves Team we want our clients to be prepared for any scenario.

A negative interest rate would be something many Americans never thought they would see.  It would also behave in a way that many would not expect.  For instance, people that put their money into a saving account expect a return on their account.  Even in elementary school you are taught that banks make money by taking money from depositors, paying them an interest rate and then loaning that interest rate out to others at a higher rate.  That whole model would be turned on its head.  Now imagine if you take your money to a bank and instead of the bank telling you how much per month they will pay you, they tell you how much you will be paying them for the benefit of leaving your money in the bank.  Strange times indeed.

So what does the mean for mortgages?  If we have to pay the bank to keep our money with them, they should have to pay us if we borrow it right?  Well it might not end up working out like that for consumers.  In some news that can be glass half full, or glass half empty depending on how you look at it, we do have some examples of countries that have negative interest rates that we can learn from.  Europe has been flirting with negative interest rates since 2015 and Danish banks have actually been providing loans with -.5 basis points.  This may be hard to wrap your head around but the bank is actually going to get back less money than they loaned out to the homeowner.   It will be interesting to see how this plays out, especially due to the fact that currently banks front load the interest you pay on a home so that most of the payment goes to interest in the beginning and as the life of the loan continues more money goes towards principal.

Even if the federal funds rate dips below zero it is unlikely that mortgages will follow suit as fast.  Many home buyers would jump for joy at rates around 1% or lower, and it would be hard to convince the majority of banks to lend money to consumers basically for free.

Do you think we will see mortgage rates in the United States fall below zero?  Or is this all just hypothetical and things will continue on as they have?  Let us know in the comments below.

How Will The 2020 Elections Affect Gilbert Real Estate

With growing uncertainty in the economy many are Americans are beginning to look toward the 2020 presidential elections to determine how the economy is going to look for the foreseeable future.   As President Trump tries his best to continue the momentum we have had in the American economy over the last 10 years, there are many headwinds he is fighting against.  The Reeves Team is constantly monitoring the market and is here to keep you informed on how it might affect your pocketbook.

The trade war has started to slow growth in the American economy and the stock market is lower now than it was a year ago at this time.  The federal reserve has just recently started cutting rates again and we had the dreaded yield curve inversion.  So what does this mean for the general public and their bottom line?  When many people think about the economy they think about their largest investment.  For the vast majority of Americans their biggest investment is the home they live in.  So how will the Gilbert housing market be affected if Trump wins reelection or if a Democratic candidate wins in November of 2020.  With the elections nearly a year away lets dive into some of the consequences that could be felt. Here are a few scenarios.

Rental Tax Credits

Most elections candidates are weary to talk about the housing market.  People feel very passionate about their homes, for good reason, and don’t want to feel like the government is meddling in their largest investment.  This election seems to be different.  Many candidates have been discussing tax credits for both renters and buyers.  If trump wins reelection in 2020 I would not expect much change, however some democratic candidates may mix up the status quo.  Some candidates are trying to tackle the problem of ever increasing rent prices in the hottest markets in America.  Gilbert rent prices have nearly doubled in the last decade, so Gilbert would certainly see some effect from these tax credits.  Some of the proposals include giving a tax credit for families that are spending over 30% of their monthly income in rent.  While this could be helpful in the short term proposals like this will probably only increase overall rent prices, as well as increase home values as well.

Home Buyer Tax Credits

Its no secret that millennials have shied away from purchasing homes, however as they settle down and start their families many of them are beginning to look at purchasing their first home.  Unfortunately for millennials they home prices are higher, and they are straddled with more debt from college than previous generations.  One area that is being looked at is renewing the first time home buyer credit.  This was a credit that was put in place during the 2008 financial crisis and has recently expired.  This type of home buying credit and other credits for home buyers and home owners could also help out the housing industry.

General Outlook

Given the historic crash in home values in 2008 it is remarkable that home valuations are within 6% of their all time highs even when adjusting for inflation.  Given these lofty valuations if we do see a recession it is likely the market could dip.  It is important to keep in mind that last time the recession was driven by sub prime lending and crazy housing valuations, that will not be the reason we go into recession this time.  So if you are worried about a collapse in housing prices as big as last time you need not worry.

So what do you think about the possibilities of these tax credits? Are you for helping out those that are burndened by high home and rent prices?  Or do you see 12 Santa Clauses on stage when you watch the debate, and think we should stop spending more government money on tax credits? Leave your thoughts in the comments section below.

How Millennials Are Changing The Gilbert Housing Market

So it seems like millennial might be buying homes after all.  The younger generation dubbed as millennials have been a punching bag for older generations on many topics over the years, and home ownership is no exception. Millennials are known to stay home longer, rent instead of own and move around frequently.  However recent survey data is showing that our young troublemakers may be starting to grow up.

A study from the Urban institute shows that 7.1 million people aged 25 to 34 now own their own homes.  This is 37% of the millennial population.  Not only that but nearly 60% of millenialls now aspire to own a home.  This is a very big change from recent surveys.  So what do these new statistics mean for the Gilbert housing market as a whole?

Favorable Outlook

Home ownership was once frowned upon by millennials.  While older generations looked down on them for it, it made sense for a couple of different reasons.  The biggest reason is that they couldn’t afford it.  While the federal reserve states that inflation is at 2% annually they must not be including housing when they release that figure.  Housing has become increasingly expensive over the last few decades and to young adults entering the workforce saving up 20% for a down payment can seem like an impossible goal.  In fact, According to a 2019 home affordability report it will take new entrants into the workforce an average of 14 years to save up 20% for a down payment.  That is a staggering number and it is easy to see how millennials could get deterred and just assume home ownership is not for them.  Secondly, owning a home means putting down roots.  When you buy a home you typically need to stay in the home for 2 to five years to make the investment worth it over just renting.  For a young single person or even a young couple that isn’t sure where they want to end up, a 1 year lease may seem like a more favorable option than a long term housing commitment.  millennials also came of age through the great recession of 2008 that was caused by massive losses in the housing market, this could also have a negative effect on their willingness to take a risk on a huge asset such as a house.

Still Some Skepticism

While we have seen a drastic rise in home ownership in millennials it may not all be roses quite yet.  The same study also showed that of the 37% of homeowners from the age of 25 to 34, that 63% of those homeowners regretted purchasing the home and had wished they had rented instead.  Some of the reasons that the respondents cited were unaccounted for expenses.  When you rent a home you know what your monthly budget is going to be for housing.  When you own a home you can have unexpected expenses that many first time buyers were not adequately prepared for.  At The Reeves Team, we make sure to prep first time home buyers on some of the expenses they can expect.  It is important to know what shape a homes roof is in when purchasing as well as having the rest of the house inspected for common concerns such as Air Conditioner or pool maintenance that may be in the future.  Another reasons home buyers regretted the purchase was due to the fact they had to sell sooner than they had anticipated.   Many jobs require frequent relocation, and we live in a world that is becoming more and more transient with multiple reasons we may need to leave the place we planned on being for the foreseeable future.  Because there are large overhead costs with purchasing and selling a home this can be a real negative when homeowners decide to sell sooner than they anticipated.

So what do you think?  Is it a good thing that millennials are starting to get excited about home ownership?  Or are you still skeptical based on how many of them resent their home purchase?  Let us know in the comment 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.