May 2014 Market Report - Maricopa County

May Market Report - Maricopa County
 

Here are your real estate statistics for last month.  Be sure to call if you have any questions about this report or about how the market is performing.  This report includes MLS data for the past 36 months for Maricopa County only as provided by the FlexMLS system.  Please note that MLS search results fluctuate as data is added to the system and the figures below were obtained on 6/3/2014.
 

(click any graph for larger view)

Closed Sales Report Analysis:
 

Sellers:
The month of May saw a 2.2 percent decrease in the number of closed sales compared to the prior month.  It is not normal for this time of the year to see a decrease in closed sales.  The statistics show that we had 6,699 residential homes sell in May in Maricopa County compared to 6,849 in the month of April.  In today’s market sellers need to continue to be diligent in pricing and staging their homes, as we are no longer in a seller’s market.  The traditional/balance market means a level playing field for both buyers AND sellers.

Buyers:
In our shifted market, buyers are continuing to buy – they want to take advantage of this amazing market due to low interest rates, increased inventory, and more traditional sales from which to choose.  The traditional market that we are in now means that there is balance from both the buyer and seller side.

 Average Sales Price Analysis:
 

Sellers:
Last month saw the average sales price decrease from $261,462 to $256,008.  This is a 2.1% drop and does NOT follow the trend for the month of May in prior years.  In this report, May has typically seen an increase in the purchase price.  It is very important for sellers to pay attention to this change and monitor this statistic to ensure that they remain competitive in the market.

Buyers:
This statistic is an indicator that buyers still continue to pay more for homes than they have in the past 36 months.  Educated and savvy buyers understand that a competitive market gives them fewer options for home choices – even when inventory increases.  Although this may vary from area to area and from price range to price range, buyers need to make sure they are fully informed regarding the specific market in which they have an interest.  This will give them the best chance of being competitive when making an offer.

 Average Days On The Market Analysis:
 

Sellers:
This is a VERY important statistic to review this month.  The month of May saw an increase of 1 day in the average days on market – from 80 to 81 days.  May has normally seen a decrease in this number, so sellers need to monitor this trend.  The longer a home is on the market, the more costly it is to sellers, as they continue to pay mortgage payments and all the other fees associated with home ownership.  Days on market are controlled by appeal to buyers – in condition and in price.  Staging and realistic pricing can dramatically impact a seller’s success in today’s market.

Buyers
Inventory continues to increase, providing buyers with more choices.  However, buyers need to be aware that competition for great homes continues to remain high.  Great homes will draw great buyers regardless of the real estate market we are experiencing.  The importance of having a reliable lender and real estate professional to guide you through this process has never been more important.

Expired & Cancelled Listing Analysis:
 

Sellers:
Sellers need to pay close attention to this number. The month of May saw another dramatic increase in the number of homes that DID NOT SELL while they were on the market – a 12 percent increase.  2,976 homes left the market without selling.  This is the highest number we have seen in one month since June of 2011.  The higher this number, the fewer sellers experienced success in selling their homes.  This number shows how many sellers “gave up” on offering their homes for sale to potential buyers.  Sellers should remain very focused on monitoring their local market to ensure that they are pricing homes competitively and offering terms that are appealing to buyers.

Buyers:
For buyers, be aware that there are 2,976 fewer homes available for consideration.  At a time when buyers are still actively looking for homes to purchase, this statistic reveals the number of sellers that have not had success in finding a buyer.  Continue to watch this trend, along with price, days on market, and list to sales price ratio as important indicators of what buyers need to do in order to be successful in closing on the home of their dreams.

STOP!

As a reminder, you need to meet with a real estate professional to see how statistics impact the area where you are considering selling or buying.  Blended statistics will not be as accurate as a more detailed report that your real estate professional can provide to help you with your decision making.
 

Would you like to know what is happening in your neighborhood?
Would you like to know the value of your home?

Do you need help deciding whether to sell or not or would you like to know if now is the right time to buy?

I would be very happy to get you that information.

Just contact me and let me know.

5 Financial Reasons to Buy a Home

Harvard: 5 Financial Reasons to Buy a Home Eric Belsky is Managing Director of the Joint Center of Housing Studies at Harvard University. He also currently serves on the editorial board of the Journal of Housing Research and Housing Policy Debate. Last year he released a paper on homeownership - The Dream Lives On: the Future of Homeownership in America. In his paper, Belsky reveals five financial reasons people should consider buying a home. Here are the five reasons, each followed by an excerpt from the study: Read more, click HERE!   Mortgage Rates Drop Abruptly; Now Approaching 4% by Matthew Graham After tying the record for most consecutive days with no change, mortgage rates moved significantly lower today.  The significance isn't due to the size of the move--as far as day to day changes go, there have been bigger.  Rather, the impressive part of today's rally is that it occurred while rates were already effectively at the lowest levels in 11 months, further extending an already strong move lower over the past two months. Read more, click HERE!

5 Questions to Ask Before Choosing a Real Estate Agent by Susan Johnston Whether you’re planning to buy or sell property this summer, you may want to work with a real estate agent to guide you through the process. While you may have a neighbor or cousin who works in real estate, it’s a good idea to vet potential agents to ensure the best fit for your needs. Read more, click HERE!   Safe Home Painting: A Primer by Madeline Vann, MPH When it comes to do-it-yourself projects, a fresh coat of paint can brighten your living space inexpensively and with a minimum of effort. But you want to take as much care to protect your health as you take to do a neat job. Read more, click HERE! White House: New policy will help home buyers by Jason Furman and Jeff Zients As construction and homebuyer activity in communities across the country demonstrate, the housing market continues to recover. Home prices nationwide were up as much as 13% in the past year, which helped lift four million homeowners from being underwater. Read more, click HERE!   7 Awesome Organizing Hacks for Your Tiny Closet by Pamela Masin Your space might be tight—and you've already packed off-season clothes in vacuum-sealed bags—but these creative bloggers have solutions for maximizing every last inch. Read more, click HERE! How to Research a Neighborhood by Kim Clark You’ve probably heard the adage that when it comes to matters of real estate, it’s all about “location, location, location.” Well, if you’re thinking about moving and buying a new house, that adage is certainly a key component of which properties you’ll want to look at. Read more, click HERE!   Secrets of People Who Love the Homes They Have by Candace Braun Davison You don't need a seven-figure income—or a fairy godmother with decorating skills to rival Nate Berkus—to turn the place where you live into your favorite place to be. Read more, click HERE!

Mesa, Phoenix make list of Best Cities To Find Job Phoenix ranks No. 14 and Mesa No. 9 on a new list of the Best Cities to find a Job in the United States. WalletHub, a consumer advocacy group, analyzed the 60 largest cities in the U.S. and used 13 criteria for determining the best places to find a job in 2014. Read more, click HERE!   Google's new self-driving car has no steering wheel or brake By Brandon Griggs If you're uneasy at the idea of riding in a vehicle that drives itself, just wait till you see Google's new car. It has no gas pedal, no brake and no steering wheel. Read more, click HERE! Suburban Phoenix cities among fastest-growing in country by KTAR.com   PHOENIX -- Two metro Phoenix cities were among the fastest-growing cities in America, the U.S. Census Bureau said. In figures released Thursday, Goodyear and the town of Gilbert ranked Nos. 6 and 12, while Texas dominated the top 15 fastest growers with seven cities. Read more, click HERE! Father's Day with a tech twist Use technology this Father's Day to give dad a memorable experience -- ideally an outing he can take with the whole family. In this Tech Minute, CNET's Kara Tsuboi suggests some original Father's Day gift ideas. See it HERE!

TOP 5 TIPS FOR BUYING A HOME

Five tips for buying a home with less than 20 percent down

Here are five ways to boost your chances of buying a home with less than 20 percent down.

By Sarita Harbour May 30, 2014 12:57 PM

 

• Five tips for buying a home with less than 20 percent down

Do you want to take advantage of today's low mortgage rates before they shoot up? If a low down payment is what's stopping you from taking action, you may be in for a surprise.

The truth is, you don't need 20 percent down to get a mortgage. Through various government, bank, and other programs, many homebuyers are able to pursue their homeownership dreams despite a low down payment. Even some of the most popular banks have been participating for decades.

"Wells Fargo and Bank of America have been offering low down payment loans through Fannie Mae and Freddie Mac since the programs first rolled out in the 1990s," says Greg Cook, who runs the First Time Home Buyers Network website.

And while these programs have been around for a while, they may not be on every potential homebuyer's radar, as conventional wisdom goes against having a low down payment. So how does a low down payment affect a borrower's chance of getting a mortgage? Cook says that the down payment amount is just one aspect of the total mortgage application.

"Whether a down payment is too low has to be taken in context with the other parts of the home buyer profile," says Cook. He says income ratios and credit scores are also critical components of the mortgage application.

Keep reading to learn what you can do to get a mortgage without 20 percent down.

Tip #1: Negotiate With Your Banker/Underwriter

If you're looking to secure a mortgage with less than 20 percent down, the first thing you should do is have a conversation with your banker. This is what Garry Polmateer, an entrepreneur from Albany, New York, did.

For Polmateer, buying a home while getting a company up and running meant money was tight for a down payment.

"When I bought the house it was my first year of being in business, so it wasn't a terribly profitable year," he says. In the hopes of reducing the required 20 percent down payment for his new home, Polmateer focused his attention on dealing directly with his bank.

"I managed it by working with a small bank that writes their own loans, and I was persistent and negotiated with them." Polmateer says that before requesting the down payment reduction, he had to address the lender's concerns about the unpredictability of his business income.

"I explained the industry that we are in and discussed growth of our main partner company, our sales pipeline, as well as general trends," Polmateer says. He says he wore business attire to the meeting and provided information on the financial health of his business. He also provided client references to show that his business (and his income) was solid and growing

Polmateer's strategy paid off.

"I focused all of my energy on helping them feel comfortable lending me money, and then I ended with my ask," he says. At that point, Polmateer requested the down payment requirement be reduced to just 15 percent. "That made the difference in me and my wife being able to move into the house or having to pass up our dream home - a little log cabin in a small upstate New York town," he says.

[Shopping for a mortgage? Click to compare interest rates from multiple lenders now.]

Tip #2: Opt for an FHA loan

If you're a first time homebuyer who just can't get a 20 percent down payment together, a loan through the Federal Housing Administration (or FHA) may be the answer, says Grace Keister of Irvine California's First Team Real Estate.

"FHA loans are great because you are able to secure them with less-than-perfect credit and looser underwriting guidelines," says Keister. "[They] are the most popular and easiest way for first-time homebuyers to get help securing a low down payment."

This type of loan is available to first time homebuyers with a down payment as low as 3.5 percent, she explains. Additionally, your closing costs can be rolled into this type of loan, so you don't have to worry about the upfront cash costs. The one caveat is that your loan and closing costs can't exceed 96.5 percent of the home's fair market value.

And while this is a great option for borrowers who can't put down a large down payment, there is one cost that comes with this loan: Private mortgage insurance (PMI). PMI is meant to protect lenders against loss if a borrower defaults on a loan. Most lenders require PMI until the borrower has paid at least 20 percent of the loan's principal, but some FHA loans require PMI for the life of the loan, so make sure to talk to your lender about the exact terms of the mortgage.

To qualify for this loan, a borrower must be able to put down at least 3.5 percent, since the loan covers 96.5 percent, according to the U.S. Department of Housing and Urban Development. And eligible properties are one-to-four unit structures. Beyond that, you can have less-than-perfect credit, but may be deemed ineligible in the following cases, according to HUD:

• You have delinquent federal debt.
• You have suffered a foreclosure in the previous three years.
• You have declared bankruptcy in the past two years.
• You have made late mortgage payments in the past 12 months.
• Your credit report reveals that you are disputing any credit accounts or public records.

For more details, please contact an FHA lender.

Tip #3: Look to state and municipal programs

If you can't swing a 20 percent down payment, our experts say to look to your local and state programs for help to buy a home.
"Anything where down payment help is provided is going to be based upon municipality/county income limits," says Dan Gjeldum, senior vice president of mortgage lending at mortgage company, Guaranteed Rate. "As a homebuyer, I would research your community and county to determine what is available to you locally."
Some of these programs may even offer reduced or no down payment loans and assistance, says Hillary Legrain Esq., assistant vice president of First Savings Mortgage Corporation. Legrain says one such program, the DC Open Doors program in Washington D.C., has two options for home buyers.
[Click to compare loan options and interest rates from multiple lenders now.]
"It allows for either a 3 percent down payment, or if you take a higher rate you can receive a 3 percent grant that is forgiven in full over a period of five years." Legrain says this has the effect of 100 percent financing.
Here's how it works. The loan doesn't need to be repaid unless the borrower sells, refinances, or no longer occupies the property, according to DC Open Doors. Otherwise, the loan functions more as a grant that is forgiven over a period of five years, with 20 percent of the grant amount forgiven each year, says Legrain.
"If the borrower takes the 3 percent grant they are able to purchase the home without any down payment required," says Legrain, adding that the income cap on this program for one borrower is $123,395.

Tip #4: Lower your debt-to-income ratio

In order to get away with a low down payment, it helps to be financially fit. One major indicator of this is a strong debt-to-income (DTI) ratio, says Gjeldum.
According to the Consumer Financial Protection Bureau (CFPB), the DTI ratio is one way lenders measure your ability to make monthly payments on money you've borrowed. It's calculated by adding up monthly debt payments and dividing them by gross monthly income (before taxes and deductions), says the CFPB site.
Generally, the down payment amount isn't more important than a borrower's DTI, according to Joe Fairless, a real estate investor and mentor in New York City.
"The down payment is merely a means to acquire the house," explains Fairless. "The real issue is if the buyer can afford the monthly payments, so really it's a matter of the right debt-to-income ratio to ensure the borrower can afford the payments."
So what's the right number? A DTI that's 43 percent or less is ideal, because studies show that borrowers with a higher DTI have difficulty meeting their debt payments, according to CFPB. So if you have a low down payment, you should strive to have a DTI under 43 percent. That number is also based on Qualified Mortgage (QM) guidelines, which ensure that you're more likely to make your payments, says the CFPB site.
If your DTI is higher than 43 percent, there are two ways to reduce it. First, you can increase your income, which could mean working overtime, asking for a salary raise, or working an additional side gig. But if that doesn't seem feasible, your second option is to pay off your debt, which could make your DTI drop dramatically.
[Shopping for a home loan? Click to compare interest rates from multiple lenders now.]

Tip #5: Increase your credit score

If you want to land a mortgage with a low down payment, your credit score could help in your eligibility for certain loans, because it tells lenders the likelihood that you will repay your debts. For example, an FHA loan generally requires a FICO score of at least 580 to qualify for maximum financing with a low down payment of 3.5 percent.
But what if your credit score isn't so great?
"If you have anything less than ideal on your credit history, a true mortgage professional will be able to help counsel you on ways to improve scoring, how to get things permanently removed, etc.," Gjeldum says. They can also help you spot errors.
 "Spending a week or two fixing errors on your report can save you thousands of dollars over the life of your loan," says Gjeldum. The lower your credit score, the more costly everything becomes - including the rate, fees, and mortgage insurance premiums.
Nathan Fisher, a lighting analytics specialist with Technical Consumer Products of Cleveland, Ohio credits his strong credit score with helping him get a low down payment mortgage. The 24-year-old had a credit score of 750 and was approved for a government-backed FHA loan. According to HUD's website, borrowers with credit scores below 499 are not eligible for FHA loans. Additionally, a borrower needs to have a credit score of at least 580 in order to qualify for financing with a 3.5 percent down payment or less.
"I worked with Howard Hanna [Real Estate] as a one stop shop for mortgage, realtor, and title," he explains. "An in-house team was able to determine, based on my credit score, liabilities, and income, how much I could afford and if I was approved."

Thanks to high credit, he was able to put down 3.5 percent and buy a decent duplex, he explains. The program Fisher is in requires mortgage insurance (PMI) for at least five years. He says that with rates so low, it's still economically viable in his situation. However, it might not suit everyone.

 "I would not recommend this method to an established family," he says. His PMI is 9 percent of the mortgage payment, and he says the PMI payment can be a major drag on finances.

"But as a younger worker, it can be a powerful way to gain equity."