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Phoenix Residential Market Report ~ March 2016

Real Time_Supply

Pie Chart_Market

Average Sold Price_Monthly

Average Days on Market_Monthly

Active vs Sold Transactions

Foreclosures_Monthly

Short Sales_Monthly

The current real time market profile shows there were approximately 11,402 new listings (up 745 from last month) on the market in March 2016 and 8,457 sold transactions. Since the beginning of the year the number of new listings has exceeded the number of sold transactions but the number of sold transactions is 7.2% higher the number of transaction in March 2015. This could be a good sign the summer buying season will be strong than last year.

Since April 2015 (12 months ago), the average sold price has increased approximately +1.3% (up from last month), the average days on market have decreased approximately -6.0% (down from last month) and the number of sold transactions have increased approximately +0.6% (up from last month). Since the month of September 2015 the average sold price has formed a new upward trend where each month the average sold price has gradually increased. Last year’s summer buying season was weak where we saw prices decrease from June to September. As long as buyer demand stays strong until September we should continue to see the Phoenix real estate market appreciate over the summer months.

The volume of foreclosure purchases since April 2015 (12 months ago) has decreased approximately -40.2% and the volume of short sales decreased of approximately -21.8%. Since November 2014 the volume of foreclosure purchases went up and now the trend is back down once again. Also, since August 2013 the volume of short sale purchases have consistently decreased because the inventory of homes “up-side-down” have been exhausted and values have risen to a point where consumers can break-even or sell with some equity but some homeowners are still up-side-down depending if they purchased their homes between 2005 and 2007.

Since April 2015 (12 months ago), the number of homes for sale on the market have increased approximately +1.5% or 24,965 homes for sale on the market to a gradual decrease of 25,329 homes. The total number of listings is still low as compared to 29,308 listings in April 2014. This decrease in the number of homes for sale indicates we are currently in a seller’s market (low supply and increased demand).

Real estate prices are still relatively low (near 2008 prices), mortgage rates are still at a historical low and the macroeconomic market is improving both in terms of prices and the overall economy. Give us a call to discuss your best investment strategy, TODAY!!

Position Realty
Office: 480-213-5251

CONFIRMING YOUR MORTGAGE LOAN BALANCE IS A YEARLY TASK

Have you ever wondered whether your lender has properly calculated your outstanding loan balance. All too often, we take for granted the mortgage loan balances given us by our lender, and never bother to check the figures ourselves. When we go to sell our house, the excitement of the settlement process often makes us overlook an important issue: was the loan payoff statement provided by our lender accurate?

Different lenders have different computer programs. However, at the end of each year, a mortgage lender is obligated to provide all borrowers with a statement indicating how much mortgage interest was paid during the previous year, and — if taxes were collected in escrow — how much was paid for the real estate taxes on the property.

Some lenders provide a running monthly statement, showing the old loan balance, the amount of the payment broken down into interest and principal, and the new loan balance after crediting the principal payment. Keep in mind that when you make a mortgage payment to your lender, interest is calculated first on the then-outstanding balance, and the difference goes toward reducing principal.

Let’s look at this example. You borrow $100,000 at 4 percent interest, to be amortized over thirty years. The computer — or an amortization program — tells us that the monthly payment required to fully pay off (amortize) the loan over a full 30 year period is $477.43. If we do some basic calculations, the first payment consists of $ 333.33 for interest and only $144.10 for principal. It should be noted that for the first seven years, you will be paying a lot more interest than will be credited toward the principal balance.

Thus, our example looks like this for the first two payments::

Mortgage Chart #1

Interest is always calculated on the then outstanding balance for the previous month, which is why the interest goes down (ever so slowly at first) and the principal goes up (ever so slowly).

If you did not make any extra payments over the life of your loan, these calculations can be done quickly — either by hand or preferably by using a computerized amortization program. However, if you have made a larger monthly payment, then you have to do the numbers. Let us further assume that in the third and fourth month, you decide to make a payment of $1,000, instead of the regular payment. The next two month’s calculation would look like this:

mortgage Chart#2

As can be clearly seen, if you make a larger payment every month, you will significantly reduce the length of your loan. In fact, if you make one extra monthly payment per year, you will reduce a 30 year loan down to approximately 22 years. And I recommend you spread the extra payments over the 12 month period, rather than making one lump sum at the end of the year.

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If you decide to make these extra principal payments, make sure that you clearly notify your lender each time that you are making such extra payments. Write “Extra Principal, $___” on both the check and the mortgage statement which you send in to your lender.

If you do not have access to a computer, the math calculations — while easy — can be time consuming. Thus, each and every year, when you get your year end statement, you should spend a few minutes doing the calculations for the previous year, so as to confirm that the numbers are correct.

If you are having trouble reconciling your numbers with those provided by your lender, you should immediately request a payment history statement from your lender. At least once a year, your lender should be able to provide this to you — free of charge. Examine the statement carefully; make sure you have not been improperly charged late fees or other similar charges. Make sure that any extra payments you may have made during the previous year have been properly credited toward your principal balance.

Lenders and their computers are not always correct. But only you can confirm.

Position Realty
Office: 480-213-5251

THE FIVE BIGGEST MORTGAGE MISTAKES YOU CAN MAKE

For most buyers, the mortgage is the largest monthly expense they will have. Yet most borrowers will do little to no preparation, negotiation, or shopping to get the best deal. And they end up paying much more for their loans than they need to. You? You’re smarter than that, or you wouldn’t be reading this article. Here are five of the biggest mistakes that can cost you real money.

1. Believing advertised rates are what you’ll pay

Unless you have perfect or near-perfect credit, most advertised rates are out of your league. To get boasting rights on a rate that good, you have to pay part of a point (one percent of the loan amount) a point, or more to get the best rates.

Your lender will go over your credit with a fine-tooth comb to find anything to raise the rate. That includes qualifying you at the beginning of the transaction, and then running your credit again a day or two before you’re supposed to close on the home and loan. If there’s been any change in your debt-to-income ratio, goodbye low mortgage rate.

2. Not comparing lenders

Just like everyone knows two or three real estate agents or more, everyone knows a loan officer or a mortgage broker. A loan officer works for a bank or savings and loan and can only offer you loan packages that the bank has put together. A mortgage broker prequalifies you just like a loan officer, and shops your deal around to various lenders.

Whether you talk to a loan officer or a mortgage broker, you’re going to have to share personal financial information in order to get a realistic rate. Reputable brokers will show you what certain banks and credit unions quoted and you can pick the loan you like best.

If you’d rather do your own shopping, consider talking to a local bank, a national bank, a credit union, and a savings and loan, but remember, unless you give them personal information and permission to run your credit, it’s just talk.

3. Not paying attention to terms

Advertised rates even for those with perfect credit aren’t what you will actually pay. The true cost of the loan is the APR or annual percentage rate, which includes fees from the lender.

Understanding loan terms is harder than shopping for a new mattress. There are so many ways lenders can inch up the fees. A loan origination fee is also called a processing fee. It pays the loan officer or mortgage broker, so this fee can vary widely. You may pay one lender more for an appraisal than another might charge you.

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One lender may charge more for pulling your credit than another. It’s all in your good faith estimate, which you don’t get until you’ve applied for the loan.

All terms are negotiable, so don’t be afraid to ask what a particular fee is for and can it be reduced or eliminated.

4. Waiting for a better rate

It’s great to have bragging rights on a low rate, but you don’t want to lose the home of your dreams over a quarter of a point in interest.

There’s a big picture here you could be missing. No matter what your interest rate is, you’re going to pay thousands of dollars in interest up front before you make any serious gain in equity. If you go all the way to the end of your loan’s term, you’ll pay so much interest that you could have bought the same home two or three times.

Instead of focusing on the percentage rate, work on how quickly you can build equity. Make one extra payment a year. Pay $25, $100, or $500 extra per month and you’ll more than offset the rate you’re paying.

Down the road, if rates drop through the floor, you can refinance, but even that’s not an ideal solution. You’ll pay loan origination fees, title search fees, appraisal fees and so on — enough to equal the closing costs you paid the first time around.

And don’t forget, you’ll start the amortization schedule all over again — with most of your payments going to interest instead of principal.

5. Choosing the wrong type of loan

Many families were hurt post-9/11 when lenders opened the spigots and gave a loan to almost anyone who could sign the paperwork. Suckers bought homes that were too expensive using balloon loans with low teaser rates.

The type of loan you choose should depend on current market conditions and how long you plan to stay in your home, not how much home you want to buy.

Current market conditions favor fixed rates, because rates are rising from all-time lows. Yes, they cost more than hybrid loans or adjustable rate loans, but the base amount is fixed and doesn’t change. Only your taxes and hazard insurance will cost you more over the years.

If you get an adjustable rate mortgage, you are at the mercy of market conditions. While there’s a cap on how high your interest rate can go, it’s still a risk.

If you plan to stay in your home five years or more, get a fixed-rate mortgage. If you plan to sell your home sooner, you’re taking a risk. It takes most borrowers five years just to earn back their original closing costs in equity.

Once you’ve narrowed your choice of lenders, ask them on the same day to give you a quote. If you wait even one day, rates may have changed, so you’re no longer comparing apples to apples.

Position Realty
Office: 480-213-5251

HOME IMPROVEMENTS THAT REALLY INCREASE YOUR ROI

Now, most of us know that there are plenty of things we can do in a home to bring an improvement, as far as our preferences go. But how many of these improvements actually bring in a return on investment (ROI) if or when an actual selling time approaches?

As our likes may not be the likes of others, improving according to our preferences doesn’t necessarily give us more bang for our bucks, as some commonly say.

That said, our article below centers on what are some of the areas of improvement that stand a better chance of a high ROI once they get done. Let’s start with the two most important and used rooms in average homes: the bathroom and kitchen area.

Small or Larger Bathroom Remodel or Renovation Project

Now, we’re speaking about an upgrade or remodel job and not a full bathroom addition. Even small changes such as replacing or tearing down old, mildew stained wallpaper and using a fresh coat of paint will go a long way.

Replacing older lighting with a system that you can actually see better with, usually can be done without emptying your checking account. Adding a new vanity, a new tile floor and even something as minor as changing the hardware or fixtures can all be done today for less than $700.

Converting a walk-in closet into a powder-room with toilet and sink can really bring in about 15 percent for an updated bathroom area–not including plumbing expenses.

home improvements

Concerning kitchens, you don’t need to start by a massive overhaul–simply do one item at a time. For instance, removing a stained sink or old microwave or refrigerator for newer, energy-efficient models add big value to your home at selling time. Later, if needed, move on to new cabinets, back splashes or counter-tops. Generally speaking, you can expect to get back about 25 percent of a home’s value for a new kitchen or a remodel project.

Floor Coverings

After a bathroom and kitchen remodel, nothing makes or breaks the ROI more than miserable looking flooring. Smelly, stained or torn carpets being the worst offenders.

Laminated floors, simulated wood flooring or even a tile job may do the trick. If you have budget constraints, then consider replacing the carpet and re-doing the floor covering–one room at a time, whichever is worse.

“Going Green” and Curb Appeal

Nothing is as attractive as a carefully sculpted shrub and colorful plants to present a certain curb appeal to buyers. However, if you’re not thinking in terms of “green” or sustainable plantings, you’ve defeated your purpose in these green-oriented times.

Planning for the future is vitally important as you really don’t know when or if you’ll be selling in the foreseeable future. Planting shade trees can actually reduce your overall cooling expense by up to 30 percent, so be sure to buy greenery suitable to your region soil or weather requirements.

Replacing A Garage Door or Front Door

Replacing an older, two-car, steel garage door may give you a healthy ROI of 87 percent on a $2,500 investment. That being said, if you convert your garage into in-law living quarters or even an efficiency, expect an even higher ROI. Without having to add a ceiling, floor or walls, you’ll be gaining valuable space that can further result in both a higher ROI and additional income–barring zoning regulations of course.

Your front door, especially if it has factory-finish colors, wood-look embossed steel and etched glass windows, will further blend well with your curb appeal and ROI as well.

Which Brings In The Highest Returns?

  • Front door replacement: 96.6 percent
  • Efficiency garage conversion: 84.3 percent
  • Garage door replacement: 83.7 percent
  • Minor kitchen remodel: 82.7 percent

Which Brings In The Lowest Returns?

  • Home office remodel: 48.9 percent
  • Sun-room addition: 51.7 percent
  • Bathroom addition: 60.1 to 85 percent
  • Backup power generation: 67.5 percent
  • Master suite addition: 67.5 percent

The list of high ROI renovation options is almost limitless. Moreover, if you make the upgrades intentionally, and don’t allow yourself to do them on impulse or under coercion, you can expect rewarding returns every time. That said, choose wisely.

Position Realty
Office: 480-213-5251

HOW TO SCORE A GREAT DEAL ON REAL ESTATE

With many real estate markets rebounding or thriving, foreclosure rates way down, and short sales all but gone in most areas, can you still find a bargain when buying a home? Yes, but you’ll have to be sneaky, creative, diligent, or all of the above.

Pay cash

You’ve got a couple hundred K lying around, right? It may sound ludicrous to some, but buying a house all cash is a growing trend, and one that can save you money upfront and down the line. Sellers may be more willing to negotiate on the home price for a cash purchase. A shorter home search and escrow period can save you money on carrying costs in your current home. And, obviously, not paying a mortgage can save you hundreds of thousands of dollars in interest.

Go to an auction

While foreclosures are down across the country, some homes still end up going through the process and then ending up available at auction. That means you can bid in person (or online if that option is available) in an attempt to get a bargain home. Take note that you’ll probably be in competition with investors and home flippers, and many auctions require an all-cash payment, which makes them difficult to purchase for the average person. You’ll also want to keep in mind that many auction homes are in poor condition – be sure to check them out before bidding so you don’t end up with a money pit.

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Buy in a developing neighborhood

If you’re willing to compromise on location, you might be able to find a great deal. And, you might even get help with the purchase.

“Some towns offer transitional and developing neighborhood homes at very steep discounts,” said Fortune Builders. “You may have to agree to live in the house for a certain number of years or agree to do a good amount of repairs, however this is definitely a program to search for in the area you’re looking to buy.

Buy a fixer upper

Have a way with a hammer and a desire to make your place your own? Buy a project house. You’ll save a ton of money and you’ll be able to redo it in your style instead of living with someone else’s. Some loans might even help pay for your renovation as part of the home purchase.

Rent to own

Is your less-than-excellent credit and/or unsubstantial down payment making it difficult to get a good loan? Maybe you’re having trouble competing with other buyers in a competitive market. Both of these scenarios could end up with you paying more than you want to. But you may be able to get a great deal and ease into the market with a rent-to-own or lease option arrangement.

“Whether the issue is a lack of down payment, a little too much debt, or a lingering ding on their credit report, sometimes buyers just have to wait while they work on their credit profile or save more money before they can buy a home,” said Realtor.com. “In such a case, a rent-to-own or lease-to-own arrangement can sometimes be a solution.”

The advantages of renting to own are the ability to lock in a purchase price from the beginning of the agreement, and saving toward a down payment – “During that time, the renters usually pay an above-market rent, with the excess rent credited toward a down payment when the contract ends,” said Realtor.com – and work on improving their credit so at the end of the term, they are able to qualify for a great rate.

Position Realty
Office: 480-213-5251

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