the AZ market

Category: Title & Escrow

  • How to Protect Real Property

    Founder and owner of the Keystone Law Firm, attorney Francisco Sirvent, discusses the best practices for property and asset protection in a volatile housing and economic environment. For more information visit keystonelawfirm.com or call 480-209-6942.

    Topics Include:

    • Should a real estate investor use one LLC or multiple per number of properties?
    • Is there a contingency plan if the primaries have incapacity issues
    • Are their techniques available to aid in legal avoidance of the Federal Estate Tax?
    • Inflation and Interest Rates Rising! How can protect my assets now?

  • Been There Done That: Reflections on a Market Shift

    Disclaimer: Today’s market and the 2008 – 2011 market are not the same. While it may feel similar, the fundamentals are entirely different. This is about my own experience.

    In 2005 I was 25 years old and thought I would never be able to buy a house. Four years later I bought my first house and promptly watched my new investment plummet in value. But we could afford the payments and needed a place to live so we stayed. Housing is shelter and is a basic human need regardless of price.

    Today there are many 25 – 35 year olds hoping to buy their first home. Last year I would have encouraged them to buckle down, save as much as possible, and still throw their hat in the ring. It may be exhausting and defeating but at the end of the day, they just might be able to push, shove, and elbow their way into home ownership.

    There are more options today. There will be even more options tomorrow. This is challenging sellers and the industry. A home listed at a competitive price last week may no longer be competitive next week. The market is cooling faster than ever before.

    I started in title in 2004 and was unaware that the market began slowing in April of 2005 (the Cromford Market Index was not yet available to the public). I had a vague idea things were changing when prices flatted in late 2006. Twelve months later available inventory reached 57,000 – the standing record – and buyers were few and far between. There were only 4,000 properties under contract when inventory hit those record highs. Before builders closed up shop or walked away from projects they offered 4%+ commissions, flat-screen TVs, and even new cars to Realtors who brought buyers. 2008 started with some optimism that was quickly extinguished.

    By November, my employer filed for bankruptcy. Only a few weeks later, while on my honeymoon, I learned the company was bought out. Then on December 27, 2008 half of the company was laid off. I survived the cut, my branch closed, and I went to work at corporate. By mid-2009 the magnitude of the housing crash, which continued for another two years, changed how the collective looked at residential real estate.

    Since then over one million people have moved to AZ. New challenges and industry leaders have emerged. 50% of licensees today sold real estate prior to 2014. As we face a new shift, one that we saw coming, there is some PTSD, some relief, and a lot of fear; I want to remind the real estate industry that we are resourceful and resilient. We have been beaten up before and lived to tell the tale.

  • Afternoon Bite 8/24/2020 (Video)

    Every Monday afternoon Amber Kovarik and I talk about what happened this week in our local and national real estate market in 15 minutes or less.

    Today’s Takeaways:

    Many economists are calling this a K shaped recovery. That means that some are having a positive recovery or are fully recovered while for others the struggle continues to worsen. Economist and real estate consultant, Elliott Pollack calls it the “have and have not economy.” Those with jobs have saved money and are in good financial standing. Those who have lost their jobs, who are usually not homeowners, are finding themselves with fewer job prospects and, with the expiration of the CARES Act, significantly smaller unemployment checks.

    Economy:

    • Retail spending is up. National retail spending increased by 1.2% from June to July, increased 1.7% from February to July, and increased by 2.7% from July 2019. (Elliott Pollack & Company)
    • AZ retail spending increased by 4% in June and was up 13.7% over June 2019. (Elliott Pollack & Company)
    • People are buying stuff though, not services. Many young couples who had $30,000 saved for their weddings are now canceling their weddings and using that money for a down payment.
    • Small businesses are struggling. 97% of businesses in AZ are considered small businesses.

    Unemployment:

    • Initial unemployment claims in the US increased last week by 1.1 million, 135,000 more than the previous week. Continuing unemployment claims dropped by 636,000 to just over 14.8 million. (US Department of Labor)
    • Phoenix has the best performing job market in the country. It is not that more jobs were added, it is that fewer jobs were lost. (Elliott Pollack & Company)
    • Amazon announced it is bringing 3,500 new jobs to the valley, including a 500 employee tech hub in Tempe and a 150,000 square foot fulfillment center at Falcon Field in Mesa. (Arizona Republic)

    Mortgage:

    • For the ninth week in a row mortgages in forbearance decreased. It dropped from 7.44% to 7.21% or to roughly 3.6 million loans. Yes, we have a long way to go but an improvement is still an improvement. (MBA)
    • Mortgage loan applications declined 3.3% week over week. (MBA)

    Schools:

    Buyer trends are shifting, they want home offices, Zoom rooms, and home-schooling rooms. This week there was an article in Inman that said, “buyers are much less interested in things that used to be important: proximity to offices, shopping and urban centers, high-quality public schools, and even the prestige of neighborhoods.”

    Real Estate:

    • Commercial real estate is struggling. The biggest thing we have to watch is what happens with rentals given the unemployment challenges.
    • About 22% of single-family homes in the Phoenix metro area are rentals. (Elliott Pollack & Company)
    • 96% of rental owners are small Mom and Pop businesses.
    • Residential real estate is the shining star and what is pulling us in the right direction. Without the good things happening in real estate the entire country would be in far worse shape.
      • Supply: The available inventory continues to stabilize. Inventory remains low but is not dropping at incredible rates.
      • Demand: Pending sales up 16% year over year. This is significant given the low inventory. Our demand is over 21% above normal. The demand continues to rise but at a slowing rate.
      • Sales & Prices: Phoenix metro area closed sales are up 5% month over month and up 15% year over year. The median sales price is $320,000, up over 14% year over year. Healthy appreciation is 3% annually.
    • The National Association of Homebuilders/Wells Fargo Housing Market Index, which shows builder confidence, increased to 78, the highest reading since 1998.
    • Appraisals are getting trickier. They are taking longer to come in. Waiving the appraisal contingency is not working as well as it used to. Many appraisals are not coming in at value.
  • How to Avoid Probate in AZ

    How to Avoid Probate in AZ

    Lydia Wietsma, with Revelation Real Estate, and I talk about different ways to avoid probate in Arizona for real property.

    Like any legal guidelines, there many different ways to own real estate. If you want to avoid probate, you have options. First if the owner(s) put the property into a trust, when the executor trustee(s) pass the successor trustee steps in to make decisions for the trust. Second, when you purchase your Arizona real estate, you can also have a beneficiary deed created and recorded. This means the owner of the property maintains ownership until they pass and the person(s) named on the beneficiary deed immediately move into title. Third, if the owners include, “with right of survivorship” is included on their deed.

    Of course there are many cases of, “if this then that.” Which Lydia and I address in greater detail in the video.