5 Common Questions
I am asked a series of questions on a regular basis. Here are my typical answers.
Are home prices rising ( stable or going down)? Through October of last year the answer was unequivocally: Yes! Since then our market has slowed considerably to the point where we are very close to a normal market right now. It is no longer a seller’s market but neither is it a buyer’s market. I have had several recent buyers who simply could not find what they wanted in the first couple of weekends. Our current market time is running just under 90 days which is fairly typical of a normal market. That doesn’t mean that it isn’t a good time to sell. Many of the homes that are sitting on the market are using old sales as comparables or are (literally) reaching for the stars as a price point. Most of these giant leaps will either reduce their price to the point of sale (true market value) or slide off the market eventually. Again, waiting for that miracle buyer from California that everyone hears about (but never actually materializes) is not good business practice. Do NOT make the assumption that our market cannot decrease again. Although it is not likely, it is not impossible. As far as long term prognosis goes, we will likely see slow but steady appreciation of 3-5% over the coming years and settle into a normal market. Waiting for your home to appreciate only leads to the home you are purchasing appreciating as well.
I heard on the news that our market was going up, down, crashing or booming. Is this correct? Keep in mind that the statistics that are published on a national basis or for that matter on a local basis, are always based on closed sales. This trend will usually show about a 2-3 month lag in what is actually happening out here in the trenches. For example, national and local media were touting our great market in January based on 4th quarter sales when in fact, January and February of this year were among the slowest I have ever witnessed. All real estate like all politics is local. A national trend rarely correlates with a local county market or more specifically the Avondale area. For the best information, contact your local real estate agent. Hint! Hint!
Does the neighborhood have children?
Although this is THE most common question I receive, it is the one question that under Fair Housing Laws, I cannot answer.
How are the schools? This is a very common question but a difficult one to answer. I do a great deal of volunteer work at several of the local high schools and have a good idea what they are like but there are many other ways to evaluate a local school system. If you believe in standardized testing rankings, that information is available at a number of different websites or the Arizona Department of Education. When I look at the reviews posted on both Trulia and Zillow, much like their valuations, I find the information to be inaccurate. In reading these reviews, it is fairly evident that with a few exceptions, every school has some kind of bad parent review which sounds very much like they have an axe to grind over their student. Being heavily involved with some of the schools, I have my own opinion of them but that is based on a very small snapshot of the entire academic environment. My recommendation is to tour the school and interview some of the teachers and make your own decision.
If I do XYZ, how much value will it add to my home?
There are two types of value, perceived and realized. Perceived is the value that the homeowner receives from the enjoyment and use of the upgrade or renovation project. Realized values is the actual differential sales price between a home with and without this specific upgrade. In most cases, the perceived value is a “beauty is in the eye of the beholder” judgment. The realized value is easy to determine with some upgrades and not in others. The easiest example to understand is generally a swimming pool. If a pool costs $30,000 to install, it has a perceived value of that amount or the homeowner would not put the pool in in the first place. The realized value is calculated based on otherwise identical models and differentiating those with a pool and without. The difference in prices averaged over several sales determines the realized value of a pool. In our area, a pool can range anywhere from $10,000 to $14,000 which is also the range that an appraiser will adjust for a pool. Before you install, a $40,000 kitchen, even though the guys on “Property Wars” and many others say that a kitchen sells a home, keep in mind that the resale value of that kitchen is probably closer to $15,000 and these investors are doing renovations at wholesale prices. Of course, they are TV shows so they have to make it look like they are doing