New ways of buying and selling Real Estate- eXP Realty

Buying and selling real estate can be difficult, time consuming, confusing besides costly. New online companies have emerged in the last 10 years- some are good and a couple are great! Some give comparable sales, photos , property history and a variety of user friendly resources.
One that stands out that I am familiar with is eXp Realty. This company has grown fast in the last 5 years- It is now international, meaning you could buy in Arizona and sell in California through internal connections- you could meet realtor to realtor in their online virtual conference room, and find a home loan and insurance through the same platform. It is an amazing service that offers endless products to help the buyer/seller exchange real estate, 40,000 agents that have information 24/7 at their fingertips. Everything is electronic signatures and digital. Seems like the agent sales end, is now catching up to the evolving world of social media, docusign, and virtual reality.

Robin R Patch        Realtor with eXp Realty

The latest way to buy a house! eXp Realty Tucson

Everyone knows about the internet, but do people understand the movement to online purchasing of property. One new company is eXP Realty, it is an online company with agents across the country and now has 40,000 agents across the WORLD!
They have partners – mortgage brokers, title company, Hazard insurance, movers, utility connections, and of course hundred of of agents in every state for relocation. It is a complete system of real estate buying and selling. Everything can be located on the internet now- Check out eXp Realty or call me
520-834-5705 Robin Patch and Tucson real Estate Appraisal
We have you covered for all your Real Estate needs and investments!
Don’t over pay or over buy- Let the eXp erts help you.

COVID and the Wild housing market

Watch out this is the WILD WILD WEST! Real estate prices have gone up dramatically in the last 5 months. Not only is there a shortage of listings, there is a lot of speculation. Californians are leaving and moving to business friendly areas and consumers are moving to get more for their money. Several western/ southern state are benefiting- if you want to call it that. Remember everything that goes up comes down again, and it falls FAST!  I am not saying we are actually at that stage, but there is speculation. The local move around boom also is because of  COVID, we have nice neighborhoods , great weather, and open spaces here in Tucson.

Arizona has had an 11.1 % increase in price appreciation-one of the top 5 states  in Bankrate’s index.  The second highest in the nation, but we still have a high unemployment rate. Job growth is improving; Californians keep coming looking for jobs and higher wages- Tucson lags in that regard.  The Housing Heat Index shows how local markets are faring in the coronavirus recession. To understand the housing economy -BANKRATE calculates the a rank, by analyzing six data points: annual home price appreciation, share of mortgages past due, unemployment , job growth, cost of living, and state by state tax burdens. These calculations are all part of the information leading to Arizona’s housing growth.

In this climate it is easy to overpay without realizing it, everything is high right now- only if FOR SURE you know you will stay for  7 years is it good to buy high. Many people bought in 2011-2013 only to see they really still had no appreciation- values are funny like that- they aren’t real until you get the money.  Mortgages are still hard to get, few subprime(if any) are processed. Due to better financial tracking, increase  in FICO scores, consequences of higher interest rates from poor loan qualities, and lenders who have to take back bad loans,  better lending practices for most buyers are the norm. Lenders and appraisers have very specific perimeters they must follow to complete the loan process.  The loan is channeled through 3rd parties without an interest in the monies being directed or dictated.  This allows the free market to complete a value without influence- except MARKET SELLING DEMANDS and rising prices which get reflected by comparable sales. When one sale price changes- so the others follow. That is the theory of supply and  demand. Even if your house is special, perfect ,the biggest, upgraded- price still is comparable in the neighborhood if prices decline- so does yours.  Don’t buy more than you can afford, don’t overbuild in your neighborhood, don’t think houses go up forever- its a 7 year housing cycle- the real bottom in Tucson was 2013- Think about that- where do we go from here?  COVID has scared everyone into thinking about buying something BIG and roomy- pushing the market, perhaps ahead of where it would normally be. One shining star in the housing market is the interest rates -record lows. Don’t let that fool you either. All things influence the housing market- it is very difficult to time a sale. If it seems really high is probably is!

Its a good time to update!

Home Depot and Lowes Home Improvement have been very busy lately as homeowners stay at home and value their space.  Home offices, porches, yards and kitchens have been the fastest categories for improvements. When it comes to an appraisal and value added by improvements- kitchens are number one and bathrooms are number two- adding almost 85% back into the home value if all other variables are similar for the neighborhood.  Remember adding too much can be a bad idea if you OVER build or OVER do for  the neighborhood. It doesn’t make your value more, it may help it sale faster.

Often people think their home is the BEST because of updates and expensive interiors- if the neighborhood isn’t expensive your house won’t be either.  There is a range pricing , comparable projections, in this standardized industry format that must be calculated for value. Costs are added and deducted for house items in an appraisal-  value is added in for items superior and value is deducted for inferior house items. This is a standard in the industry- you can’t compare something if not similar. Fireplaces, pool/spa, landscaping, garages, are all taken into considerations with number data.  Neighborhood, location,  exact calculated living  square footage, floorplan,  acreage, condition ,obsolescence, view, and  building methods are all considered by the appraiser closely. Custom homes are calculated a little differently with interior costs also. Track homes are valued within a range. Houses do increase in value when demand is high and the market is limited. The housing market relates  to outside variables and changes also- -ie. interest rates, economy, local markets, time of year and so on. Some things you can’t control-

Keep in mind when adding/updating to your home, take all things into consideration,  understand the market, hire an SRA, or MAI apprasial to do an appraisal if concerned with value. Tucson is a constantly changing market- we are smaller than Phoenix, less affluent, we are spread out with a slower laid back life style.  There aren’t enough lower priced homes, which sell  fast , and too many expensive (over $1,000,000) which take 1 year. The average selling home price is a $245,000 range- that requires  $48,000 (20%) down for a conventional loan. Tucson sells a lot of homes with Pathway home loans with 5% down.  FHA and VA have different selling requirement and sometimes are harder to get.

Buying a house is a big commitment, be prepared and understand the local market. Understand what you are gaining from your updates.

A Housing nightmare, can it happen again?

Have we really turned the corner on housing since the 2006 , in Tucson- yes? Some neighborhoods have  certainly recovered and some NEVER will go up that high again. High prices were on paper only and in channels of loan mortgages rather than in value. Always be aware of the difference.  Even though you have a lot of positive housing numbers, rents high, endless tenants available, but housing can be sensitive to politics.

Consider CHOP zone ,in Seattle, inner city land taken over by protesters, you as the owner still pay  ownership costs – taxes, insurance, interest mortgage, and repair costs, however you have NO access. Just like that your value went down- can it recover?  It depends on a lot of outside factors you have no control over- remember you are still paying. Owning real estate  is serious business ,you still need to buy  property from an accounting  perspective and always have emergency funds in reserve.

Fourteen years ago the worst economic housing  pattern occurred in history, without anyone realizing it.  The collapse of the U.S. housing market, has now recovered from the  14 year low , but in 20 states it has begun a slow tick upward from .47% to 3 %   that is something to watch, especially the high priced rental market. Watch the rental market for the next 6 months- does it stabilize as people go back to work. Remember owners have to pay mortgages/repairs even as tenants are allowed to default.

Good points to remember: only buy what you can afford- don’t speculate. Buy CASH flow properties, remember taxes , insurance and utilities continue to go up. Repairs and good maintenance cost money, and must be done to keep up value. Remember rental properties tend to go down before single family- pockets of weaknesses will begin to occur.

Be aware buying a property takes a lot of time, it can be  affected by things you can’t imagine and , pay attention to your local markets.

Still value in home ownership!

It is a time once again, when interest is at an all time low and millions of buyers are taking advantage of the American dream. The housing market in going crazy! Refinance is at an all time high and appraisers can’t work fast enough. That doesn’t mean your value is up.  The housing market often runs in tangents with the economy. Believe it or not many believe the economy of America is coming back- there still may be pocket weaknesses- rental markets, flipper market, value market, and now we add security and safety issues to our real estate.  Tucson over the years ( 60) has been quiet , growing off and on slowly and spread out. The community is receptive and open to new comers.

Perhaps our problems with Tucson are budget problems- zoning, and management of  affordable development. Construction increased nationally at 4.3 % in May and 14% more permits which was a very good number. National trends are very different than ours here in Tucson.

Tucson housing sales numbers increased and were quick to sell if priced correctly- 1% below sales price, 46 days  average time on the market.    5.7% increase on a house with a $200,000 list price , 1025 house sold.  Nationally the number of homes sold fell 22.7 %  and the number of homes listed for sale fell. Interest in single family homes- have popped because of coronavirus- privacy is an important issue, larger home with well designed spaces.  Renovations have increased because people are at home more- cooking, and hanging out. Also neighborhoods become important because of privacy, walking areas, biking paths, safety, and other amenities. People are rethinking what they need in a home.

Prices are up because demand is up- however not in all price ranges. We are a post pandemic migration destination city because homeowners realize the value of working remote. Tucson offers a variety of affordable housing, within a variety of locations across the valley where Tucson has expanded. You can get land in the city, horse property, a high rise condo, a duplex to add income, a single family residence in a parklike community, a pueblo adobe, a cabin on Mount Lemmon- just to list a few! We are a diverse cultural community.

Tucson will keep moving in its own cycle different than other areas because of our local interests and needs are different- Tucson has specific buyers!

House Values 2020 BEWARE- COVID

House values in pocketed areas are strong again. Interest is LOW, however the economy is trending downward as we wait for the solutions to the virus. Watch/ wait 6 months from now to see the real affects on the housing market. If you study it you will see lumber, materials, copper, and building are lagging,
Home depot and Lowes are doing well- why you ask? Because people are staying put, repairing and updating because the economy needs to rebalance. Houses may drop, if demand goes soft- it is, relatively speaking, soft now. Beware when buying , get the house you want at the price you want, don’t be emotional, don’t over buy.
This is a difficult time in the market for appraisers too.
We know our market, however open houses, market demand, viewing, and tours are down now because of COVID. It has become another market consideration, it has taken over home buying.
Buyer beware, and educated- watch the sunset a little bit longer right where you are!

Is the Housing Market approaching a Crossroad?

Investors will be watching the markets for signs that the housing market is cooling-there are signs appearing.  Data on existing homes and new homes , have showed evidence of  slumping. Existing home sales slumped in June, for the fifth time in the first six months of the year, while new-home sales fell in June to the weakest pace in eight months.  Those worrying  see trends appearing, these are critical indicators of the overall health of the economy, tied into the housing markets.

Home builders have higher costs of materials and labor.  Mortgage rates have edged higher- these push some buyers to wait and push first time buyers out of the markets.  Home builders are  raising  costs, but demand MAY go down as prices go up.   Existing homes are slowing, even though they offer a better value. There are fewer available homes to purchase as owners stay. Home improvement chains like Home Depot and Lowes are  busy as owners upgrade instead of moving.

The projections seem to be an overall slowing market. Inflation will cause your home to go up, but remember you still need to have demand, a buyer that can qualify for a  mortgage, and be in an upward mobility community.

This may be the beginning of a slowing housing market, however pricing may continue to climb for a year or two especially if interest goes up slowly.  Remember market segments vary from area to area, and city to city due to local demands.

Owning Real Estate learn to think like an accountant!

It is a difficult plan to build immediate cash flow  in ownership, it COSTS money,  most of the time when people buy real estate as investments they don’t realize the cost of becoming a landlord. Often the money you put into the property does not come back in your pocket- keep itemized records. Between taxes, insurance, utilities and maintenance, often the cash flow just isn’t there. Be aware increased taxes  and/or  the sale of the property , often brings more losses if not carefully planned.  So, at least get some appreciation in the property- buy at the right time, and timing IS everything for a little mom and pop rental business. At the end of the year there should be cash sitting in your rental account checkbook, that is a good time for repairs and capital withdrawal.

Understand your MARKET area. Tucson is volatile and goes soft  quickly. Over the years of owning  properties , especially after 10 years, (unless you have managed to PAY OFF THE MORTGAGE) the cash flow may get harder.  Large repairs begin to occur then. Thinking back over the years with my experience, I almost wonder if it would of been better to sell after ten years- moving into something newer and use my equity to buy more. The more units you have the more cash flow, balancing of vacancies is easier, and perhaps greater equity growth occurs,  however  more knowledge is needed.   Money floating, carry overs,  expensive repairs, and  income accounting  are extremely important in managing your own units. Try to calculate your return on money: if you spend $ 100,000 on a unit can you get a 5% net return? $5000.00 a year. That means after mortgage, utilities, taxes, and expenses. It was EASY with 3% interest rates, now it is way more difficult,  because of insurance and taxes.

Real estate appraisers take income, leases, and  management into account when looking at the value for a rental property. If you are under rented on your unit  your appraisal could be less. If the rental neighborhood property price is less,  your property is worth less, even if you have spent a lot in the property.  Usually a cost approach is how an appraiser evaluate the value of the property. All costs are evaluated in the cash flow.

Sometimes holding isn’t a good choice if the neighborhood is changing. What is the competition out there? Watch for neighborhood gentrification. Tucson has seen a great deal of change in different areas of the city. Competition is a killer  sometimes good, sometimes bad.  Areas  often change by zip code, where DO students now want to rent? retireres? young families, young professional?

Know your target  market and how to be a landlord.  Watch your cost on updates- keep them in line with the neighborhood, keep informed of the community,  hire people you trust to do repairs, run credit reports, have strong leases that protect you, be an active landlord- it is your job!  Never buy a property unless it can cash flow from the beginning.

Remember: What do you expect to get in return for your particular property?

Be an educated buyer!

Ten years ago the worst housing crisis occurred. About 2.5 million American buyers  still owe homes worth less than their mortgages. That is about double  what a normal housing market carries.  Many housing markets around the country  are now close to their 2006 values,housing markets however,are hard to image as cyclical.  The market timing is everything, be aware of the patterns that happen in your area and how fast and long they occur.  Usually they are within 7-8 years.

Each cycle will be affected by the relativity within the particular area- ie, jobs, general economy, government regulations, cost of money, building cycles (different) and area of demand. You can’t  control outside factors that control the values of housing only the intrinsic value.  Remember when you buy a property it is a huge investment that affects many aspects of your money.  The costs of housing often goes up as your mortgage may go down- taxes, insurance, utilities, repairs.  Sometimes ownership is NOT always positive , even rentals.  The costs outweigh the value.   It is  a good idea to buy the smallest house in a stable neighborhood, than the biggest house in a declining neighborhood. Be aware of how much money you reinvest in your house- not all of it returns. For instance new windows; no value there, however, cooling costs maybe lower, view better and quieter it makes for a quicker sale.  A pool will return 75%, a kitchen 89% and so on. Sweat equity is always a way to big value.

Another words home ownership has changed in the US.  Many people like to rent  rather than buy, they expect gardeners, midnight keys replacements, plumbing repairs at a phone call, and ften pay late. Many people ARE NOT great tenants or have any pride of ownership. These are the tenants that cost you money- often big money.

Be educated when you buy , keep a reserve of cash for repairs, chose your realtor carefully.  The internet is not the place to research, walking the neighborhood is, talking to neighbors, sitting in car and watching what goes on.  Understand all the complications of ownership and property management. Understand your escrow, watch the adjustments, and understand your local market and the local economy.