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You are here: Home / Archives for Better Homes and Gardens Real Estate | BloomTree Realty

Better Homes and Gardens Real Estate | BloomTree Realty

To Buy or Not to Buy?

November 1, 2022 By quadcities Leave a Comment

Many economic experts believe the current inflation cycle will abate within a few years and interest rates will begin to soften.

Many folks who have wanted to buy a home over the last couple of years or so chose to wait until the heated market cooled down and for prices to come down to earth. The good news is, prices have softened somewhat, but the bad news is, interest rates are much higher.

Let’s assume that you could have purchased your dream home in 2020 for $650,000 with 20% down and that you could have financed the balance with a 30-year, 3% mortgage. Your payment would have been $2,398.53 per month. Let’s also assume that with softening prices, today your home may be worth $630,000. The result is you have equity of $110,000 and you still have a low interest rate. Not a bad position to be in overall but you have lost some equity in your home.

Let’s assume that today, you decide to continue to wait because interest rates have skyrocketed. If you were able to buy that new home today for $630,000 with a 6.5% mortgage and you put down 20% or $126,000, your monthly payment on a 30-year mortgage would be $3,869.49. Unfortunately, for many, this is more than the household budget can handle. However, your savvy mortgage broker tells you, you can qualify for a 3-2-1 buydown so your first-year mortgage payment could be $2,263.19 and increase to $2,553.69 the second year and $2,861.66 the third year.

Now, let’s assume again you hold this home for another three years or so while the market goes through more softening but then interest rates come back down because a potential recession is requiring the feds to drop interest rates again. What will happen to housing prices as the rates come back down? That is right, they will go up again.

Many economic experts believe the current inflation cycle will abate within a few years and interest rates will begin to soften. As they do, your home value will likely increase. Buying a home today utilizing a buy-down option could help you accelerate your equity gains in a few years because you are buying in a down market!

The home you could have bought today could go up in value a conservative 5% or $31,500 and the home is then worth $661,500. You would have equity of at least $157,000. At this point, you may choose to refinance your existing loan balance of around $500,000 at say 4% on a 30-year mortgage. Your new payment would be $2,406.17 and you have gained quite a bit of equity. If you continue to wait, you may miss an opportunity to gain future value and equity.

The above example is in general terms and I have made some broad assumptions. Please talk to your real estate agent and mortgage broker about your own situation, which may or may not fit this example.

Real estate is like many other commodities. Prices and interest rates are affected by supply and demand, but over time the market reaches equilibrium where supply, interest rates and demand adjust to market conditions.

Is it always a good time to buy or sell? Not necessarily, but if you have a game plan and understand that market forces always change and a new equilibrium will set in, you can buy and sell in almost any market and come out a winner over time. Conversely, waiting for the market to improve or change without a game plan could be a very bad strategy without understanding the basics of market forces and the dynamics that change them over time. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley and Cottonwood. To reach Malouff or a highly qualified agent, please call 928-925-2023

Filed Under: Columnists Tagged With: Better Homes and Gardens Real Estate | BloomTree Realty, Nick Malouff

Area Real Estate Market is Mixed

October 6, 2022 By quadcities Leave a Comment

Is it still a good time to sell? I would say yes, because prices have held fairly well and days on market is still fairly low.

According to recently published statistics from the Prescott Area Association of Realtors, the area real estate market remained reasonably strong in August 2022 versus August 2021, but there are signs of weakness.

For the entire market area, the sold median price versus a year ago is up 7.4%, from $437,500 to $470,000. The median days on the market went up from 11 in August 2021 to 33 in August 2022. By most measures, that would still qualify as a seller’s market, but the trend does seem to be heading to a more balanced market. However, for the same period, total sales went down from 436 to 321,  or 26.4%.

Prescott’s total sales went down from 193 in August 2021 to 145 in August 2022, a 24.9% decline, and the median sold price went down 9.3%, from $600,000 in August 2021 to $544,000 in August 2022.

Prescott Valley had similar results, with a reduction in total sales of 31.5%, down from 111 in August 2021 to 76 in 2022. However, the median price increased from $405,000 to $433,250 for the same period.

Chino Valley experienced what is probably the biggest drop across the board year over year. Total sales dropped from 62 in August 2021 to 30 in August 2022, a whopping 51.6% reduction. At the same time, the median price went down from $388,000 to $365,000 for the same period, which is a reduction of 5.9%.

The Dewey- Humbolt area seems to have fared better during this same period, with total sales increasing from 29 in August 2021 to 36 in August 2022, an increase of 24.1% countering the trend in the rest of the market area. The median price also increased from $415,000 to $446,250 for the same period, showing strength in price appreciation of 7.5%, which is market leading performance.

Although days on market for the entire market area has increased about 200% from 11 to 33 days in August 2022 over August 2021, this statistic would still be considered a seller’s market.

Is it still a good time to sell? I would say yes, because prices have held fairly well and days on market is still fairly low. Is it a good time to buy? I would say yes, because prices have abated somewhat and interest rates are still relatively low, but they could go much higher before the economic turmoil we are experiencing now is over. Also, the total inventory of homes is up about double for the market area compared to a year ago, which makes the possibility of finding the right home much higher. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty, with offices in Prescott, Prescott Valley, and Cottonwood. To reach Nick or a highly qualified agent, please call 928-925-2023.

Filed Under: Columnists Tagged With: Better Homes and Gardens Real Estate | BloomTree Realty, Nick Malouff, Prescott Area Association of Realtors

The Housing Market: Is it a Buyer’s or Seller’s Market Now?

July 28, 2022 By quadcities Leave a Comment

How do we make sense of these interesting and unexpected numbers? Is this a buyer’s or seller’s market?

The housing market statistics in our area for the year-over-year period from the end of June 2021 to the end of June 2022 are very interesting and not what many might expect given the changes in interest rates and other economic turmoil.

As one would expect, the number of total listings has increased from 605 at the end of June 2021 to 923 at the end of June 2022, an increase of 52.6%. This is truly an eye-opening statistic given the tight market through the last several years. Another interesting statistic is that sold listings for June of 2022 came in at 363, compared to 472 for June 2021, a decrease of 23.1%.  However, on a year-to-date basis of 2022 over 2021, we find that total closed sales year to date were 2,155 for June of 2022 and 2,245 for YTD June 2021, a decrease of only 4%.

While much of the sales listing volume data might indicate a buyer’s market, we are seeing some not so expected results on the pricing and sales of homes. Despite the overall slight slowdown of sales, we find that the median list price has increased 19.78% year over year through June, from $455,000 to $545,000! The median sales price has also increased by 15.54%, from $390,000 to $451,000.

The average days on market has increased from 22 for June 2021 to 25 for June 2022. Although the number of listings has increased, homes are still selling at a pace that is only slightly slower than in 2021.

How do we make sense of these interesting and unexpected numbers? Is this a buyer’s or seller’s market? I would say the answer is both. For buyers, the increase in inventory is good news providing greater selection and a less competitive environment. Although interest rates have gone up, they are still historically low, so this could be a great time to buy, given that rates are likely to go up even more.

It has been stated many times that this housing market is not like 2008 where prices collapsed dramatically. This time around, we are still struggling to find enough inventory for all buyers but it is improving because of higher interest rates.

Sellers are finding that this is also a good time to sell, and many of those who were waiting for the opportunity to sell at the right time may have decided it is time to act. Therefore, we are seeing an increase in the number of listings year over year. So, it appears from the data that this market is becoming much more balanced, and it may very well be both a buyer’s and a seller’s market!

I am sure there will be more unexpected market statistics in the future as the worry about inflation and a possible recession have an impact on the behavior of both buyers and sellers.

The bottom line for the current market is that waiting for the bottom to fall out on home prices could be a losing strategy for buyers. And, waiting to sell your home to gain even more appreciation could result in a missed opportunity to take advantage of a fairly robust buyer environment while interest rates are still reasonable and prices are holding up. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-925-2023.

Filed Under: Columnists Tagged With: Better Homes and Gardens Real Estate | BloomTree Realty, Nick Malouff

Are We Experiencing a Housing Market Shift?

July 2, 2022 By quadcities Leave a Comment

In other words, the market is shifting somewhat to favor buyers a little more, but no one is talking about a market collapse right now.

The rising tide of inflation and interest rates are beginning to take their toll on home buyers’ and sellers’ sentiment.

Fannie Mae spoke to us in May when it reported a third consecutive month of record-low homebuyer sentiment, divulging in its latest National Housing Survey that fewer than one in five Americans think now is a good time to buy a home. A disheartening 17% of the 1,000 Americans polled by Fannie Mae last month believed it was a good time to buy. Times, they are a-changing.

Although homebuyer sentiment is down, there may be hope on the horizon, given the effort by the feds to hike interest rates and curb inflation.

Although the prospects of a housing bubble have been widely dismissed, a consensus has begun to form in which a mild recession later this year or in 2023 may bolster housing.

Among 114 experts polled earlier this month at Zillow, three out of four expect the economy to contract for multiple quarters as the Federal Reserve takes bigger steps to curb inflation.

While it’s unclear how a recession would affect the real estate industry, at least a few have suggested that, historically, such a turn would be less damaging to housing than the economy at large.

“Although the Great Recession was triggered by a housing crash, it’s an outlier in the grand history of recessions, which have often strengthened investment in housing due to its relative stability as an asset,” said Zillow economist Nicole Bachaud in Zillow’s report on the survey.

Meanwhile, although home prices are still rising, sellers are losing some of their advantage and, in some cases, are reducing their asking prices. That doesn’t mean prices are dropping, but it does suggest price growth will slow down and a more balanced market may return. What’s more, incentives and concessions are appearing like a sudden cloudburst, giving homebuyers the occasional upper-hand in some markets.

In other words, the market is shifting somewhat to favor buyers a little more, but no one is talking about a market collapse right now. Despite the downward pressure on housing prices because of higher interest rates, the fact remains that we simply have not built enough homes fast enough in the last decade to serve the needs of the nation – and that problem won’t likely vanish anytime soon. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty ,with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-443-8800.

Filed Under: Columnists Tagged With: Better Homes and Gardens Real Estate | BloomTree Realty, Nick Malouff

Were the Remodel Projects Taken on During the Pandemic Worth the Money?

April 29, 2022 By quadcities Leave a Comment

Americans spent $420 billion in 2020 on remodeling their homes.

According to a recently published report by the National Association of Realtors and the National Association of the Remodeling Industry, homeowners remodel for a variety of reasons and some projects produce a better cost recovery than others.

The report focused on the following items:

  • The typical cost of 19 remodeling and replacement projects, as estimated by members of the National Association of the Remodeling Industry (NARI).
  • How much appeal each project is likely to have for buyers, according to realtors.
  • How much realtors estimate that homeowners can recover on the cost of the projects if they sell the home.

Americans spent $420 billion in 2020 on remodeling their homes. Among NARI members, 90% found a greater demand in contracting in remodeling work during the COVID-19 pandemic. Sixty percent of NARI members cited the scale of the projects increased either in a larger project or remodeling more than one room because of the pandemic.

While most consumers (83%) cite they would have remodeled regardless of the pandemic, 86% of consumers report that remodeling one area of their home made them want to then remodel other areas of their home. When consumers remodel, it is to upgrade worn-out surfaces, finishes and materials (30 percent); to add features and improve livability (20%); and because it is time for a change (16%). Most consumers are pleased with the overall result and 57% would tackle the project the same way, while 35% would make a few different choices such as finishes or materials.

After remodeling, 84% of owners have a greater desire to be in their home. Sixty-nine percent have increased enjoyment in their home. Fifty-seven percent feel happy, and 39 percent feel satisfied when they see their completed project, with a typical Joy Score of 9.6.

Sixty-nine percent feel a major sense of accomplishment when they think of their completed project. Thirty-five percent of owners report the single-most important result from remodeling is better functionality and livability, 22% report durable and long-lasting results, materials and appliances, and 14% report beauty and aesthetics. Thirty-five percent of the owners hired a professional for the whole job, 28% hired the labor but purchased the materials, and 22% did the entire project themselves.

Thirteen percent contributed some do-it-yourself (DIY) labor. In some areas of the report, costs are not collected, as these projects are more likely to be done DIY or part of a larger project. The report covers both interior and exterior home improvement projects. This report provides a cost recovery estimate for representative remodeling projects. The actual cost of each remodeling project and cost recovery are influenced by many factors, including project design, quality of materials, location, age and condition of the home, and homeowner preferences. For the purpose of costs collected, NARI members were asked to expect the home was a 2,495-square-foot house — the average size according to U.S. Census data — and that the house is a post-1981-built home with no hidden issues. To ensure the most applicability, projects and materials represent standard or typical quality; a few projects feature “better-quality” materials. But there are no top-of-the-line projects.

There are many ways for homeowners to approach remodeling projects and even more ways to analyze the projects’ successful outcome. NAR calculated a Joy Score for each project based on the happiness homeowners reported with their renovations. There were numerous interior projects that received a perfect Joy Score of 10: paint entire interior of home, paint one room of home, add a new home office, hardwood flooring refinish, new wood flooring, closet renovation, insulation upgrade, and attic conversion to living area.

In comparing that dollar value to the estimated cost of each project provided by NARI members, a Recovered Project Cost percentage was calculated. For interior and exterior projects, these graphs show the results of the major cost recovery categories.

Surprisingly, it wasn’t always the most expensive projects that produced the best cost recovery results. Remodeled kitchens and bathrooms are also popular upgrade projects but they are expensive to undertake and don’t always provide for great cost recovery at sale time.

It you are looking to make some upgrades to your own home and you are considering selling any time soon, you may want to pay close attention to the results of this study. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-443-8800.

Filed Under: Columnists Tagged With: Better Homes and Gardens Real Estate | BloomTree Realty, National Association of Realtors, Nick Malouff

Housing Market Expected to Remain Strong for Years

April 2, 2022 By quadcities Leave a Comment

Millennials, investors and a lack of inventory are driving demand as interest rates rise.

Arizona’s real estate market remains “ridiculously hot,” says Arizona Association of Realtors President Gary Nelson. “We are seeing tremendous increases in home values in the last two years, increasing about 25% year over year in localized markets and about a 12% to 13% per year increase in median home prices.”

A lack of inventory, Millennials and investors are playing a huge role in the home-buying frenzy, say the experts, especially in scenic, tourism destinations.

Prescott, Sedona, Flagstaff and parts of Scottsdale are experiencing the biggest spike in the cost of homes, says Nelson, a longtime realtor and delegated-associate broker with Realty Executives in Flagstaff. He describes a typical real estate scenario like this: “A property recently listed in Flagstaff was built in 1975. It was a three-bedroom, two-bath, two-car garage, single- level house, nicely updated, 1,740 square feet. It comes on the market at $650,000. There were 11 showings and seven offers with bidding up over $800,000.”

Better Homes and Gardens Real Estate Bloomtree Realty CEO Nick Malouff has similar stories. He says Hillcrest, inside Forest Trails on the west side of Prescott, was built and sold two years ago in the high $600,000s. “Now, it would probably go in the high $800s – a $200,000 increase in two years.”

A home in Prescott’s Tenney Ranch sold for $589,000 in 2016. “It just went on the market for $1.2 million,” said Malouff. “This is what’s happened in pricing. And it’s not just new homes. An older home in Timber Ridge, built in the late ‘80s, was bought in 2015 for $289,000. It just sold for $639,000.”

Those looking for a 2,500-square-foot home might expect to pay a million dollars, if not more, in desirable areas, says Nelson.

In the North Scottsdale community of Terravita, a 2,400-square-foot home sold in February for $1,335,000. “The house had just sold for $1.1 million four months previous and the new owners did nothing to increase its worth,” stated a report from the Scott Gaertner Group.

It’s largely because of supply and demand, says Nelson. “Right now, we’re looking at maybe a one- to two-month supply in most parts of Arizona. In the higher elevations, there’s less than a month’s supply of [available] real estate at any one time.”

Currently, there are fewer houses on the market than there were last year, plus Arizona continues to feel the impact from The Great Recession when new construction nearly slowed to a halt.

“Builders have been unable to get product out of the ground quick enough. It’s taking about twice as long to build a home as it did a few years ago,” said Malouff. “The pandemic caused more stress and strain on labor and materials. Builders are fighting for the same crews and the cost of lumber and other commodities are all up.”

Also, Millennials have arrived on the scene.

“We didn’t think about the impact of that generation and that’s really what we’re seeing on a national level,” said Nelson. “The Millennial generation is as big as the Baby Boomers and we just did not plan for that many people entering the real estate market with new construction and building. The top end of the Millennial generation is about 40 years old.”

In addition, short-term rentals have become a “market disrupter,” says Wickenburg Deputy Town Manager and Economic Development Director Tim Suan. “The short-term vacation market, including VRBOs, Airbnbs and turnkeys only gained real popularity since 2015. What Uber did to the transportation industry is the same thing as what these short-term rentals are doing to the lodging industry as well as the housing market. Now, beautiful destinations such as the city of Page have hundreds of these short-term rentals in the community taking up housing stock. Just imagine that 25% or 30% of housing in your community is just completely disappearing from the market in such a short amount of time!”

Meanwhile, interest rates are expected to hover around 4% to 5% this year.

All of this has complicated efforts to provide affordable housing in Arizona communities, which is impacting small businesses’ ability to attract and retain workers. Thus, the Arizona Association for Economic Development  (AAED) calls affordable housing the No. 1 challenge facing Arizona cities.

Suan, who has held leadership roles with AAED, cites the Verde Valley region as a model for collaboration moving toward a sustainable solution. “Camp Verde, Cottonwood, Jerome and Sedona have formally partnered to address housing with shared resources. For example, Cottonwood and Sedona are both small communities but they partnered to hire a housing manager, which otherwise they wouldn’t be able to do on their own. With that housing manager, they are able to lead the implementation of some of their housing initiatives.”

In addition, Cottonwood has a housing assistance program and Camp Verde has an inclusionary zoning plan to allow for more dense housing, he says. “They’ve even attracted a low-income, housing tax credit program developer inside the community.”

At the same time, Wickenburg is creating a deed restriction program to keep homes affordable in perpetuity and Flagstaff is managing affordable rental units. “The city funds a home-buyer assistance program,” said Suan about Flagstaff. “They work closely with organizations like Housing Solutions of Northern Arizona to offer even more housing solutions.”

While the sizzling real estate market shows no signs of cooling, Nelson expects a strong sellers’ market for at least the next three years. “We don’t see that there’s a change in the market. We don’t feel that there’s a bubble and there won’t all of a sudden be an influx of inventory.”

However, he does not believe there will be as much of a spike in median home prices this year. “This is a good thing. We need to slow down, that’s for sure.” QCBN

By Bonnie Stevens, QCBN

For more about Arizona’s housing market, visit Zonie Living: Business, Adventure and Leadership with Bonnie Stevens at

https://starworldwidenetworks.com/episodes/lack-of-inventory-driving-real-estate-market-communities-seeking-housing-solutions-video.

Filed Under: Business, Local News Tagged With: Adventure and Leadership, Arizona housing market, Better Homes and Gardens Real Estate | BloomTree Realty, Bonnie Stevens, Housing Market, Zonie Living: Business

Knowing Your Options When Selling A House

March 29, 2022 By quadcities Leave a Comment

Make sure you understand the options available to you before you commit to a path.

These days, sellers have many options.

In just a few short years, it seems the options available to a homeowner who wants to sell his or her house has gone from either hire an agent or sell it yourself to so many options that most of us can’t keep up.

In addition to the traditional methods, home sellers can now choose from a range of iBuyer options, discount brokerages and home-swap programs. How do you decide which option will serve you best?

The good news is many of the options have merged, so you can have the best of all worlds. How so? Companies like Easy Knock will pay you up to 90% of the appraised value of your home up front (less fees) and they will pay the agent who is advising you in the process. If you need to be out quickly or you have another home you want to purchase, you can accomplish both by taking advantage of this option and have the advisor you need to help with both the sale and a new purchase. You may even lease back the home for up to a year in this program.

Knock is another company that basically allows you to swap your current home for another. In this program, Knock will give you up to 75% of your appraised value up front and purchase the home you want. According to Knock’s publications, you can buy a new home before listing your old house for sale, skip the hassle of living through house showings, pay only one mortgage at a time and build equity while you sell. You may also receive up to $25,000 of home prep work prepaid so your old house sells for the best price, and you avoid renting costs and moving twice.

Of course, if you have sufficient knowledge of the industry and don’t need an advisor, you can go the old-fashioned route of selling your home yourself. There are advantages and disadvantages to this approach. If you aren’t familiar with the selling contract process, critical mistakes could cost thousands of dollars. You may also miss out on giving your home the maximum selling exposure without the benefit of a brokerage or listing service.

Some companies are a hybrid of the sell-it-yourself versus sell-with-an-agent approach. They help you place your house on the market and provide limited services for a lower fee. However, you still need to have sufficient knowledge of the process to deal with the complexities of selling your home in this scenario. You also must be prepared to deal with many potential buyers and do most of the negotiating. The time commitment could be substantial, and the potential pitfalls are many.

Making A Good Choice

Overwhelmed by the options? You don’t have to make a hard-and-fast decision right away. Instead, talk to a few good agents, get quotes from several iBuyers, and scope out your local market. The programs listed above are only a snapshot of the available options in the selling process. Make sure you understand the options available to you before you commit to a path. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-443-8800.

Filed Under: Columnists Tagged With: Better Homes and Gardens Real Estate | BloomTree Realty, home selling, Nick Malouff

Why the Right Real Estate Agent is Critical for Home Selling or Buying Success

February 22, 2022 By quadcities Leave a Comment

The value of a good agent in these situations is hard to overstate. The wrong decisions could be very costly for both seller and buyer!

When the real estate market reaches the frothy levels we have experienced over the last few years, it is safe to say most homes will sell quickly. However, does that mean you don’t need a highly qualified agent to help navigate the complexities? The high demand for real estate in this market has actually made selling or buying a house more complicated than ever. It wouldn’t be possible to cover all of complexities here, but the following is a snapshot of what sellers and buyers are up against in today’s real estate market.

Counteroffers in Real Estate Sales

In our market, it is not uncommon for a seller to receive multiple offers to purchase a home soon after listing the property. A seller cannot respond to multiple offers by sending a simple counteroffer to each offer (buyer) without creating a potential legal issue. If more than one buyer accepts the counteroffer, each would have a legally binding contract, but the seller would not be able to sell the property to more than one buyer.

One common way of dealing with a multiple buyer offer situation is when the seller chooses to respond to several buyer offers simultaneously. In this case, the seller would make a “multiple counter offer” to some or all of the potential buyers.

Responding to a Multiple Counter Offer

If the seller receives one or more responses to a multiple counter offer (either accepting it or countering it), the seller must accept and sign one buyer response in order to make the contract ratified. What if all the buyers sign the multiple counter offer? If a buyer simply accepts the multiple counter offer, that does not mean the buyer has a valid contract. The seller has to accept the buyer’s acceptance of the multiple counter offer.

Once the purchase contract has been signed by both seller and buyer, neither can arbitrarily decide to cancel it. However, until the multiple counter offer is ratified by both buyer and seller, the seller can accept an offer which is not from anyone the multiple counter offer was sent to!

Responding to Multiple Offers

The seller and his or her agent must weigh the advantages and risks of each approach. Sending a multiple counter offer cancels the offers that were originally sent by the buyers. However, the multiple counter offer clearly announces that several offers are being considered. The buyers could respond in a multitude of ways; they may be motivated to improve their offer, they may decide to resubmit their original offer, or they may decide they don’t want to get in a bidding war and not respond at all.

A seller’s agent may decide to discuss each situation with the buyer’s agent to gain a better understanding of the situation for each buyer, which, in turn, could help the seller make a more informed decision.

The value of a good agent in these situations is hard to overstate. The wrong decisions could be very costly for both seller and buyer!

Multiple Options for Multiple Counter Offers

Just as each of the buyer offers submitted probably have different terms and prices, the multiple counter offer may have different terms and prices for each of the buyer offers. The seller may like the contingencies (or lack of contingencies) in one of the offers, but not the price. Conversely, the seller may like the price but not the contingencies. Even though it is a simultaneous offer made to several potential buyers, responding with different terms makes each buyer more likely to accept the multiple counter offer.

One seller strategy is to respond with different multiple counter offer terms, trying to get the best terms while also trying to play it relatively safe. The seller could respond to one of the offers with changes, which would probably be accepted, and reply to other offers trying to get the best result.

Conversely, after the seller’s agent discusses each buyer situation with the buyer’s agent, the seller may simply decide to accept the first response to the multiple counter offers if they are confident the fastest response is the most motivated buyer.

The experience and skill of the agents involved can dramatically affect the outcome. Clearly, both the buyer and seller need to employ the most qualified agent they can find to navigate the complexities of a hot real estate market to increase their odds of success and to gain the best possible deal. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-443-8800.

Filed Under: Columnists Tagged With: Better Homes and Gardens Real Estate, Better Homes and Gardens Real Estate | BloomTree Realty, BloomTree Realty, Hot Real Estate Market, Nick Malouff

Top Ten Trends Impacting Real Estate

November 26, 2021 By quadcities 1 Comment

The market is split into the haves and have-nots in terms of where capital is flowing.

Everyone wants to know where the real estate market is headed. There was big news in November when the real estate giant, Zillow, known for its consumer website and property value estimates, announced it would no longer be buying homes.

In the recent real estate runup, Zillow had turned from its core business model of providing real estate listings to gain consumer interest and then selling the consumer’s contact information to real estate agents and brokerages. Zillow had transformed into a real estate brokerage and, with deep-pocketed investors, was buying thousands of homes in 25 major market areas. Then, what seemed to be an abrupt pump of the brakes on new purchases, the company admitted the algorithm made it difficult to determine property values in three to six months during one of the strongest markets in history.

Zillow laid off 25% of its workforce and is arranging bulk sales of property to institutional investors that plan to put the properties on the market as rentals in a buy-and-hold strategy that will not dump much-needed inventory into the market for sale. There is also a shortage of rental property and that has created a spike in rental rates at a time when most renters have had a reduction in income.

The National Association of Realtors remained cautiously optimistic at its recent annual conference in San Diego, California. Buyer demand is expected to continue through 2022, although we have seen a tapering of multiple offers in our local market as sellers realize there is a limit to how high home prices can climb in one or two years.

Here are the top 10 trends impacting commercial and residential real estate as we move into 2022:

  1. Bifurcation of Capital Markets

The market is split into the haves and have-nots in terms of where capital is flowing.

Industrial real estate has been the darling of commercial investment, so much so that cap rates have fallen from 2% to 3%. Phoenix currently has 29 million square feet of new industrial space under construction and there is little supply in the Prescott area.

Multi-family investments are attracting capital but there are just not enough properties to satisfy the decade-high demand for multi-family rentals. The Phoenix metro area is on the list of top areas in rental demand and has the strongest apartment rental growth of 21% according to a NAR analysis of Costar data.

Ecommerce is booming but brick and mortar is gaining market share particularly in open air centers or strip malls anchored by a grocery store.

Restaurants overall are suffering, but we are seeing a demand for quick-service spaces that accommodate drive-thrus, and not just one, but two, three and even four drive-through lanes with small or non-existent dining rooms.

  1. The Need for Adaptive Re-Use

There are many empty big box stores and regional malls that need to be reimagined with the needs of the community in mind. In Prescott, we have seen hotels repurposed into apartments and that is the kind of thing developers and communities need to be working on together.

  1. Economic Structural Change

The U.S. economy is still strong internationally; however, the pandemic continues to cause uncertainty and we are experiencing inflation. Interest rates are so low that many see that as a sign of an economy not as strong as we would like it to be.

  1. Political Polarization

The country has been more focused on what divides us than on what we agree on and that has made it difficult to find solutions as the political aisle widens across the parties in Washington and at home. Real estate needs a strong, stable government to thrive.

  1. Housing Supply and Affordability

Costs of both for-sale and rental housing are rising much faster in secondary and tertiary markets like Prescott as people flee pricier gateway markets and are able to bid up residential prices past the point that local workers can afford.

Housing production overall has fallen short of new household formations as millennials approach their peak buying years and more baby boomers are aging in place. Many first-time homebuyers struggle with putting together their down payment, with only 28% receiving assistance from family or gifts.

About 80% of renters earn $36,000 to $60,000 annually and only 3% of construction of rentals in the past 10 years was for B and C class units, which would be considered affordable. Millions of moderate-to-lower income families are severely housing cost burdened, spending more than half of their income on housing.

  1. Infrastructure  

This is perhaps the biggest issue facing our Prescott area. Commercial agents working with companies looking to bring business and jobs to the area cite the distance from I-17, the lack of a rail line or port to deliver goods and even the cost to bring utilities to an area or upgrade water mains and sewer systems to increase demand on an area. Matt Fish from BHGRE Commercial said, “Modern and reliable infrastructure is an essential building block of commercial development. Without the roads to access it, without the power to run it, without the gas to heat it, and without water and sewer, it’s not profitable to build it. Our economy is changing as fast as our society. In order to continue attracting new jobs, economic opportunities and essential services, we must constantly invest in the infrastructure needed to ensure economic growth.”

There is also a social equity concern with infrastructure such as widely available broadband. As more shopping, work and school moves online, we have a great need for expanded service to rural areas.

  1. Logistics

The economics of the last mile of service are growing ever more important to the field of logistics as companies struggle to predict demand and manage their supply chains with significant challenges not always in their control.

  1. Environmental, Social Governance, or ESG

ESG is at a tipping point, especially in major market areas. A reported 82% of the people making the world’s real estate decisions are considering ESG. Most of our carbon footprint comes from the buildings we live in, work in and construct. Buildings without the proper retrofitting are falling out of favor in large funds as a preference for buildings that are newer and constructed with attention to clean energy are garnering the most attention and, of course, capital. This has not been a big concern for seekers of commercial real estate in our area, but it will be someday.

  1. Tech Acceleration

This year has taught us that adoption of tech is a must. Some technology solutions were adopted easily, especially those that aided us in working from home and doing more business in a contactless environment.

  1. Remote Work and Mobility 

A third of workers were able to work from home specifically because of the pandemic, according to the BLS, but there were sharp differences by educational level. More than half of workers with a college degree worked from home, while only 5% of those with a high school diploma did.

NAR economist Lawrence Yun believes we are only in the first innings of work-from-home options. We now have “WFA,” or Work From Anywhere! The great resignation is in sectors where employees cannot work from home – in retail, hospitality and entertainment/events.

Working from home is trending down as employees go back to work, but it remains elevated above pre-pandemic levels. Office occupancy levels are increasing but the vacancy rate is still high in metro areas. In downtown Prescott, we have had high demand for office space and there are almost zero available listings. QCBN

By Leslie Guiley 

Leslie Guiley is chief operating officer at Better Homes and Gardens Real Estate | BloomTree Realty, which includes BHGRE Commercial and she is an area ambassador with Inman News.

Filed Under: Columnists Tagged With: Better Homes and Gardens Real Estate, Better Homes and Gardens Real Estate | BloomTree Realty, BHGRE Commercial, BloomTree Realty, Inman News, Lawrence Yun, Leslie Guiley, real estate, real estate trends

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