Lucas Group News and Real Estate Report – Issue 1
Kyrene Corridor Home Values Increase Substantially in 2004
For a year that wasn’t supposed to be all that great, 2004 certainly turned out to be quite a surprise. Fueled by low interest rates, move up buyers and a frenzy of investors, the real estate market witnessed that hottest year in recent memory.
The market was especially advantageous if you just so happened to be a homeowner in the Kyrene Corridor. And the proof is in the numbers.
Roughly the same number of homes sold in 2004 as in 2003, but that’s were the similarities stop. The average time on the market declined but about 25%. The velocity of the market was astonishing as homes flew off the market at times with multiple offers and sales prices exceeding the asking price. It is reflected in the average list price to sales price ratio that jumped nearly one percentage point.
These numbers are all great but they all lead up to the one question that all homeowners care about most - “How much has the value of my house increased?”
Well, here’s the answer - most homeowners in the Kyrene Corridor realized appreciation in the range of 10-15%. Compared to recent history when most years have seen returns in the 5% range, this is great news for local homeowners.
Valley wide there were 102,115 sales of existing homes last year in metro
Prices are higher, too. The median price of a Valley resale home rose nearly 13 percent last year to an annual record of $174,815. And price increases aren't showing any sign of waning. The median cost of an existing house in the
The good news is that most experts are predicting another good year for real estate sales in
A Note From Jeff
2004 brought many new and exciting changes to ERA Lucas Realty Group
At the top of the list would have to be our affiliation with ERA in September. The relationship has been great for us, and we are excited by the many tools and benefits that we have been able to implement that allow us to give our clients a better real estate experience.
We are happy to have added ten new agents and several key staff members to our growing team. As we look forward to 2005, our goal is to continue our steady growth while maintaining our uncompromising commitment to customer service. If you are considering a career in real estate, please give us a call.
We would like to take this opportunity to thank all of our clients and Kyrene Corridor residents who helped make 2004 our best year ever. We sold a home every day!
Please consider ERA Lucas Realty Group if you or someone you know is considering a move in 2005.
Jeff
Babysitter/CPR Classes
The Lucas Realty Group sponsored Babysitter/CPR classes are back by popular demand. This will be our tenth year of this hugely successful campaign to help make our local neighborhoods a little bit safer.
The all day classes cover growth and development, age appropriate play, children’s safety issues, babysitting techniques, basic first aid and CPR for infants, children and adults. The classes are open to kids ten and older
The cost of the class is $30.00. Upon completion of the class, kids will be a Certificate of Completion.
The classes are taught by Patti Luttrell RN, MS. Patti has been involved in pediatric nursing and a variety of healthcare and community education for the past 20 years. She is a certified American Heart Association CPR instructor.
Classes run from 8:00-5:00. Scheduled classes are for April 2nd and May 14th. For more information or registration please call (480) 496-7100.
Lucas Group News and Real Estate Report – Issue 2
The Move-Up Juggling Act
Simultaneously buying one home and selling another can be tough. In the current market it's usually a deal killer to include in your offer to buy a new home, a contingency to sell your existing home. Sellers will simply take their pick of offers not burdened by such a contingency.
On the other hand, if you sell your existing home first without signing for a new one, you could wind up temporarily homeless or spending exorbitant amounts on hotel rooms or other high-priced temporary quarters. You do have some alternatives.
The best case buy and sell scenario is for those who can afford to own two homes -- if only temporarily. Those who can are able to put market cycles to work for them and actually reap a financial return in the process.
For those who can't afford to own two homes, a more common move-up strategy is what's called a "rent-back." In a rent-back, the seller sells the home but stays put, paying rent to the new buyer. The rent is typically the same as the new buyer's mortgage payment, including principle, interest, taxes and insurance. The deal is useful when the seller is waiting for a newly built home or knows he or she is about to close or enter escrow on another home.
Rent backs can be as long as 60, 90 days or longer -- but not much -- whatever is agreeable to both parties. The contracts, which can be an addendum to the sales contract, are written like month-to-month rental contracts with a 30-day notice of cancellation should the move-up buyer's new home become available sooner than expected.
The approach works best in hot markets, when inventories are low, or during peak buying periods. During these times, sellers typically have fewer problems finding buyers willing to put up with a move-in delay, especially when the seller is effectively paying the mortgage during the rent-back period.
The rent-back also eliminates the need for a sale contingency, which puts the move-up seller's offer to buy in the best light. While the sale leg of the transaction may not be a problem in a hot market, the key to making the rent-back work, of course, is finding a new home to buy within the rent-back period -- perhaps not an easy task in a hot market. Move-up buyers should be pre-approved for a guaranteed loan amount for their new home and if no specific home is in sight, should attempt to determine, in advance of signing a rent back, if a move-up home is attainable.
Kyrene Corridor Real Estate Market Continues Its Torrid Pace
The prices continue to skyrocket as the inventory of homes for sale continues it’s downward trend. We didn’t know what to expect for 2005, but so far it appears to be as good a market or even better than last year. Some of the prices that we have seen in the Kyrene Corridor over the past two months are mind boggling.
As of print time, the number of homes for sale in the Kyrene Corridor was 24, which represents a fall off of nearly 85% from this time last year.
Prices are rapidly appreciating. Last month’s newsletter stated that the local area saw appreciation of 15% in 2004 compared to 2003. However, we ran stats for December thru February of last year and then compared them to the same time frame this year, and the median price in the 85284 and 85226 zip codes is up 25%.
Warner Ranch Garage Sale
The 10th Annual Warner Ranch Garage Sale will be held Saturday, March 26 starting at 7:00 AM.
ERA Lucas Realty Group is sponsoring the event and will handle all of the organizing of advertisement and signage.
Please call 940-7100 for more information or to register.
A Note From Jeff
It seems that the news continues to repeat itself as the real estate market defies the odds. We don’t see any end in sight and actually things seem to be heating up compared to last year.
It is now more important than ever to have a knowledgeable Realtor in your corner. Whether you’re selling, buying or building, this market requires that your Realtor possess special skills in order to navigate their client through this unique real estate market. How your Realtor deals with proper pricing, multiple offer situations, appraisal issues, inspection inquiries, and numerous other issues of due diligence required will determine what type of transaction you will experience.
At ERA Lucas Realty Group, we pride ourselves on our level of service and expertise - characteristics that allow us to adapt to the changing markets and consistently create excellent real estate experiences for our clients.
Babysitter/CPR Classes
ERA Lucas Realty Group sponsored Babysitter/CPR classes are back by popular demand. This will be our tenth year of this hugely successful campaign to help make our local neighborhoods a little bit safer.
The all day classes cover growth and development, age appropriate play, children’s safety issues, babysitting techniques, basic first aid and CPR for infants, children and adults. The classes are open to kids ten and older
The cost of the class is $30.00. Upon completion of the class, kids will be a Certificate of Completion.
The classes are taught by Patti Luttrell RN, MS. Patti has been involved in pediatric nursing and a variety of healthcare and community education for the past 20 years. She is a certified American Heart Association CPR instructor.
Classes run from 8:00-5:00. Scheduled classes are for April 2nd and May 14th. For more information or registration please call (480) 496-7100.
ERA Receives Buyer Award
ERA Real Estate announced it is the recipient of the 2004 J.D. Power and Associates Award for "Highest Overall Satisfaction For First Time Home Buyers Among National Full Service Real Estate Firms."
"We are extremely proud to be honored by such a well-respected organization as J.D. Power and Associates," said Brenda W. Casserly, president and COO for ERA Franchise Systems, Inc. "Buying a home for the first time can be a rather daunting experience. Being ranked highest in customer satisfaction with first time buyers illustrates the tremendous care we take to help our clients, both first time and repeat buyers alike, find the ideal home while making the buying process as enjoyable as possible."
According to a recent survey by the National Association of Realtors, first time homebuyers currently account for 40 percent of all home purchases in the
Lucas Group News and Real Estate Report Issue 3
Local Home Values Up 33% in ‘05
Wow, what a start to 2005! Demand is as at an all time high and supply is at an all time low. Combined, these two factors are creating the perfect storm for substantial appreciation in local home values.
Here are just a few of the highlights:
• For the time period of January 1st thru May 11th, medium home prices increased 33% in 2005 when compared to 2004. What’s 33% of the value of your home? If your home was worth $300,000 last year then chances are that it is worth $400,000 today!
• The number of homes sold in 2005 has decreased by upwards of 30%.
• The average list price to sales price ratio increased 1.5 percentage points to 99% in 85284.
• The average list price to sales price ratio increased 2.5 percentage points to 101% in 85284.
• The average time that a home stays on the market has decreased by 14 days in 85284 and by 30 days in 85226.
• There are currently 39 homes for sale in 85284 and 85226. This is down from 124 home this time last year and 222 in 2003.
• The medium price of homes that are currently pending sale is $395,000 in 85284 and $257,000 in 85226. If these close at or near the asking price then the level of appreciation will approach 40%.
Bottom line - Now is a great time to sell or refinance your home. We can help you, no matter what your real estate needs are. Contact ERA Lucas Realty Group or Lucas Mortgage today at 480-496-7100.
Should You Prepay Your Mortgage
Does it make sense to prepay your mortgage, or buy real estate with a big downpayment?
Some people say 'put no money down', 'do not prepay your mortgage', 'do not give money to the bank', 'refinance and reinvest your equity outside the house'. Other people say 'put money down', 'pay more and apply towards the principal', 'have your house debt free'. Who is correct?
You can buy today with no money down and use your cash elsewhere. Also, the money used to prepay a loan can just as easily be devoted to other investments, including some with higher effective yields.
Buying with no money down in a rising market can be -- with caveats -- attractive. The caveats? First, while home values nationwide have been soaring during the past few years, there are no guarantees that either prices or rental rates will eternally rise. Second, less down means more debt, and more debt means higher monthly mortgage payments. That's not a problem -- unless income declines.
The leverage gained when real estate prices are rising, works in the opposite direction when prices and rentals stagnate or actually decline. And despite recent value increases, declines are possible. The balance between risk and reward has largely favored those who have maximized risk in the past few years.
Prepayments - There are surely circumstances where it makes sense to prepay a mortgage -- but not always. For instance, before prepaying a mortgage it's better to first pay off high-interest debt such as credit cards. Prepaying a mortgage often works because most people in this country are not rich. For most, mortgage amortization -- paying down principal over time -- and simple real estate ownership are some of the surest ways to increase net worth over time, lower monthly living costs, and increase inter-generational wealth.
For most people, putting an extra $50 a month into a mortgage means collecting change at the end of the day, or not dining out once a month. In effect, prepayments are simply a better way to use money that might otherwise disappear.
No less important, for most people the choice is not an absolute, either/or decision to either place more money in a mortgage or to invest in stocks, bonds, or whatever. Instead, the practical choice is to use some money for mortgage prepayments and other money for other purposes.
At six percent, a $100,000 mortgage costs $599.55 a month for principal and interest over 30 years. Add $50 a month and the loan will be repaid in 24.54 years. The potential interest bill will go from $115,838 to $91,292 -- a savings of $24,546.
In the end there is no right or wrong. There are pros and cons to each scenario based upon the specifics of your situation.
Lucas Group News and Real Estate Report Issue 4
Local Market Stays Strong But Shows Signs Of Possible Slowing
Unless you have been vacationing in
• The median sale price in the Valley is now at $250,000 - up 43% from a year ago.
• The median sales price in June for 85284 was $380,000, up 36% from $280,000 a year ago. The number of homes sold decreased from 53 in June 2004 to 30 in June of 2005.
• The median sales price in June for 85226 was $270,000, up 48% from $182,000 a year ago. The median price per square foot jumped from $106 in June of 2004 to $168 in June of 2005, representing a 58% increase. The number of homes sold decreased from 120 to 86.
These numbers lead most observers to comment that such rates simply can not be sustained indefinitely. Still, after months of such warnings, you could be forgiven for wondering if there will ever be an end to this run-up in pricing.
The real estate data released for June gives us some reason to think that the market has begun to slow a bit. The number of available homes for sale this year has risen from 8,598 in April, to 9,451 in May, and 11,134 in June.
As the number of homes for sale increases the backlog of buyers begins to ease, homes stay on the market longer, and the number of competitive bids decreases. The market begins to move away from conditions that dramatically favor sellers and towards a more stable and balanced condition that allows buyers to take a more reasoned approach to the home-search process.
Bear in mind that the housing market is a very complex system, and it is not always possible to tease out all the factors that will influence its future direction. Predicting real estate trends is about as scientific an endeavor as predicting where the stock market is heading. That being said, we can look at today’s numbers and make an educated guess about the future.
Our guess is that the local market will cool a bit, but will remain a seller’s market through 2005. We do not foresee a real estate pricing bubble at this point in time due to following factors:
• The standing inventory of homes for sale is still very low at around 11,000. This number is up from a low of around 5,000 earlier this year, but is still well below a couple years ago when the inventory of homes was over 20,000.
• Mortgage interest rates are still below six percent.
• The Valley’s population is growing.
If any of these factors change, or if we have any dramatic political or economic news from then the direction of the market could change rapidly.
If you are thinking of buying or selling in the next few months, we would be happy to talk with you and discuss how the changing market conditions might affect your plans.
It’s Still A Great Time to Refi
You already know about the great service that ERA Lucas Realty Group provides. What you may not realize is that Lucas Group also has an in-house mortgage company, Lucas Mortgage, with the same great service and professionalism you have come to expect from the Lucas team.
We wanted to share some mortgage rate information with you. Rates are extremely low, and now is the time to refinance or sell and upgrade. Current 30-year fixed rates are in the mid five percent range. If you want cash back for debt consolidation, a new car, kids’ college, etc - then you can select from many of our loan products. Here are some recent examples:
We have a client right now who is refinancing his primary residence. His current mortgage payment is $1075.00 (which includes that nasty Private Mortgage Insurance). He also has a new Corvette that costs him $380.00 a month. With his refinance, he is pulling cash out to pay off the balance on the Corvette and his new mortgage payment will be only $1023.00, or a total savings of $432.00 a month.
We have another client who currently pays $1225.00 for his mortgage. He is pulling cash out to pay off all his credit cards which cost him $650.00 in monthly payments. His new mortgage payment will be $1339.00, so his net savings is $536.00 a month on bills, plus he saves on the high interest credit card companies charge.
So you can see now is the time to consider a move and/or reduce debt!!!! Please call us with any questions you may have or to get pre-qualified and see how much money you can be saving each month!!!
Contact Lucas Mortgage today at 480-940-0922 or go online at LucasMortgage.com.
A Note From Jeff
We are proud of what we have built at ERA Lucas Realty Group. We have grown from a two person operation ten years ago to over 40 people today.
While we have grown and undergone many changes, some things are so ingrained in our value system that they will also shine through.
• One of them is our strong company culture. Working at ERA Lucas Realty Group is like being a part of a family, and we support each other towards a common goal of excellence
• Another value that has been bedrock of our foundation is our dedication to service. We are different from most real estate agencies in that we have created an infrastructure of service related employees around our agents that allow them to give unparalleled service and focus solely upon the customer.
• The third value that remains steadfast is our commitment to education and training. We know that our agents are among the most knowledgeable in the business because we are constantly keeping up-to-date on market trends and contract training.
• That brings us to technology. Since day one, we have been among the industry leaders when it comes to using technology to deliver a superior experience for our agents and their customers.
Lucas Group News and Real Estate Report Issue 5
Local Home Prices Up 54%
But increased supply of homes for sale could spell end of the hot market
The median price for homes that have sold in the Kyrene Corridor appreciated an astounding 54% from third quarter 2004 to third quarter 2005.
This means that if your home was worth $300,000 last year then it is probably worth about $450,000 today! This gives many homeowners that ability to sale and cash out or tap into some equity to remodel and or pay off debt. And that is exactly what many homeowners have done this year with near record sales expected.
The numbers are really quite staggering coming off a decade or 5-7% annual gains. The median sales price in 85284 went from $292,000 to $450,000 while 85226 experienced an increase of $102,000 to $290,000.
The number of local homes that sold and the average time to sell a home both decrease substantially. While the average price per square foot and the average list price to sales price ratio both increased.
The hot market does appear to be coming to an end as the inventory of homes for sale has increased substantially this year. Currently, there are 18,683 homes for sale in the Valley and 159 for sale in the Kyrene Corridor. Both of these numbers are up over 100% from July of this year. The increase of inventory may seem dramatic but it actually returns the market to where it was before 2004.
Home sellers will have to rethink their pricing strategies as the laws of supply and demand make it more advantageous for buyers. Over the past year, home sellers have been able to successfully price their homes well above recent comparable sales. This strategy will simply not work in a balanced market where buyers have many more homes from which to choose.
Most experts are predicting a moderating of homes sales and prices. Current trends don’t hint at prices depreciating but rather a soft landing and a return to a balanced market.
If you’re thinking about selling or refinancing your home or if you’re just curious about the value, call ERA Lucas Realty Group today, 480-496-7100.
Lucas Community Friendly Activities
Kyrene Schools Harvest Festival - It has become a tradition for ERA Lucas Realty Group to support many of the local Kyrene elementary schools as they put on their annual Harvest/ Fall Festivals. We are happy to help out and make these events fun for students and parents alike.
Babysitter/ CPR Classes Offered - It’s a great time to enroll in the ERA Lucas Realty Group sponsored Babysitter/CPR classes.
The classes cover babysitting techniques, basic first aid and CPR for infants, children and adults. The classes are open to kids ten and older. The cost of the class is $36.00. Upon completion of the class, kids will receive a Certificate of Completion.
The classes are taught by Patti Luttrell RN, MS. Patti has been involved in pediatric nursing and a variety of healthcare and community education for the past 20 years. She is a certified American Heart Association CPR instructor.
Classes run from 8:30-4:30. Upcoming classes are scheduled for March 4, June 3, July 8 and August 5. For more information or registration please call (480) 940-7100.
Hurricane Katrina Relief - Many of our agents gave to Habitat for Humanity and the Red Cross. We were happy to match their contributions so that together we could help the hurricane victims.
