Kitchen and bathroom remodels should come with built-in functionality and accessibility features that match today's lifestyles.
Likewise, when buying a new home, consider the positive resale potential attached to accessibility and functionality, according to the American Institute of Architects' (AIA) "Home Design Trends Survey" for the fourth quarter of 2010.
Kitchens
Half of architects AIA surveyed said special function areas within the kitchen remain popular, especially pantry space and recycling centers with only a few architects reporting a decrease in the demand for the special function areas.
As in other studies, the architects said the growing use of electronic devices is pushing demand for recharging areas, as well as space and place for general computer work.
Making space for electronics is also part of a trend to integrate kitchens with family living rooms to create more of an all-purpose "great room", AIA reported.
Sustainability is also popular in the kitchen. Nearly half of residential architects said renewable material flooring (bamboo or cork) and countertops (concrete, bamboo) are gaining in popularity. Only a small percentage indicated that consumer interest in sustainable items was decreasing.
Drinking-water filtration systems and natural wood cabinets were also showing gains in popularity.
Upscale kitchen items were a no sale as architects saw falling demand for double islands for working or eating, wine storage areas, composting bins, pet feeding and grooming areas, duplicate or upscale appliances, and natural stone countertops.
In contrast with other studies pointing to a smaller-is-better approach, more architects said the size of kitchens is increasing (22 percent), compared to those who said the kitchen is downsizing (16 percent). The vast majority, however (62 percent) said they see no change in size of the kitchen, which has decreased in size during the housing bust.
Bathrooms
Most architects (67 percent) also saw no demand for larger bathrooms, 20 percent did see demand for an increase in size and 13 percent saw demand for a decrease in size.
Universal design features were at the top of the demand list of bathroom design elements. Universal design features promote accessibility for people of all ages, especially older people and people with disabilities. The demand for universal features has been high for several years as the nation's population ages.
Architects say water conserving toilets, both those directly using less water as well as those with a dual flush option, topped the list of features in demand, followed by radiant heated floors, doorless showers and hand showers. LED lighting was another popular bathroom product with growing demand.
As with kitchens, upscale bath items (steam showers, towel warming racks or drawers, sensor operated faucets) were waning in popularity.
Published: May 5, 2011
by Broderick Perkins
Thursday, May 5, 2011
Inventory of available homes is trending down in the Greater Phoenix area
Inventory of available homes is trending down dramatically; sales are approaching record levels; and as a result we see what you would expect: both price stability and some upward movement in the most competitive market sectors.
From the Cromford Report Commentary May 3rd: Market Summary for the Beginning of May
Almost all the market indicators for Greater Phoenix have been strongly improving since the fourth quarter of 2010. Let's look at what has happened since then using the numbers for all areas and types of ARMLS residential resale listings.
• Active Listings (Total): Peaking on November 20 at 45,960, supply has since declined by over 25% to 34,364
• Active Listings (excluding those in AWC status): Peaked on November 21 at 39,813, has since declined by over 28% to 26,764
• Pending Listings: Reached a low point of 8,695 on January 2, has since risen 55% to 13,467
• Sales per Month: Reached a low point of 6,195 on January 31, has since risen 49% to 9,237 today.
• Sold % List Price: Reached a low point of 94.23% on December 31, has since risen to 95.57% today.
• Days Inventory: Peaked at 188 on November 21, has since fallen 28% to 135
• Months Supply: Rose to 6.8 on October 6, has since fallen 48% to 3.5
• Listing Success Rate: Reached a low point of 53% on January 31, has since risen to 69% (means almost 3 out of 4 deals are now closing - MB)
• Cromford Market Index: Hit a low of 85.2 on September 28, has since recovered strongly to 123.1
• Contract Ratio: Low point of 38.0 on January 1, now more than doubled to 78.7
All of these led us to conclude we were participating in a strong recovery, but until April sales prices stubbornly refused to follow suit and merely stabilized. However during the last ten days of April average price per sq. ft. started increasing in most (but not all) sectors.
We can now declare January 22, 2011 to be an official pricing bottom for the overall ARMLS market (all areas & types), with average sales price per sq. ft. at a low level ($80.74 per sq. ft.) we are unlikely to see again. As a reminder we experienced another initial bottom in $/SF prices on April 6, 2009, followed by a rebound that lasted over a year but collapsed along with the expiry of the tax credit incentive in 2010. Those waiting for the second bottom just missed it. It is not impossible that we see a third bottom at some point. However prices are unlikely to weaken while the indicators above continue to improve. At the moment we are looking at a W shaped recovery pattern and prices are starting to move up the second upward leg.
We should point out that the sales price per sq. ft. for lender-owned homes is still making fresh lows this week. This is not bringing down the overall $/SF because lender owned homes are gradually falling as a percentage of the total while normal sales are taking a greater share. For example in April 44.6% of sales were REOs compared with 46.8% in March. Normal sales increased their share from 34.0% to 35.7% while short sales, whose sales $/SF prices have been rising slightly, increased from 19.2% to 19.8%.
Those looking for bargain buys among the single family detached REOs should note that the list price average is now $71.22 per sq. ft. up from its low point of $68.77 per sq ft just six weeks ago on March 21. Short sale and pre-foreclosure single family detached list pricing has held steady for several months at around $79 to $80, while normal list prices for these homes have surged from $185.96 on September 26 to $196.53 today.
The recent increase in average sales pricing was quite sharp and was emphasized by greater participation from the luxury market. It is a little known fact that $/SF pricing for homes above $300,000 has been moving gently higher since October/November 2010 and sales volumes are on the rise. We should expect increased price volatility over coming months as the mix of sales varies. Remember that August is historically a weak month for pricing.
We will report which sectors have shown the greatest price gain shortly, along with those sectors that have yet to move higher.
In the world of foreclosures, the big news is the rapid fall of new notices of trustee sale. April delivered only 4,418 new notices in Maricopa County of which 4,200 were residential. This is the lowest monthly total since December 2007, nearly three and a half years ago. Completed trustee sales in Maricopa County fell back from the March high as expected, but at 4,709 (4,513 of which were residential) they far outstripped the new notices for the first time ever. This signals a significant phase change in the foreclosure tsunami as the activity starts to decline more rapidly. We are now seeing huge reductions in the pending foreclosure counts, with active notices at the end of April reading 32,203 which contrasts with 51,466 at the end of 2009 and 41,478 as recently as the start of 2011.
Not quite everything is good news. The monthly sales total for April is currently standing at 9,366. Normally this would be very impressive, but after March's 9,995 this suggests demand has reached a peak and fallen back just a bit, and this is reflected in the recent decline of the Cromford Demand Index™. It is the continued reduction in supply that is most encouraging and inventory now stands at just 3.5 months. To put that into context, the average between 2001 and 2011 has been 5.9 months with a minimum of 0.5 (in March 2005) and a maximum of 20.6 (in January 2008). It looks as though the Cromford Supply Index™ will shortly fall below 100 for the first time since November 2005. If you are buying right now, do not go out there expecting to find the widely reported "glut of foreclosed homes for sale". That disappeared several months ago.
The pending $/SF is also not behaving very well. This is due to the unusual market we are in. Short sales constitute 29% of pending listings but only 20% of sales and they tend to remain pending for long periods, often failing to close at all. Normal listings are only 27% of pending listings but comprise nearly 36% of sales, and they tend to close fast. These factors conspire to make the average list $/SF of pending listings significantly lower than the actual $/SF of monthly sales. The mix represented by the pending listings is not currently a true reflection of what will close escrow and that gets increasingly the case as you look out further into the future. Price forecasts (including ours) that are based on measuring pending listings are therefore coming in more pessimistic than they would normally and we recommend that you should be wary of them until the market reverts to a more normal situation.
The big question now is: will higher prices lead to weakening of demand or will the sharp reduction in supply cause buyers to get more aggressive in their offers to ensure they don't miss out on the last chance to capture homes at bargain prices?
For the answer - watch this space!
From the Cromford Report Commentary May 3rd: Market Summary for the Beginning of May
Almost all the market indicators for Greater Phoenix have been strongly improving since the fourth quarter of 2010. Let's look at what has happened since then using the numbers for all areas and types of ARMLS residential resale listings.
• Active Listings (Total): Peaking on November 20 at 45,960, supply has since declined by over 25% to 34,364
• Active Listings (excluding those in AWC status): Peaked on November 21 at 39,813, has since declined by over 28% to 26,764
• Pending Listings: Reached a low point of 8,695 on January 2, has since risen 55% to 13,467
• Sales per Month: Reached a low point of 6,195 on January 31, has since risen 49% to 9,237 today.
• Sold % List Price: Reached a low point of 94.23% on December 31, has since risen to 95.57% today.
• Days Inventory: Peaked at 188 on November 21, has since fallen 28% to 135
• Months Supply: Rose to 6.8 on October 6, has since fallen 48% to 3.5
• Listing Success Rate: Reached a low point of 53% on January 31, has since risen to 69% (means almost 3 out of 4 deals are now closing - MB)
• Cromford Market Index: Hit a low of 85.2 on September 28, has since recovered strongly to 123.1
• Contract Ratio: Low point of 38.0 on January 1, now more than doubled to 78.7
All of these led us to conclude we were participating in a strong recovery, but until April sales prices stubbornly refused to follow suit and merely stabilized. However during the last ten days of April average price per sq. ft. started increasing in most (but not all) sectors.
We can now declare January 22, 2011 to be an official pricing bottom for the overall ARMLS market (all areas & types), with average sales price per sq. ft. at a low level ($80.74 per sq. ft.) we are unlikely to see again. As a reminder we experienced another initial bottom in $/SF prices on April 6, 2009, followed by a rebound that lasted over a year but collapsed along with the expiry of the tax credit incentive in 2010. Those waiting for the second bottom just missed it. It is not impossible that we see a third bottom at some point. However prices are unlikely to weaken while the indicators above continue to improve. At the moment we are looking at a W shaped recovery pattern and prices are starting to move up the second upward leg.
We should point out that the sales price per sq. ft. for lender-owned homes is still making fresh lows this week. This is not bringing down the overall $/SF because lender owned homes are gradually falling as a percentage of the total while normal sales are taking a greater share. For example in April 44.6% of sales were REOs compared with 46.8% in March. Normal sales increased their share from 34.0% to 35.7% while short sales, whose sales $/SF prices have been rising slightly, increased from 19.2% to 19.8%.
Those looking for bargain buys among the single family detached REOs should note that the list price average is now $71.22 per sq. ft. up from its low point of $68.77 per sq ft just six weeks ago on March 21. Short sale and pre-foreclosure single family detached list pricing has held steady for several months at around $79 to $80, while normal list prices for these homes have surged from $185.96 on September 26 to $196.53 today.
The recent increase in average sales pricing was quite sharp and was emphasized by greater participation from the luxury market. It is a little known fact that $/SF pricing for homes above $300,000 has been moving gently higher since October/November 2010 and sales volumes are on the rise. We should expect increased price volatility over coming months as the mix of sales varies. Remember that August is historically a weak month for pricing.
We will report which sectors have shown the greatest price gain shortly, along with those sectors that have yet to move higher.
In the world of foreclosures, the big news is the rapid fall of new notices of trustee sale. April delivered only 4,418 new notices in Maricopa County of which 4,200 were residential. This is the lowest monthly total since December 2007, nearly three and a half years ago. Completed trustee sales in Maricopa County fell back from the March high as expected, but at 4,709 (4,513 of which were residential) they far outstripped the new notices for the first time ever. This signals a significant phase change in the foreclosure tsunami as the activity starts to decline more rapidly. We are now seeing huge reductions in the pending foreclosure counts, with active notices at the end of April reading 32,203 which contrasts with 51,466 at the end of 2009 and 41,478 as recently as the start of 2011.
Not quite everything is good news. The monthly sales total for April is currently standing at 9,366. Normally this would be very impressive, but after March's 9,995 this suggests demand has reached a peak and fallen back just a bit, and this is reflected in the recent decline of the Cromford Demand Index™. It is the continued reduction in supply that is most encouraging and inventory now stands at just 3.5 months. To put that into context, the average between 2001 and 2011 has been 5.9 months with a minimum of 0.5 (in March 2005) and a maximum of 20.6 (in January 2008). It looks as though the Cromford Supply Index™ will shortly fall below 100 for the first time since November 2005. If you are buying right now, do not go out there expecting to find the widely reported "glut of foreclosed homes for sale". That disappeared several months ago.
The pending $/SF is also not behaving very well. This is due to the unusual market we are in. Short sales constitute 29% of pending listings but only 20% of sales and they tend to remain pending for long periods, often failing to close at all. Normal listings are only 27% of pending listings but comprise nearly 36% of sales, and they tend to close fast. These factors conspire to make the average list $/SF of pending listings significantly lower than the actual $/SF of monthly sales. The mix represented by the pending listings is not currently a true reflection of what will close escrow and that gets increasingly the case as you look out further into the future. Price forecasts (including ours) that are based on measuring pending listings are therefore coming in more pessimistic than they would normally and we recommend that you should be wary of them until the market reverts to a more normal situation.
The big question now is: will higher prices lead to weakening of demand or will the sharp reduction in supply cause buyers to get more aggressive in their offers to ensure they don't miss out on the last chance to capture homes at bargain prices?
For the answer - watch this space!
Saturday, April 30, 2011
Cheaper to Buy Than Rent? In Most Cities, 'Yes'
Americans in 39 of the country’s 50 largest cities are finding it’s cheaper to buy a home than rent one, according to Trulia’s second quarter Rent vs. Buy index. In its index, Trulia compared the cost of buying and renting a two-bedroom apartment, condo, or town home in the 50 largest cities in the country.
When compared to the previous quarter, buying a home has become even more affordable than renting. Trulia found last quarter that in 72 percent of the cities it was better to buy than rent, but this quarter the number has grown to 78 percent of the cities studied.
Rising rents, falling home prices, and low mortgage rates have made home ownership make more financial sense in most areas of the country, according to Trulia.
"With home prices nearing a double dip and more foreclosures expected to flood the housing market over the next two years, the decision between renting and buying a home across most of the country has clearly moved in favor of buying," said Ken Shuman, Trulia's spokesperson, in a statement.
The cities where renting was a less costly option than home ownership were in New York, Fort Worth, Texas, and Kansas City, Mo.
Where It’s Cheapest to Buy vs. Rent
The following is a list of the top 12 cities where it’s cheapest to buy a home than rent.
1. Las Vegas, NV
2. Phoenix, AZ
3. Arlington, TX
4. Fresno, CA
5. Miami, FL
6. Mesa, AZ
7. Jacksonville, FL
8. Sacramento, CA
9. Detroit, MI
10. Omaha, NE.
11. San Antonio, TX
12. El Paso, TX
Source: “Trulia Reveals Trend Towards Homeownership Where Affordability to Buy Versus Rent Extends to Almost Four in Five Major U.S. Cities,” Trulia.com (April 28, 2011)
Ps. To calculate this and be the expert in your own markets of interest use the simple formula I've posted in my October blog -- see Price-to-Rent-Ratio:
When compared to the previous quarter, buying a home has become even more affordable than renting. Trulia found last quarter that in 72 percent of the cities it was better to buy than rent, but this quarter the number has grown to 78 percent of the cities studied.
Rising rents, falling home prices, and low mortgage rates have made home ownership make more financial sense in most areas of the country, according to Trulia.
"With home prices nearing a double dip and more foreclosures expected to flood the housing market over the next two years, the decision between renting and buying a home across most of the country has clearly moved in favor of buying," said Ken Shuman, Trulia's spokesperson, in a statement.
The cities where renting was a less costly option than home ownership were in New York, Fort Worth, Texas, and Kansas City, Mo.
Where It’s Cheapest to Buy vs. Rent
The following is a list of the top 12 cities where it’s cheapest to buy a home than rent.
1. Las Vegas, NV
2. Phoenix, AZ
3. Arlington, TX
4. Fresno, CA
5. Miami, FL
6. Mesa, AZ
7. Jacksonville, FL
8. Sacramento, CA
9. Detroit, MI
10. Omaha, NE.
11. San Antonio, TX
12. El Paso, TX
Source: “Trulia Reveals Trend Towards Homeownership Where Affordability to Buy Versus Rent Extends to Almost Four in Five Major U.S. Cities,” Trulia.com (April 28, 2011)
Ps. To calculate this and be the expert in your own markets of interest use the simple formula I've posted in my October blog -- see Price-to-Rent-Ratio:
Monday, March 21, 2011
Arizona offers a unique real estate opportunity
Manhattan real estate diva Barbara Corcoran recently had this to say:
“We have a regular real estate miracle happening right now. We not only have record low prices, but we also have cheap money.”
Here in Arizona we further see the convergence of 4 factors--sales volume, 'low prices', # of month supply and that 'cheap money':
Sales:
10 years ago in February of 2001 there were 4609 home sales in ARMLS.
In February of 2011 there were 7157 homes sales in ARMLS.
That’s over 35% more sales today than 10 years ago.
Only one other year exceeded 7,000 sales in the month of February and that was 2005 with 7781.
And maybe this graph showing the relationship between sales volume and prices over the past 10 years:
Prices (Average):
10 years ago in February of 2001 the average price for a home in ARMLS was 169,700.
In February of 2011 the average price for a home in ARMLS was 155,605.
Average prices today are the lowest in 10 years (actually 8% lower than 10 years ago)!
In Sum:
Sales are rivaling the highest in 10 years even as prices are the lowest 10 years.
# of month supply: Add to this that inventory is dropping to a current < 5-month supply:
Today there is a 4.9 month supply; last month it was 5.7; last quarter 6.3; last year 5.9; 2-years ago 8; note the trend!
The green button with the trend arrow pointing down indicates this is a good leading indicator for sellers.
What does all this tell you (high demand, shrinking supply)?
Now add the lowest rates in history to the mix (4.5% for a 30-year fixed rate).
The buy signal is now overwhelming.
The source for the above stats is here. I would carry this around in my pocket or purse or better, a quick link in my SmartPhone or iPad.
“We have a regular real estate miracle happening right now. We not only have record low prices, but we also have cheap money.”
Here in Arizona we further see the convergence of 4 factors--sales volume, 'low prices', # of month supply and that 'cheap money':
Sales:
10 years ago in February of 2001 there were 4609 home sales in ARMLS.
In February of 2011 there were 7157 homes sales in ARMLS.
That’s over 35% more sales today than 10 years ago.
Only one other year exceeded 7,000 sales in the month of February and that was 2005 with 7781.
And maybe this graph showing the relationship between sales volume and prices over the past 10 years:
Prices (Average):
10 years ago in February of 2001 the average price for a home in ARMLS was 169,700.
In February of 2011 the average price for a home in ARMLS was 155,605.
Average prices today are the lowest in 10 years (actually 8% lower than 10 years ago)!
In Sum:
Sales are rivaling the highest in 10 years even as prices are the lowest 10 years.
# of month supply: Add to this that inventory is dropping to a current < 5-month supply:
Today there is a 4.9 month supply; last month it was 5.7; last quarter 6.3; last year 5.9; 2-years ago 8; note the trend!
The green button with the trend arrow pointing down indicates this is a good leading indicator for sellers.
What does all this tell you (high demand, shrinking supply)?
Now add the lowest rates in history to the mix (4.5% for a 30-year fixed rate).
The buy signal is now overwhelming.
The source for the above stats is here. I would carry this around in my pocket or purse or better, a quick link in my SmartPhone or iPad.
Sunday, March 20, 2011
Home Buying today versus back in the day ..... the evolving pursuit of the American DReam
March 1st, 2011
In 1995 Realtor.com went live, posting multiple listing information (MLS) from around the country in one database with public access. Before that, MLS information was proprietary. You couldn’t ‘see’ all the inventory of available homes without an agent / member of the MLS. Would-be buyers would drive neighborhoods looking for ‘for sale’ signs, or circle ads in the Sunday paper at the local coffee shop. But when they wanted more information on a home with that ‘for sale’ sign in front of it, or that ad in the paper, they had to call the phone number on the sign or ad. The real estate agent was the gate keeper.
Today you can see that same for sale sign, but now it may have a bar code-like ‘tag’ on it. Focus on the tag with the tag reader app on your smart phone and the next thing you know you’re looking at the home online, complete with a virtual tour of all the rooms. And if you don’t like what you see, another GPS powered phone app can immediately identify any other listed property in the area. In fact, by 2012, 20% of home searches will be done on a mobile device. The gatekeeper is nowhere in sight.
Things have changed a bit…but not the fundamentals.
For example, the common denominator in the above scenarios is that buyers typically initiate the home-buying process on their own. They rarely contact a real estate agent as their first step. What was true back in the day is still true today–buyers quite frequently find their agent through what we might call ‘the back door’ of agent inventory. However, now they can do it with a great deal of precision.
One reason for the delay in talking with a professional is the temporal factor. That is, from inception of the idea of making a move (‘honey, we’re pregnant’) until the actual move into the larger home (with at least one more bedroom for little Johnny) is statistically a 6-month to 2-year process.
This also explains why the classified ad in the paper or magazine typically doesn’t sell the house (only about 1% of the time). Similarly, the odds are against the ‘sign call’ turning into a purchase (about 12% of the time).
The common denominator that explains the low correspondence between marketing and advertising venues and selling the house is that when buyers are looking at the ad or the sign they tend to be early in that 6-month to 2-year process…they are not ready.
Rather than drive through neighborhoods, today’s buyers surf the web. 90%+ of today’s homebuyers will do at least some of their home searching online.
But the stunning statistic today comes from a large survey by the National Association of Realtors of homebuyers and sellers released 6 months ago. When buyers were asked where they first learned about the home they ended up purchasing, 38% report they saw it first online! This percentage has grown dramatically over the past decade and will likely continue…and why not. Purchasers like being empowered with both information and anonymity.
In 1995 Realtor.com went live, posting multiple listing information (MLS) from around the country in one database with public access. Before that, MLS information was proprietary. You couldn’t ‘see’ all the inventory of available homes without an agent / member of the MLS. Would-be buyers would drive neighborhoods looking for ‘for sale’ signs, or circle ads in the Sunday paper at the local coffee shop. But when they wanted more information on a home with that ‘for sale’ sign in front of it, or that ad in the paper, they had to call the phone number on the sign or ad. The real estate agent was the gate keeper.
Today you can see that same for sale sign, but now it may have a bar code-like ‘tag’ on it. Focus on the tag with the tag reader app on your smart phone and the next thing you know you’re looking at the home online, complete with a virtual tour of all the rooms. And if you don’t like what you see, another GPS powered phone app can immediately identify any other listed property in the area. In fact, by 2012, 20% of home searches will be done on a mobile device. The gatekeeper is nowhere in sight.
For example, the common denominator in the above scenarios is that buyers typically initiate the home-buying process on their own. They rarely contact a real estate agent as their first step. What was true back in the day is still true today–buyers quite frequently find their agent through what we might call ‘the back door’ of agent inventory. However, now they can do it with a great deal of precision.
One reason for the delay in talking with a professional is the temporal factor. That is, from inception of the idea of making a move (‘honey, we’re pregnant’) until the actual move into the larger home (with at least one more bedroom for little Johnny) is statistically a 6-month to 2-year process.
This also explains why the classified ad in the paper or magazine typically doesn’t sell the house (only about 1% of the time). Similarly, the odds are against the ‘sign call’ turning into a purchase (about 12% of the time).
The common denominator that explains the low correspondence between marketing and advertising venues and selling the house is that when buyers are looking at the ad or the sign they tend to be early in that 6-month to 2-year process…they are not ready.
Rather than drive through neighborhoods, today’s buyers surf the web. 90%+ of today’s homebuyers will do at least some of their home searching online.
But the stunning statistic today comes from a large survey by the National Association of Realtors of homebuyers and sellers released 6 months ago. When buyers were asked where they first learned about the home they ended up purchasing, 38% report they saw it first online! This percentage has grown dramatically over the past decade and will likely continue…and why not. Purchasers like being empowered with both information and anonymity.
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