Montevina Estate Homes

This past Friday I received a fairly interesting phone call from a local Realtor. One that did not truly hit me until I replayed that conversation in my head this past weekend. You see, Friday was a home closing day for me at "The Cottages," and that usually consumes most of my time during the day.

What was so unique about this particular phone call was not the conversation itself; it was the larger, philosophical questions that came from the replaying of that conversation. Like most professions, Realtors utilize large blocks of numbers to create averages, and then apply these very black and white numbers to everything. For example, in the entire Ahwautkee marketplace this year, 660 homes have sold, with a low price of $75,000 and a high of $2.1 Million. This creates an average of approximately $161 a square foot. But this is just an average, based upon many other averages. For example, the same areas homes had an average square footage of 2,065 feet. Or were an average age of over 10 years old.

So from this perspective, this particular agents question to me was very valid.... How did you sale a home with an average square footage prices between $210 and $275? And my response was to please come out and take a look at our homes.

Real Estate is about so much more than number averages. It really is about three real estate fundamentals..... Location, quality and amenities.

The problem with averages is that they do not take in the quality and amenities into account. For example, how do you compare a typical home with aluminum framed windows with a retail cost of around $4,000 and one with wood clad windows with a retail cost of $25,000? How do you put a price on a home that consumes 20-30% less energy per square foot than those other older homes? How do you put a price on a new home, in a great location, surrounded by no other new homes to compare them too? What price do you put on the ability to truly customize the interior of your new home?

Do not get me wrong, I believe that those big picture numbers do help, by giving us a larger macro perspective and a base in which to work off of. But those macro perspectives very rarely apply specifically to the individual units or on a micro perspective. That is the reason why appraisers utilize specific "Comps", our very similar homes when evaluating the price of a particular home.

So next time you see a salacious headline in the paper or on the news....... make sure you really dig deep into the numbers to see the whole picture, and not just what someone wants you to see.

-Jason Kush-

Home Buyer's have an exceptional sales opportunity with last week's three-quarters percentage point interest rate cut by the Federal Reserve. Mortgage rates are already historic lows, and the largest rate cut since October 1984 makes buying a new home not-to-be-missed decision for consumers right now.

 Those who commit to a new home today will get extraordinary value for their dollar. Whether
they choose to add more features or upgrades, or help their budget with lower monthly
payments, the power is in their hands to purchase a home that meets their needs.

“Today’s rate cuts by the Federal Reserve had an immediate effect on prime mortgage
rates,” said David Seiders, chief economist with the National Association of Home Builders. “Fixed-rate conventional conforming mortgages now are available around 5.3 percent, which is extremely low historical standards.”

Did you know that a rate cut almost always provides a significantly
greater cost savings over the life of the loan than a drop in price. Buyers who wait for
prices to go down will most likely end up losing money overall if rates go up even onehalf
of a percent. Trying to time the market is a dangerous gamble that could end up
costing thousands of dollars.

For example, a buyer who gets a 30-year fixed rate mortgage for $400,000 at 5.3 percent
today will spend $20,520 less overall than someone who got a better price — say
$380,000 — but rates increased to 6 percent.

Think about it!

I heard an interesting question recently regarding weather
or not now was a good time to buy a new home.  The question was “who is the smarter home buyer the one who
bought their home in the November 2006 or the person who buys a home now ?”

My 30+ years in the Phoenix home building market tells me
that prices are petty much at or near the bottom.  True prices will probably sort of drag along for awhile,
however, I doubt if interest rates on 30 year fixed loans will go a whole lot
lower than they are now and the sooner you get into a new home, the sooner you
start enjoying the tax benefits home ownership affords.  

Do not expect the kind of double diget annual value increase
we all saw in the 2004 to 2007 market frenzy, just like the dot com boom that
was a market run wild and it had to correct itself.  However, if you look at the tech stocks today (Google !) you
know that the prices corrected and investments were rewarded.  So it is and will be with housing,
except with housing not only do you get appreciation and tax benefits but you
also get a piece of the American Dream.