Should You Use a Lower Down Payment?

If you have ever bought a home in the past, or have had friends and family who have bought homes, you’ve most likely heard the rule for down payments: save for a twenty percent down payment before you buy a home.

The logic behind saving twenty percent makes sense because it shows that you have the financial discipline and stability to save for a long-term goal, which in turn also helps you get favorable rates from lenders.

But there can actually be financial benefits to putting down a small down payment— some programs allow for as low as three percent—rather than parting with so much cash up front, even if you have the money available.

THE DOWNSIDE

The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a twenty percent down payment, which will eliminate some homes from your search.

THE UPSIDE

The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down twenty percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for any home repairs the home may requite upfront, or perhaps even for doing some pricey upgrading right off the bat rather than waiting years and years until you have your money saved up again. These would allow you to immediately make sure your home is stable and to make the home the dream home you’ve always wanted.

THE HAPPY MEDIUM

Of course, your home payment options aren’t binary, there are many options out there for buyers now on the money needed for a down payment. Most borrowers can find some common ground between the security of a traditional twenty percent down payment and an investment-focused, small down payment. Your trusted real estate professional and local lender can provide some answers as you explore your financing options, and what the best choice is for you in your next home purchase.

Looking for more information, or some professional Real Estate Advice on this matter? Call us at 928-771-1111, we’d love to help!

Sharp Declines In Home Bidding Wars

If you have been looking to buy a home in the past few years and perhaps even put in a few offers on homes, then you know it has been a buyer eat buyer real estate world out there!

Homes would hit the market and instantly have multiple offers on them (if they didn’t already have offers on them before technically even being on the market). There were so many people looking to buy that the market had become incredibly competitive for buyers, yet also incredibly good for sellers who had their choice of highest and best offers to pick from.

You can imagine how these situations would be extremely frustrating for buyers who would be constantly outbid or their highest and best wasn’t as good as someone else’s highest and best.

Well, according to the National Association of Realtors, the amount of competition in Real Estate as we come into these Spring and Summer seasons will mostly likely be seeing a decline.  “There will likely be less competition for home buyers this spring—a widely reported index from Redfin shows a significant decrease among real estate professionals reporting bidding wars this month, compared to a year ago. Only 16 percent of offers written by Redfin agents on behalf of their customers in the first three weeks of March faced a bidding war, down from 61 percent a year ago, according to the brokerage’s index.”

This is good news for buyers because your chances of getting into a bidding war when making an offer on a home have sharply declined. This means you don’t have to come in at the very tip top of your home buying budget just to have a hope and a prayer of getting the home you have your eye on – you could possibly make a more reasonable bid and have it accepted because there isn’t another buyer breathing down your neck.

In Phoenix, the amount of offers that faced competition was at 41% in March of 2018. That number has gone down to just 14% calculated in March of 2019. Prescott is a lot different than Phoenix market wise, but agents here have noticed a decline in bidding wars as well, which means if you have been wanting to buy in Prescott, Arizona, now might be the time!

If you are looking to buy a home, or even sell a home in Prescott, you should give us a call! Working Real Estate in the community for the last fifteen years, we have a lot of experience and would love to help you in your next Real Estate transaction. 928-771-1111.

 

Wage Growth Vs. Home Price Growth

Living in Prescott, or perhaps anywhere in the United States, something you may have noticed is the difference in wage growth verses the difference in home price growth.

Being a Real Estate Agency in Prescott, this is something we have definitely noticed as our market has continued to grow healthily over the last few years. With such quick growth in the housing market, it would really be hard for wage growth to keep up.

Home prices can grow at any time they want. From one month to the next, the market can change and prices can go up. Even though the difference might not be substantial, or perhaps even noticeable, there is steady growth in home prices throughout the year (depending on the housing market at that time).

Wage growth, however, tends to be much slower. If you think about it, growth in wages happens maybe once or twice a year, if that. Being an employee, you may get a raise at the end of the year, or a raise when you are promoted to a higher position, but that’s not nearly enough to keep up with the rate of growth of the current housing market.

On top of that, Prescott has been known to be a very competitive job market, meaning employers can start a position off at a lower salary knowing that someone will be eager to fill the position with hopeful raises and bonuses later on down the line. Speaking of bonuses, many companies often don’t raise your salary at all, rather you get a “Christmas bonus” at the end of the year, meaning home price growth has gone up all year round, yet salary growth has remained stagnant. It all depends on the company you work for and the industry you work in.

To further show this fact, check out this quote from the National Association of Realtors (NAR), “Based on the headlines, home prices outpace wage growth. Indeed, in the last six years home prices increased 47 percent while wages rose 16 percent.”

After reading all of that, it may feel discouraging or make one think it would be impossible to afford a home when the rise of wages isn’t keeping up with the rise of home prices. However, what NAR found is that doesn’t appear to be the case.

“Nationwide, the monthly earnings of a typical employee rose by $530 to $3,784 in the fourth quarter of 2018 from $3,256 six years earlier. In the meantime, the monthly payment increased by $354 to $1,114 in 2018 from $760 in 2012. Thus, although home prices increased nearly three times more than wages (in percentage points), homebuyers needed to spend less than their salary increase for the higher mortgage payment. Noticeably, homebuyers needed to spend nearly two thirds of their salary increase (above the 30% rule) for the higher mortgage payment.” – NAR Economist’s Outlook Blog.

This is good news! It means that even though housing prices have grown far more than wages, wages have still grown enough to keep up with the price of these higher mortgages, only costing consumers two thirds of their salary increase towards their house payments. That may still seem like a lot, but at least it isn’t equal to or more than, which means housing based on current salaries is still somewhat affordable.

The best thing to do when thinking of buying a home, and wondering what you’d be able to afford on your salary, is to connect with a local lender. This is the very first thing you should do before even beginning to look at homes. That way you don’t’ set your eyes on something you can’t afford and have your hopes dashed. They will help you determine what your price range is based on your income and get you moving towards your ultimate goal: becoming a homeowner.

Need help finding a lender? Call us today and we can help! Working in the Prescott area for over a decade, we have a lot of experience with all the local companies and can help you find the right fit for you. 928-771-1111.

Listing Feature – 3555 Friendly Meadow Road

This is our amazing listing on 3555 Friendly Meadow Road in Williamson Valley Ranch. Right away, you are taken aback by the breathtaking views of Granite Mountain and ”The Indian,” which are captured from this rambling main level living family home.

Rural living offers a sense of space around you with only a 20-30 minute drive from downtown, giving you the feeling of being away from it all, while still being close enough to downtown to enjoy all of Prescott’s festivities. A large and fabulous deck with spa gives you a glorious outdoor living space you can enjoy all year long, taking in the views and the big night sky.

Approximately 3,557 square feet, the home includes five bedrooms and four bathrooms. The master bedroom is complete with a separate exit onto the expansive deck and plenty of windows to help you take in all of your wonderful views. The master bathroom includes dual sinks, a separate shower and jetted tub, and a walk in closet.

A spacious eat-in kitchen features granite counters, an island with breakfast bar, a gas range, plenty of pantry storage space, and an adjacent seating area with Kiva fireplace. Next to the kitchen is a cozy sunken living room that offers a more intimate gathering space when entertaining guests, or a little privacy to sit aside and read a book, or whatever you like.

The lower level living is a walk-out basement complete with its own family room and a full second kitchen for multi-generational living. It includes plenty of storage space to put all of your treasured items, a separate exit to outside, three bedrooms, and a large bathroom with three sinks to accommodate all those in this living space.

Not only does this home have all the living space you need, but it also sits on three acres to accommodate any growing your family will do, including horses and farm animals! The home has a brand new well plus storage tank. The well and the storage tank holds 3,400 gallons at a time and pumps 725 gallons per day. A typical family of 4 only uses 350 gallons per day.

Interested in this home? Call our office today for a showing appointment! 928-771-1111. Interested in homes similar to this one? Still call! We’d love to help you find the right home for you!

Do People Think It’s a Good Time to Buy/Sell a Home?

According to the National Association of Realtors Home Survey performed in March 2019, most people would agree that now is a very good time to buy or sell a home.

  • “Fifty percent of renters compared to seventy-five percent of home owners think now is a good time to buy.” Only thirty-five percent of people believe that now is not a good time to buy.
  • “Those who are in the West (77%) are most likely to think that now is a good time to sell a home.” Only thirty-one percent of people believe that now is not a good time to sell your home.

For some more of the statistical facts and figures they found, visit the website article here.

As Realtors who work in the Real Estate business every day, we’d have to agree with what others believe as well, that now is a good time to buy or sell a home (at least here in Prescott, Arizona). We aren’t just being biased; this comes from our own experience and knowledge of the market right now.

Even though the market is projected to take a slight dip in 2020, it will be nothing near the crash we had over ten years ago, in fact it won’t be a crash at all – hence the word dip.

So, what will happen after the dip? The market will continue to go back up. With a good economy and competitive market, there’s really no waiting to be done here. “I’m waiting for the market to drop,” or “I’m waiting for the market to be less competitive.” Mortgage companies and realtors alike will tell you this isn’t likely. While you might get lucky and find a small pocket of time that’s “just right”, the reality is that the best time to buy is now so you can start building equity in your new home, rather than waiting and watching as the prices just continue to go up rather than down.

What do you think? Is now a good time to buy or sell a home?

Why Should You Use a Real Estate Agent to Buy or Sell?

With websites around today such as Realtor.com, Trulia, and Zillow, many buyers and sellers tend to think, “Who needs a real estate agent?” The answer is everyone!

Even though these websites are extremely user friendly and can make the whole real estate process seem like a piece of cake, the truth is there is so much more that goes into a real estate transaction other than finding a home, or selling your home.

While it might seem like we are being a little biased on the topic, hear us out! This is probably the biggest financial decision/investment you will ever make. That’s a big deal! Here are some reasons why we believe it is so important to use an agent rather than try to venture the industry of real estate alone.

Real estate Agents have a ton of experience: “Want to check the MLS for a 4B/2B with an EIK and a W/D? Real estate has its own language, full of acronyms and semi-arcane jargon, and your Realtor is trained to speak that language fluently,” notes Realtor.com. This isn’t exactly an end all reason to use an agent, but wouldn’t it be nice to be working with someone who knows what they’re doing rather than scratching your head in confusion and having to look things up at every turn? What if you miss something, or overlook something? Well, an agent is paid to avoid exactly that! They are also very familiar with the dozens of lengthy contract forms you will be required to sign both as a buyer and a seller, and help you navigate those wordy jungles so you fully understand what it is you’re signing exactly. Any mistake could end up costing you financially, legally, and emotionally. Real estate agents work hard to prevent that.

They have access to all the best home searches: With websites like those mentioned above, realtors and the public alike have access to them, and there are so many places to look for homes on the internet. However, realtors have even more! They have access to the MLS (Multiple Listing Service), which every home has to be listed on except FSBO (For Sale By Owner) – see what we mean about the acronyms? Realtors also often have some homes not yet on the market they could show you, giving you a jumpstart on any new listings. Good local realtors also know their areas better than anyone and will be your best resource for finding a home in the neighborhood and price range you want.

They’re master negotiators: When looking to buy or sell a home, you better believe there will be some negotiating involved in today’s real estate market. Depending on the home, there could be a lot of competition, all cash offers, bidding wars, and more. Do you want to try to traverse these waters alone, or would you rather have a knowledgeable and experienced agent at your side that has dealt with these types of situations before? Your realtor will always have your back, fight for you, and look out for your best interest to make your transaction as smooth as possible.

They know everyone: After years in the real estate business, real estate agents know the best people when it comes to buying and selling homes. Mortgage companies, real estate attorneys, Escrow companies, home inspectors, and the list could go on and on. Real estate agents will know who’s the best, who they’ve had trouble with in the past, and everything in between. This expertise is priceless considering a bad home inspection could cause a home to fall out of contract, or a mortgage company that isn’t on the ball could delay closings.

They have to stick to a strict code of ethics: Not every licensed real estate agent is a Realtor. A Realtor is an agent that also belongs to the National Association of Realtors (NAR), which is the largest trade group in the country. To be a Realtor with NAR, you have to adhere to a strict code of ethics that not only protects the agents, but also protects the buyer and sellers from any agents looking to take advantage.

They wear a lot of different hats: A Realtor is a parental voice, data analyst, therapist, expert, and so much more. They do a lot of work to earn their commission even though it might not always look like it. They are constantly looking for new homes for their buyers and using their own money to market their seller’s homes. They drive around neighborhoods and towns with you to make sure you find exactly what you are looking for. They do a comparative market analysis (CMA) on your home to see what you could possibly sell it for to make sure you are getting the most out of your investment. They are texting, calling, and e-mailing at all hours of the day. This is not a 9-5, Monday-Friday job. It is 24/7 all week long job because your real estate agent wants to be there for you!

We hope some of these reasons make sense and that in your next real estate transaction, you’ll consider using an agent.

If you’re looking for an agent’s assistance now, or have any questions about what it looks like to use an agent, give us a call. We’d love to help! 928-771-1111.

Listing Feature – 1295 Coyote Road

This is our gorgeous new listing in Hidden Valley Ranch on 1295 Coyote Road. Built on a corner lot, this home backs to Hidden Valley Ranch common area and the seasonal Banner Creek.

Walking in the front door, you are welcomed in by high vaulted ceilings complete with beams. This home was originally built as the builder’s own home, which tells you the time and care that went into creating it. The Great Room and formal dining areas in this home are expansive and offer a lot of natural light through the Anderson wood windows complete with plantation shutters.

Making your way into the kitchen, you find that it is a large open space, inviting to all your future guests. With a wall oven, desirable kitchen island with cook-top, granite counters, and plenty of counter and cabinet storage space, you will be able to make this kitchen your own.

Opening up into the family room, it boasts built-ins and a grand hearth with a wood burning fireplace. This room is perfect for relaxing and getting cozy with those you love most.

Rounding out the main level are one bedroom, one bathroom, and one laundry room. On the upper level you have the very spacious master suite bedroom with dual vanities and a jetted tub. Three more bedrooms take up the upstairs living with a full bathroom, laundry chute, and a walk-in linen closet.

Outdoor amenities include a two and a half car garage, a covered back deck and grassy yard to enjoy all seasons, and a separate fenced in dog run for your fur family.

Quick Facts:

  • $525,000
  • 3,023 Square Feet
  • 5 Bedrooms
  • 3 Bathrooms
  • Grown Ponderosa Pine Trees
  • Subdivision Includes: Club House, Community Kitchen, Membership Included, Outdoor Pool, RV Parking, and Tennis Courts.
  • Views of the Creek and Pines
  • New Exterior Paint 5 Years Ago
  • 14 Year Old Roof of a 40 Year Shingle

This home is move-in ready and a blank slate for anyone wanting to do a little updating and some fresh coats of paint to make it their own.

Interested in seeing this home? Call our office today at 928-771-1111. We’d love to assist you with this home, or any other home you might be interested in!

Why 2019 Might Be a Good Year to Buy a Home

If you’ve bought or have been trying to buy a home over the last several years, you know that the market has been absolutely crazy, and that includes Prescott!

Homes would go under contract before officially being on the market. Homes would go active and within one day there would be multiple offers on the property, and people would find themselves in a bidding war. Homes were going for over asking price and more than they were actually worth. This is called a Seller’s market and it was hot, and it was not slowing down for anyone!

With all that going on, unless you were a cash buyer, could put in an offer on the property within the first day, or could make an over asking price offer, your chances of landing the contract were slim.

Because Prescott’s market is higher priced than others, the affordability that 2019 seems to be promising might not affect us greatly, but some help is better than none, right?

Here are a few key changes in the market this year:

There will be more homes available to buy. With tight inventory on homes, many buyers have decided to wait it out because by the time they call their agent, the home they were looking at has already sold. Who can compete in a market like that? How this will be changing is more new builds in our area, which brings increased inventory. The problem is that new inventory might not always be in your price range, or if it is (most in the 200-300k area), it also seems to be a lot of other people’s price range and you’ll still have some competition.

Soaring prices will slow down. Even though the inventory of homes has been tight over the last few years, the prices of those homes have done nothing but rise (like we said, it’s a seller’s market). In 2019, that looks to be slowing down slightly. Home prices will continue to rise to be sure, but they will rise at a much slower pace now. According to Realtor.com, there will be a “2.2% increase in home prices this year – compared with a nearly 5% increase last year.” Prices don’t look like they’ll stop rising completely, so it’s best to buy as soon as possible to begin building on your home equity.

Rents are rising and will not stop. Speaking of rising prices and building equity, another reason to buy is so that you can stop wasting your money on renting and start investing in your home. While buying a house is a very expensive adventure and can seem scary, keep in mind that along with home prices, rental prices are rising as well. A top dollar market means that those who are able to buy and turn those homes into rentals for extra income have to charge more for rent. Think of how much they need to make on rent just to cover the mortgage, not to mention make a profit off their investment. We know that buying is a lot of cash up front, but it is also a lot of cash saved later on by building equity in your home and not having to give your money to a landlord every month.

Mortgage rates are lowering. Mortgage rates were predicted to rise in 2019, but they have actually been dropping. Lower mortgage rates are good news for buyers because it significantly helps with home affordability. Higher rates means a higher mortgage, which means pushing a home’s price over what you’ve been pre-qualified for, where obviously, lower rates means the opposite. However, Realtor.com thinks these lower rates are only temporary because of the long-term direction of mortgage rates seems to point to them going back up because of our strong economy.

We hope these pointers give you some hope about trying to buy a home this year, or at least make you consider that perhaps you’ve waited long enough and it’s time to take the plunge. If you’re waiting for another crash, it doesn’t look like that is going to happen. The time to buy is now!

To talk about possibly buying a home, or to get a better idea of what this might look like, we would love to help! You can call us at 928-771-1111.

Older Homes and Renovation Loans!

If you live in Prescott, chances are you understand how even though we have a lot of new build homes, the majority of homes here are fairly old. As you can see in the graphic below, of the 601 single-family homes currently listed in Prescott, Arizona, 426 of them were built prior to 2009!

Older homes can tend to scare buyers away, but that doesn’t always need to be the case. Perhaps baring homes with larger ticket item fixes such as roofs and foundation issues, other fixer uppers you view don’t need to be so scary. Older homes can not only be an investment opportunity depending on the area they are in, but with a little TLC, they can also have potential to be the dream home you’ve always wanted.

The problem here is that most people don’t have the money to both buy a home and then invest thousands of dollars into it to make it their dream home, so what are they supposed to do then?

The same could be said for those who already own their home. Perhaps they are living in a more dated house and would love to do some of those renovations they’ve always dreamed of. Knocking down a wall, getting granite countertops, and so many other things. Where do homeowners get the money to do this if they haven’t been able to save for it over the years?

The answer to both these questions could quite possibly be a renovation loan. A renovation loan can look like a lot of different things depending on what you are qualified for. With new home buyers it can mean rolling the cost of fixing up your home into the same loan you’re using to finance your home. This means you can renovate that fixer upper right away and not “sometime in the future.” For current homeowners, a renovation loan might look like refinancing to roll the coast of upgrading your home into your loan.

Can you imagine buying a home that you plan to “one day” make your own, but instead of one day, you get to renovate it right away? Or, can you imagine being a homeowner and finally being able to get rid of that gaudy shag carpet and laminate counters?

Well, a renovation loan might be your answer and they aren’t as scary as perhaps you’ve heard. Don’t believe us? Why not talk to the experts? Tamara Jakubos with Fairway Independent Mortgage Corporation specializes in renovation loans! Having helped numerous other clients with renovation loans in the past, she could tell you more about them and possibly help you with your own renovation loan.

Give her a call today, she’d love to answer your questions and see if you qualify for one of Fairway’s multiple renovation loan programs!

Tamara Jakubos

Fairway Independent Mortgage Corporation

tamara.jakubos@fairwaymc.com, 480-467-3010

Listing Feature – 2827 College Heights

Check out our sensational and affordable listing in the Villas at Sunrise Terrace. This home is entirely on one level with only one step from the garage into the home, and the interior of the home has been recently painted and a new roof was installed in 2017!

Boasting three bedrooms, two full bathrooms, and a two car garage, the home also has vaulted ceilings and attractive decorative touches. The spacious master suite has a French door to the back patio, the master bathroom with dual vanities, walk-in closet & separate bath tub and shower.

In the great room, cozy up on the window seat complete with plantation shutters and serene views of Granite Mountain in one direction, and the San Francisco Peaks in the other. The gas fireplace is the focal point in the great room, cladded in reclaimed wood and featuring a gorgeous wood mantle.

The kitchen features granite countertops, a plethora of cabinets and black appliances including built-in microwave, dishwasher, smooth-top electric range and refrigerator.

The backyard is perfect, topping off this great little house! It’s very low maintenance with the concrete patio flowing out into the open paver yard that is fully fenced.

Want to see this gorgeous home? Call our office today for your showing appointment! 928-771-1111.