Lucas News and Real Estate Report Issue 1

The Outlook Remains Bright           

The Phoenix real estate market took a well deserved breather during 2006.  Prices increased marginally during the first half of the year and decreased just as much during the second half.   The year was basically a wash.

The good news...the local housing market is simply experiencing a short term inventory correction. 

There were a large number of cancelled contracts for both new and resale homes in 2006.  This left between 15,000 - 20,000 excess homes on the market that are just now beginning to be absorbed.  It will take awhile to get back to a balance in the supply and demand ratio.

The Phoenix area is positioned to deal with this inventory correction relatively quickly because jobs are being created and people are moving here.

In July, U.S. Bureau of Economic Analysis sited that Arizona became the fastest-growing state, passing Nevada in economy, population and job growth.

In-place entitlements (zoning and plat designations), affordability (land and housing), enough water, infrastructure, new transportation corridors, and having the second-fastest growing airport in the country will continue to boost the residential real estate economy for years to come.

Various forecasts predict that Phoenix will need 500,000 new homes over the next decade and the population will exceed 6 million by 2020.

In short, don’t get caught up in the short term lull in the market.  All indicators point to a very bright future.            

Lucas News and Real Estate Report Issue 2

Spring Brings New Life to the Market

Football season is over and that can mean only one thing - the peak real estate season is here!  So get off the couch and start fixing up the house - now is the time to sell your home.  The weather is perfect, buyers are cruising the streets, and for sale signs are popping up like daffodils.

This year could be especially exciting as many discretionary buyers sat out 2006 and should be looking to reenter the market in 2007.  Additionally, buyers are starting to respond to low interest rates, falling prices and record high housing inventories.

If you are a seller this could be great news, but remember we are still in a buyer’s market.  Sellers still need to be conservative when pricing their home.  As many sellers found out in 2006, correct pricing is the most critical element of a successful sale.  Those who priced their homes too high, saw their home sit for months as they followed the market downward - resulting in the loss of tens of thousands of dollars.

"After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008," says National Association of Realtors Chief Economist, David Lereah.  "When you put it all together, home sales may appear weak in comparison with the record surge in 2005, but they will be sustained at historically high levels that are in line with long-term demand."

If you are a buyer - what are you waiting for?  The supply of homes for sale is at a record high and now is the time to deal.  There are bargains to be found as prices have come down from their high in June of 2006.  Plus mortgage rates continue to behave which gives you more home for your money.

Bottom line, whether you are looking to buy or sell, this is the season.  Don’t forget, a knowledgeable Realtor who follows market trends can save you thousands of dollars.  Call ERA Lucas Realty Group today at 480-598-8800.

Lucas News and Real Estate Report Issue 3

Selling Your Home May Be Tax Free

Your home may not always be your “castle,” but if it is your principal residence, there is one very significant tax benefit when you sell.

Married couples can exclude from their taxable income up to $500,000 of gain. Individuals filing separate returns can exclude up to $250,000. Unlike a deduction, which allows you to take a percentage off your gross income (based on the tax rate bracket in which you fall) the exclusion means that the profit you make up to the statutory ceiling is not even included in your income for tax purposes.

There are two important limitations:

1) You must have owned and used the home as your principal residence for two out of five years before the sale. If you are married, although both husband and wife must meet the “use” test, only one of them must meet the “occupancy” test.

2) The exclusion is generally applicable once every two years. However, if you are unable to meet the two year ownership and use requirements because of a change in employment, health reasons or unforeseen circumstances, then your exclusion may be prorated.

The IRS has issued regulations which will guide you if you are faced with having to sell before the two years are up. There are what is known as “safe harbors” -- in other words, if you fall within the guidelines, you are safe to take the partial exclusion.

This law applies to all principal residences: single family homes, condominium units and cooperative apartments. If your boat or your mobile home is your principal residence, the law is also applicable if three things are present: sleeping quarters, a head (toilet), and cooking facilities.

Once again, each taxpayer has different concerns and situations. You are advised to consult with your financial and legal advisors if you sold your house last year. You can also get some helpful information from IRS Publication 523, entitled “Selling Your Home -- for use in Preparing 2006 returns.” This is available on the IRS website, IRS.gov.

Don’t forget your $60 at tax time

Uncle Sam is offering a one time refund to taxpayers for overcharging telephone excise taxes from March 2003 to July 2006.  It's a small refund, but the amount is enough to pay a monthly cable bill or phone bill.

The government established a standard refund amount, based on personal exemptions, ranging from $30 to $60, but if taxpayers kept all their bills they can request the actual amount of tax paid.

For those electing the standard amount complete the line, labeled, "Credit for federal telephone excise tax paid" on your tax return.

More information is available from the Telephone Excise Tax Refund section highlighted on the IRS.gov's home page.

Lucas News and Real Estate Report Issue 4

New Home Builder Bargains Abound

Many Valley home builders are cutting prices as they struggle to attract buyers and regain their footing in a market flooded with an excess of unsold homes.  It's good news for consumers who may have thought all the great deals had passed them by.

Construction of new homes has slowed dramatically since 2004 and 2005, when demand was pushed out of proportion by investors.

According to Metrostudy, there were 11,161 finished but empty homes in metropolitan Phoenix at the end of December 2006.

Adding fuel to the fire is the near 50,000 existing homes that are currently on the market in the Valley.

Some builders are now actually negotiating with buyers on price and upgrades. Quite a change from the lottery mentality of the last couple of years.

The best advice we can give you is to call a Realtor before you start your search.  Most home builders will not allow you to be represented by a Realtor if they do not accompany you on your first visit.

A good Realtor can assist you in finding the best deals and determining if there is any room for negotiating the price or upgrades.

We have helped many families through the process of building a new home and we would be happy to help you too.

The best part - our representation costs you nothing, but can potentially save you thousands.  Call today and start packing!

Lucas News and Real Estate Report Issue 5

This News Just In: The Internet Is Not A Fad!

ERA Lucas Realty Group’s homes sell 25 days faster and for 1.5% more than the Valley average.  We are able to achieve these numbers because we expose our homes to as many potential buyers as possible.    

How do we expose our homes to more potential buyers?  We do a lot of advertising but we have found that the most effective and efficient way to reach the greatest number of potential buyers is through the Internet.

Over 80% of home buyers start their home search on the web.  And why wouldn’t they.  With multiple photos and virtual tours, home buyers get the equivalent of an open house from the privacy of their own home and at any time of the day.

Any advertising expert will tell you that the key to a good marketing campaign is knowing the habits of your buyer.

The following statistics from the National Association of Realtors show where home buyers first learn about the home they purchase.  We have included the 2006 stats and 1997 stats to show you the changes over the past 10 years.

Source                         2006                1997

________________________________________________________________________•  Realtor                      36%                 50%    

•  Internet                     24%                 2%

•  Yard Sign                 15%                 17%    

•  Friend/ Neighbor       8%                   9%

•  Home Builder            8%                   3%

•  Newspaper               5%                   8%

•  Knew the Seller        3%                   4%

•  Home Magazine        1%                   3%

•  Other                        0%                   4%

We take great pride in our comprehensive Internet strategy.  We showcase all our homes for sale with multiple photos and 360° virtual tours on our web sites: LucasRealtyGroup.com, TempeRealEstate.com and ChandlerRealEstate.com. 

Additionally we place our homes on Realtor.com   (the biggest real estate web site in the world), Google.com, ERA.com, AOL.com MSN.com, AZCentral.com and literally thousands of other real estate related sites.

We drive traffic to our Internet sites through organic search engine optimization and a host of pay per click campaigns.  It’s not uncommon for our sites to appear multiple times on the first page of Google when a buyer is looking to find homes in the area.  The result - we receive thousands of visitors to our sites each and every month which means more exposure for our homes for sale.

Of course we continue our traditional marketing efforts which include placement in the Multiple Listing Service, installing a quality yard sign, mailing Just Listed postcards, and showcasing our homes in the Wrangler News and Lucas News.

All of this exposure creates results for our seller clients.  
Call us today to find out how we can sell your home faster and for more money.    

Lucas News and Real Estate Report Issue 6

The Art of Establishing Value

The most important decision in the marketing of your home is made the moment you decide what price to list your home.  These are the five factors to consider in setting a price for your home:

Real Estate Data - You must view data of homes recently sold, expired, under contract, and for sale.  Your home will generally fall within a similar price range of these homes.

Market Conditions - The current market condition will play a major role in the pricing of your home.  The inventory of homes for sale determines the level of supply and demand. 

Location - Your home's location and setting influences its value.  

Unfortunately,  you have no control over location.

Condition - You have nearly complete control over condition, and you can increase value and decrease marketing time by being sure your property is in great condition.

Amenities - Homes that have been upgraded and/or updated will generally sell for more than comparable homes that have not been improved. 

The biggest fear most sellers have is not realizing their highest potential profit. Obviously, under pricing your home can lead to unrealized profit, but starting out overpriced can also lead to adverse results.  The following are just a few of the potential consequences of overpricing:

Reputation - Overpricing causes most homes to remain on the market too long.  Buyers, aware of a long exposure period, are often hesitant to make an offer because they fear "something is wrong" with the house. 

Additionally, extended market time tends to dampen the other sales agent’s attitude, making it less likely to be shown to their buyer prospects.

Competition - Buyers educate themselves by viewing many homes. They know what is a fair price. If your home is not competitive in value with those they have seen, it will not sell.  If your home is not priced correctly, it very likely will not be exposed to its potential or targeted buyers.

Lower Net Proceeds - Studies show the longer your home is on the market the less it will sell for.   Below is YTD data from the Arizona Regional Multiple Listing Service:

Days on market   LP/SP ratio

0-30                           98.38%

31-60                         96.20%

61-90                         94.35%                     

91-120                       92.97%

121-150                     91.60%

151-180                     89.74%

180+                         88.03%

 Inconvenience - If overpricing keeps your home from selling promptly, you can end up owning two homes - the one you've already purchased and the one you're trying to sell.

Sellers need to understand that there are going to be three "buyers" who must be satisfied with the price of your home. The Buyer - Obviously the buyer has to agree with the price.

The Appraiser - Most homes that sell are financed by a bank.  The bank hires an appraiser to protect their interests.  The appraiser determines if the seller and buyer have come up with a realistic price for the property. The Underwriter - Finally, you have to satisfy the person in the back office, the underwriter of the mortgage. Underwriters determine risk factors for the lending company or group of investors.

Lucas News and Real Estate Report Issue 7

Valley Real Estate Q & A

How much have homes appreciated since 2000? 

Great news - homes in the Valley and in the Kyrene Corridor have doubled in value over the past 7 years (see chart above).

Why have homes appreciated so much? 

In 2000, Phoenix home prices were undervalued when compared to other cities in the region.  This created a boom effect which drove new industry, residents and of course real estate investors.  The result, the supply of homes was scarce in 2005.  This imbalance in supply and demand drove prices up in a relatively short period.  

Are Valley home prices currently depreciating?

Home prices have decreased slightly since the peak but are remaining surprisingly stable.  Home prices hit an all time high in June of 2006 when the median price was $265,000 and the   average price was $348,756.  In June of 2007 the median price was $255,000 and the average price was $347,754.

Then why are there so many negative stories in the press? 

Home prices are only one part of the story.  The big issue right now is that the number of homes sold has dropped 40% since 2005.  There is currently a vast divide between supply and demand due to the record number of new and existing homes for sale.

Will my home sell in this market? 

Homes that are well located, in good condition and priced right will continue to sell, but there is a growing supply of homes that will not sell unless homeowners’ expectations change.

Is it a good time to buy?

We are in a strong buyers’ market with a huge supply to choose from.  Now is the time to buy new or resale.