Luxury Homes Weekly 346th Edition - Feb 11, 2017 |
| | I had many interesting conversations following the release of last week's video presentation on stocks, bonds, and real estate.
The question that comes up the most is "Well what if the stock market keep rising?"
There absolutely is a risk of missing out on more gains if you reduce your exposure. In 1999 and 2007 there were terrific gains even after the valuation signals were all flashing "Danger!" The problem was most people were still exposed in 2000 and 2008 when everything fell apart.
By analogy, its like there's a bus with faulty brakes that is certain to crash, we just don't know exactly when. People are trying to decide what is the very last minute to get out of the bus, so that they can ride the furthest distance before having to walk. To me, it's very simple: if it's clear the bus will crash, get out immediately. It may be a long, boring walk but it sure beats getting maimed or killed in a collision.
If you are going to stay invested in the stock market despite the warning signs, consider the strategy outlined in this article in Barrons: only own stocks of well capitalized companies with low debt. They'll still go down in a major downturn, but they will suffer less than the companies with high debt, and could rebound faster. However, the high debt companies - and there's more corporate debt now than in 2007 - are in a very precarious spot.
On a related note, this week Deutsche Bank advised this week to short Commercial Mortgage Backed Securities (CMBS). Considering that DB is one of the world's largest underwriters of these bonds, this was an especially powerful statement. Why would DB bite the hand that feeds them?
The challenge is retail. We are in the midst of an incredible transition to e-commerce, and the grandest names in retail are faring poorly. The numbers from Sears, Macy's, Target and other retailers have all given cause for concern.
In closing, it's not all gloom and doom. Those of you who know me, know I'm an optimist. There are still plenty of sound opportunities for investing one's money, and the future of our country remains bright. We are simply in one of those cycles, so often repeated, where values are high in many assets, and there's more risk to staying long than stepping aside. This too shall pass.
If you didn't see the presentation last week, please click the image below, or this link, to watch. Please feel free to share with friends and family. I welcome your comments, and am happy to chat if I may be of service.
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| | | | Housing affordability hit a 7 year low. Specifically, it now takes 22.2% of the median income to afford the median house. Back in 2006 this number hit 36% so we're still way off from the previous peak.
Also, it's important to note that this national statistic masks huge regional differences.
The lack of affordable housing in markets like California and New York is a boon to more affordable markets like Arizona, Nevada, and the Midwest.
Bottom line: the U.S. population is growing, Millenials want to get out of their parents basements, and they've all got to live somewhere.
My money is that "somewhere" will not be San Francisco, Southern California, NYC, or the many other places where engineers making $150k feel poor.
Nevertheless, it's important to monitor the national housing affordability because -- as history has proven -- the macroeconomy affect us all when it gets to extremes. At 22.2% I'm not concerned. If we start getting near 30%, either interest rates need to back off, or prices will have to go down.
The smart investment play is, as this newsletter has advocated for years, to own affordable housing. That way, you're not counting on anything other than a growing population for your investment returns.
People always need a place to live, but they don't need to live in expensive cities. |
| | | Reminder: The standard real estate contract has changed. If you've bought or sold a home in the past couple of years, you will find that the Arizona Association of Realtors contract has some modifications. They're designed to clarify the responsibilities of the parties and for the most part look to be an improvement for all parties concerned.
It may look similar to the previous version, but there are material changes including: - earnest deposit
- personal property
- financing contingency
- appraisal fee
- assessment liens
- foreign sellers
- condition of premises
- inspection period
- remedies
Quite a substantial list, so please read the contract carefully before presenting or accepting an offer. I would be happy to review the new contract with you, and highlight the changes. |
| | Commercial & Investment Properties
Off market apartment building offering a 10% annual return. $3 million with 50% non-recourse financing available. Please reply to this email if you'd like to learn more.
Looking for something bigger? Smaller? My approach is radically different than most of the large commercial real estate brokerages.
If you're looking for service that is custom-tailored instead of "cookie cutter" please call my direct line at (480) 442-7325. |
| | Best Homes on Market
The best of the best in their respective categories, selected for quality and/or value.
Paradise Valley New construction with 6 car garage, 6 bedrooms, and a guest house for under $2.5 million. A "prairie style" architecture that will be familiar to former residents of the Midwest. A bit farther north than is optimal, but I'd expect the final price to reflect the area.
Arcadia/Biltmore Santa Barbara style in prime area of Arcadia just north of Exeter. Excellent interior design in this remodel. This 4 bedroom home is probably pushing it with an asking price of $2.4 million, but then again Arcadia has seen some big numbers lately. This is worth a look, and perhaps some sharp-elbowed negotiation.
Scottsdale
Deals of the Week Bank foreclosure and short sale in Paradise Valley this week both well under $1 million, something we haven't seen in PV in a long time. One is a teardown value in the land, the other has a more substantial house but may also be best suited to a teardown. Please reply to this email with your contact information, or call my direct line at (480) 442-7325 for details. |
| | Active Buyer Needs
Perhaps you've been thinking of selling your home, or know someone who is?
Here's what some of my clients are looking for right now: - Lock and Leave Contemporary Home with views, recent construction, "wow" finishes, and plenty of space for entertaining.
- Quality 4+ bedroom home in Paradise Valley priced to sell. Light remodeling is ok but nothing in need of a huge remodel. Flexible on style, just something cozy with a good layout under $1.5 million.
- Contemporary or Mid-Century remodeled home with 4+ bedrooms under $2 million. High level of finish, a "wow" interior. Preferably single-level.
If you know of anything, please reply to this email or call my direct line at (480) 442-7325.
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| | Home Inventory
Paradise Valley
77 New Listings
22 Homes Sold
Average Sale: $2.1 million - $378 per square foot - 138 days on market
Arcadia/Biltmore
44 New Listings
16 Homes Sold
Average Sale: $1.6 million - $367 per square foot - 117 days on market
Scottsdale
200 New Listings
65 Homes Sold
Average Sale: $1.5 million - $338 per square foot - 153 days on market
Please note the data above covers the past 30 days of luxury homes, defined as follows: any single-family home in Paradise Valley, and all residences in Scottsdale, Arcadia, and Biltmore listed over $950k.
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There are many thousands of listings on LuxeAZ.com. To help you find what you're looking for quickly: Please note that listings are sorted from newest to oldest. So you may bookmark these pages and return at any time to see the very latest listings. |
| | Thank you for reading this newsletter. Your comments and suggestions are always appreciated, and will be used to improve future editions.
I'll be back in next week with all the latest news and analysis.
Sincerely,
Alex
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| | | The bestselling book about real estate that's gotten rave reviews from readers all across the country. Topics include:- Selling your home for top dollar
- Demystifying housing statistics
- Critical elements of successful negotiating
- Closing and escrow explained in Plain English
- Financing, with or without a bank
Would you like a paperback copy with my compliments? Just reply to this email with your address and phone number. If you prefer Kindle, you may download from Amazon here. |
| | | A frank examination of real estate and business by Alex Goldstein and Brian Tracy.
Negotiating in good and bad markets, insider secrets from the real estate industry, and much more.
Would you like a paperback copy with my compliments?
Just reply to this email with your address and phone number.
If you prefer Kindle, you may download from Amazon here.
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Disclaimer: All information is believed to be accurate, but should be verified by the reader and is provided without warranty. Please consult appropriate financial, tax, legal, and real estate advisors before making decisions. This email is not intended to solicit people who are represented by another agent.
(c) 2017 Alex Goldstein PLLC
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