Phoenix Real Estate — Anything and everything about it. Plus random musings… Now with Phoenix area MLS Listings Search!

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We get this question all the time. Here’s the bottom line…

Having a swimming pool built is not cheap. If you spend $20,000 on a pool, it will not add $20,000 to the value of your home. Sadly, it may add nothing to the value of your home. Don’t add a pool to your home if you expect to recoup the cost upon sale. It just doesn’t work that way. Add a pool to your home because you want a pool. A pool is an outstanding investment in terms of recreation, fun, enjoyment, enhancing the appearance of your back yard and it provides great exercise. (In Phoenix, having a pool may mean being able to survive the summers comfortably!) There are dozens of great reasons to have a pool, but adding value to your home isn’t one of them.

(I should note that what I say above pertains to the Phoenix area. The reason it’s this way here is because so many homes have pools. In some parts of the country, a pool is rare and does add a premium to a home.)

What a pool can do is help you sell the home when the time comes. MANY people home shopping in Phoenix want a pool. We’ve had clients look at homes they loved but didn’t buy because there wasn’t a pool. Having an existing pool appeals to many home buyers. But note that there are some who don’t want a pool and won’t look at your house because it has one.

This question is currently the most viewed question on our Real Estate FAQ site.

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Below is the second part in the “2006 Housing Scenario” series from Inman News. For Part 1, click here:

Worst-Case Scenario for Housing in 2006, Part 2

By Janis Mara
Inman News

Editor’s note: This is the second part of a two-part story looking at housing market conditions for 2006.

The scene opens on a devastated landscape, with the voices of a thousand wannabe homeowners crying out in pain. Congress has enacted limitations on mortgage-interest deductions; interest rates have hit 8 percent; creative loan products have been curtailed; investors have fled to the stock market and first-time buyers can’t afford a house.

At least, that’s the worst-case scenario for 2006, according to various possibilities suggested by experts and industry observers consulted by Inman News.

Though different folks painted the future with different strokes, one theme was consistent: interest rates will be the most important factor affecting the industry in 2006. And, though the sign of the beast is 666 in the Bible, the bad-luck number for mortgage interest rates is 8 percent, a number of experts said.

“If the (long-term) interest rate went over 8 percent it would impact the market,” said James Wright, president/principal broker of Century 21 All Islands in Honolulu.

“You tick the price up and make the monthly payment another $300, $400, and people who were marginal to begin with will be priced right out. The pool you’ll hurt the worst will be the first-time buyers,” Wright said.

A real estate analyst also evoked the 8 percent figure.

“At 6 and 7 percent we still see upward movement or, at worst, sideways-moving price projections,” said Michael Sklarz, chief valuation officer for Fidelity National Financial. “But at 8 percent, some markets have prices falling.”

Christopher Cagan, director of research and analytics at First American Real Estate Solutions, agreed with Sklarz. “Prices would start to decline. But I don’t expect that to happen.”

Indeed, not one member of the group expected interest rates to jump to 8 percent. Generally, the pundits expected rates to remain historically low in 2006, going no higher than 6 or 7 percent at most.
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Below is an article from Inman News (which is a pretty good source for national level real estate realted news. Unfortunately, it’s a pay service but articles are frequently reprinted across the Internet). The article is, of course, the opinion of the writer, not mine (though I tend to agree with most of this part). For Part 2, click here.

Best-Case Scenario for Housing in 2006, Part 1

By Janis Mara
Inman News

“Moderation in all things.” — Aristotle

As John and Jane Doe Home Buyer enter the year 2006, driving their Ford Focus down Main Street, they see a moderate number of townspeople buying lunch boxes and new work clothes, signifying modest job growth. As they pass a local bank, the automated ticker display registers interest rates at 6 percent. Best of all, flyers in the window of the local real estate brokerage show house prices reflecting modest appreciation.

At least, that’s the best-case scenario for 2006 predicted by experts consulted by Inman News. Not only that, many of them said they believed this scenario was likely.

“A situation where the U.S. economy continues the modest job growth it has produced over the last year is the best-case scenario,” said Mark Dotzour, chief economist at Texas A&M University’s Real Estate Center.

“Modest job growth creates underlying demand for housing and very little threat in the way of inflation,” the economist said. “That’s what keeps interest rates at low levels like the ones we’ve enjoyed for the last five years. If we have moderate job growth resulting in low inflation and in turn a low mortgage interest rate environment, the U.S. will have another successful year.”

The best thing that could happen in 2006? Continuation of low interest rates, according to Mike Sklarz, chief valuation officer for Fidelity National Financial. Also, a recovering economy, “which we seem to be in the midst of in a number of sectors,” and a rebound in consumer confidence, Sklarz said.

“My guess is that prices will keep going up but at a slower rate,” Sklarz said. “Some markets showed double-digit rates of appreciation this year. The more likely appreciation rate is in the single digits in 2006.”

David Lereah, chief economist of the National Association of Realtors, also believes there will be “modest cooling.”

“The market will be coming off of a five-year boom and experience a soft landing next year,” Lereah said in a 2006 forecast released in late October.

“An uptrend in mortgage interest rates will cause some slowing of the sales pace, but we forecast 2006 to be the second-highest year on record and housing will continue to support the overall economy,” Lereah said.

Lereah predicts that the national median existing-home price for all housing types, after jumping about 12.4 percent to $208,100 for all of this year, will grow by 5.3 percent in 2006 to $219,200.
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Here’s a couple of pictures from the most expensive home currently listed in the Phoenix area MLS: It’s a 6 bedroom, 8 bath home, approximately 25,000 square feet. Built in 1994, it’s been on the market for 537 days. List price…$19,900,000. Let me know if you’re interested, I’ll be happy to show it to you! The pics aren’t the greatest, you can thank our MLS for that… 

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