More Americans signed contracts to purchase homes in May, as pending home sales climbed to their highest level in more than nine years.

The National Association of Realtors reports that its seasonally adjusted pending home sales index rose 0.9 percent to 112.6 last month. The index has increased 10.4 percent over the past 12 months, putting it just below the April 2006 level — which was more than a year before the housing bust triggered the Great Recession.

Pending Home Sales Numbers Not Sustainable?

Pending home sales have climbed to a new 9-year high according to the National Association of Realtors

Strong sales and depressed inventory continue to push prices higher — perhaps too high, too fast. NAR chief economist Lawrence Yun says prices are now rising at an unhealthy and unsustainable pace.

Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages,” Yun added. “Without meaningful gains in new and existing supply, there’s no question the goalpost will move further away for many renters wanting to become homeowners.”

The steady job growth along with low but slowly rising mortgage rates has created greater urgency to buy homes. The gains reflect both a stronger economy but also the pressures to purchase a home before both prices and the cost of borrowing become potentially unaffordable.

Completed sales of existing homes jumped 5.1 percent last month to a seasonally adjusted annual rate of 5.35 million. Median home prices climbed 7.9 percent over the past 12 months to $228,700, about $1,700 shy of the July 2006 peak.

Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.

Get more information as it pertains to Scottsdale pending home sales in our section on Scottsdale Real Estate News to your right under Scottsdale Real Estate Categories.

Remember, we post tips daily to Twitter, and also on our Facebook Page. We'd love you to check us out there too.

Most people know and understand that you can lower the monthly premium on your Scottsdale homeowners insurance by raising your deductible. But whether it makes sense to do so can vary.

The deductible for a Scottsdale homeowners insurance policy typically ranges from $500 to $1,000, but may be as low as $250 or as high as $5,000.

The deductible is the amount of a loss you must cover out of pocket. The deductible for a Scottsdale homeowners insurance policy typically ranges from $500 to $1,000, but may be as low as $250 or as high as $5,000.

An analysis done for an online insurance site found that raising a deductible to $2,000 from $500 lowers the average annual premium by a wide range, depending on where you are, anywhere from 6 to 40 percent.

For the analysis, the study was based on premiums for a two-story, single-family home insured for $140,000 (which is a price range that is a challenge to even find anywhere these days).

The catch of a much higher deductible, of course, is that you risk not having enough cash on hand to cover the deductible if you need it. Many Americans lack significant savings, so paying several thousand dollars to cover a major loss may be a stretch.

Homeowners with a robust emergency fund can afford to raise their deductible, but if you're living paycheck to paycheck, or if you're not a consistent saver, be careful. Plus, if you raise your deductible significantly, that means you’ll be responsible for more minor damage. You’ll be self-insuring for smaller losses.

Other Ways to Save on Scottsdale Homeowners Insurance

Many insurers offer discounts if you buy multiple policies, like Scottsdale homeowners and automobile coverage, or if you take steps to reduce risk, like installing security or sprinkler systems. Others may offer a discount if you have your premium automatically deducted from your bank account. So you should check with your insurance agent.

Also, according to the Insurance Information Institute, If you’re at least 55 years old and retired, you may qualify for a discount of up to 10 percent from some insurers (the rationale being that you’re probably at home more, so you may spot potential problems more quickly).

To get more information on Scottsdale homeowners insurance and how premiums are calculated for different homes and different coverages, check out our other articles over in the Scottsdale Insurance section under Scottsdale Real Estate Categories.

We also offer tips on a daily basis on Twitter and our Facebook Page. Some of which may deal with Scottsdale homeowners insurance. Check us out there as well.

First time Scottsdale homebuyers are in a trap they can't seem to get out of, and it's called a "Rent Trap."

First time Scottsdale homebuyers seem to be caught in a rent trap they cannot get out of.

Everyone has pretty much come to the conclusion that interest rates won't stay low much longer, and home prices continue to rise. New three percent down programs from Fannie and Freddie sweeten the deal for new buyers. FHA’s mortgage insurance premium cut makes FHA affordable again. Incomes are up.

To top it all off, greedy landlords everywhere seem to be practically pushing their tenants out the door, with rents rising every month. Rent vs buy comparisons show renters how much they are losing by staying put. According to Reis, Inc., the average US monthly rent has climbed 14 percent in the past five years—double the rate of home price appreciation. Rents rose 3.5% last year according to Zillow, which forecasts another 3.5% hike this year. Rents are forecasted to keep rising in 2016, though record numbers of new apartment openings are expected to slow down increases to about 2 percent, according to Zillow.

Renters Not Rushing to Become Scottsdale Homebuyers

In what could be considered a reverse trend, rising rents do not appear to be playing a significant role in motivating renters to become Scottsdale homebuyers. This contradicts what some in the housing market think as they expect more renters ought to be actively looking to purchase a home. Rising rents are primarily a sign of increased demand rather than a signal that home purchases will be increasing.

Instead of acting as an incentive to buy a home, rent hikes are keeping renters captive by siphoning off cash that otherwise might have been saved to make a down payment or pay closing costs. Even to save the 3 percent down required of the new Fannie and Freddie programs, it takes two years or more for the average first-time Scottsdale homebuyer to muster enough for a down payment. Every time rent increases, it’s going to take even longer to save enough to become a homeowner.

In the past, renters making the national median income could expect to pay about 25 percent of their income on a typical apartment. Today, renters should expect to spend roughly 30 percent of their income on the median apartment

Find more news pertaining to the recent number of Scottsdale home sales under our Scottsdale Real Estate News Section of articles to your right just below our Scottsdale Real Estate Categories.

We also post tips on Facebook and Twitter. Follow us there for many other mortgage related tips as well.

Scottsdale Real Estate News - July 2015

In our Scottsdale Real Estate News for July 2015:

American Dream: Not What It Used to Be

Owning a home is no longer the American Dream it once was.

Owning a home is no longer the American dream it once was. The lingering effects of the Great Recession and housing bust have altered Scottsdale homeownership – a change likely to ripple through the Scottsdale housing market for years to come, according to a recent study conducted by the Joint Center for Housing Studies of Harvard University.

Because of a lack of jobs, slow income growth and other financial factors – including the weight of student and other debt, homeownership continues to lose steam, sales of existing homes are lagging and single-family construction is at near historic lows.

The homeownership rate stands at 64.5 percent, where it stood in 1993. The rate fell for eight consecutive years after peaking in 2004 at nearly 70 percent.

While homeownership has dropped off, those living in apartments continues to increase along with rental rates.

Rents on a national basis have nudged up by 3.2 percent, meaning affordable housing is becoming out of reach for a segment of the population.

The flip side of falling Scottsdale homeownership rates has been exceptionally strong demand for rental housing, with the 2010s on pace to be the strongest decade for renter growth in history. With no signs of a slowdown in renter household growth, rental markets are likely to remain tight in the near term.

Meanwhile, if you are renting and plan to continue doing so, or if you're an up and coming first time renter, the next article is for you…

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5 Tips for Renters This Summer

Roughly 45 million people will choose to rent a home instead of buy this year– many for the first time.

When they move into their new place, they will quickly discover a number of things they didn’t realize they needed – whether it’s something aesthetic like wall art or essential like a recycling bin. Here are five rental reminders before the next big move:

1. Make Sure You Can Afford It

Popular advice insists that renters should not spend more than one third of their annual salary on rent – but that doesn’t necessarily mean that’s how much you actually end up spending. Rent is only one of your monthly expenses; so don’t forget to budget for things like utilities, cable, Internet or even weekly groceries.

2. Know Your Landlord

Surprisingly, not a lot of new renters research their landlord or rental company before signing a lease. People research restaurants before dining, so why not do the same with someone you’ll be paying rent to for a year?

3. Get Renters Insurance

Studies show that 66% of burglaries happen in the home, and renters are just as likely to be victimized as homeowners, yet fewer than 45 percent of them actually purchase insurance. The average price of renters insurance is only $15 a month, and saves you from financial disaster in the event of theft, accidents or property damage.

4. Pay Your Rent On Time Every Month

It’s important to build a good credit score in case you want to buy a Scottsdale home someday. The easiest way to do that is to pay rent on time each and every month, and if you do miss a payment or have to pay late, include a formal letter of apology to your landlord with your rent for his or her records.

5. Think Safety

A neighborhood can seem safe and active during the day, but nighttime can tell a whole different story. Familiarize yourself with your new neighborhood by looking up local crime maps and signing up for sites like EveryBlock, which aggregates crime news from local outlet sources, public police reports and comments from local residents. Do your research and find a safe and fun neighborhood that suits you.

Why is the rental market so hot everywhere? Partly because being able to afford a home is shrinking…

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Scottsdale Home Affordability is Shrinking

Home sales could be off to their best year since the housing and economic downturn, with May marking the fifth straight month that contract signings have climbed, according to the National Association of Realtors.

The Realtor’s Pending Home Sales Index, which is based on contract signings, climbed 0.9 percent to 112.6 in May from a slight downward revision of 111.6 in April and is now 10.4 percent above May 2014 (101.9).

The index has now increased year-over-year for nine consecutive months and is at its highest level since April 2006

This year’s stronger sales — coming with similarly tight housing supplies from a year ago — have caused Scottsdale home prices to rise to an unhealthy and unsustainable pace.

Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages. Without meaningful gains in new and existing supply, there’s no question the goal post will move further away for many renters wanting to become Scottsdale homeowners.

A recent S&P/Case-Shiller Home Price Index was the latest report to show a relentless rise in housing prices, causing some economists to ask: Is another Scottsdale housing bubble forming?

Economists point to several reasons why this isn’t a concern, namely that while prices keep rising, the rate of growth has slowed. In the first three months of this year home prices gained 0.8%, according to the S&P Case-Shiller national index. That’s down from 2.8% in the first three months of 2013 and 1.2% during the same period of last year.

Over the long-term, housing has tended to rise about 1% annually above inflation. According to the Bureau of labor Statistics, $1 in pre-bubble 1997 is $1.46 in 2015 dollars. A 1% gain over the past 17 years adds 18.4%.

If we add inflation and a 1% annual gain, we find a historically justified target around 110 on the Case-Shiller index.

The chief economist for the National Association of Realtors has gone on record as saying that prices could surpass the peak set during the last housing boom…

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Economists also aren’t concerned about a Scottsdale housing bubble because far fewer new homes are being built  than a decade ago so there is little concern about oversupply. And most buyers are using cash or getting 30-year, fixed-rate mortgages that don’t carry the same risks as the sub-prime, adjustable-rate mortgages that many received during the boom.
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Some economists said that’s a sign of a normal housing market because in a bubble prices typically rise in tandem across the country, rather than responding to the strength of local economies. That doesn't seem to be happening now, which is strength for the argument that a Scottsdale housing bubble is not in the picture, at least not for now.
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Stay abreast of news that could trigger a Scottsdale housing bubble, as well as a bubble nationwide, by staying plugged in with our website. And don't forget, we post news daily at Twitter and on our Facebook Page to help you stay up to date on events related to the housing market.
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