Thriving In A Changing Market - Kimberly Caruso

This week, my guest is Kimberly Caruso, a top 1% realtor in Arizona. Caruso has been in the business for 10 years and has seen a lot of changes in the market. She says that the biggest change she's seen recently is the influx of out-of-state money and investors into the market. This has caused prices to skyrocket, making it difficult for locals to afford to buy a home. Caruso has had to change her entire marketing strategy to focus on investors and buyers from out of state. Despite the challenges, she believes that the market in Phoenix is still thriving.

(The following texts has been transcribed)

And good morning. My name is Kim Hayden, and welcome to Kim talk's, all things real estate today is Thursday morning and this is where we go out and we find people that are like boots on the ground in all the markets. And we're just going to get to the nitty gritty as we all know, real estate's a hot topic right now. And what's a little bit warmer than Phoenix and Arizona and that whole beautiful area? I'm sitting here in the cold to see, you know, it's like -16 in Calgary. So I've got my hot tea and I'm hoping I can get some warm vibe, some temporary crew so fast. Now, first of all, I have to say I love this name, Caruso, so I think Roberson Caruso, she's out exploring. She's bringing back, you know, a great find and she's doing it best. Like, are you going to invent a better name for real estate? Took that.

Into consideration.

Now, did you actually go out and invent that name or is that like just a gig?

No, I married that name and chose to take it because it worked. It works.

So well. It works so well. So top 1% realtors in Arizona. So first, tell us exactly where you're at and what's your market that you're working at?

Sure. So I've been a realtor for about ten years in the Greater Phoenix area. I work all of Maricopa County. I'm from Los Angeles, so I'm used to working far and wide. Many realtors just kind of work in their neighborhood and that's their niche. I work in Phoenix. I'm an expert in every neighborhood. I've been working, as I said, about ten years. A few years ago, I took on a licensed realtor assistant, and with her we've been able to do about 15 million in sales per year. And boots on the ground. As you said, I'm out there, anything I work, I touch from start to finish. My licensed assistant is my back up. She does my transaction coordinating. She's able to get into properties if I'm not available. And together we get it done.

Awesome. Awesome. So we know that real estate itself right now is like I jokingly said the other day, I think I could sell my dog house in the backyard for triple digits. So when we look at this, what are some of the strategies? Are you working with many buyers right now? I guess that's my first question. Are you working with many buyers?

Sure. So I typically work with buyers. Nothing I love more than a listing. So easy to put that sign out there and get it sold. The hardest part about being a listing agent is saying no to the 25 people who put in over asking bids. I work with lots of buyers. I've had to change my entire marketing plan. I always worked with entry level buyers. That was my passion. It was my wheelhouse. My kids are in their early twenties. I moved to Arizona eight years ago from Southern California. So friends that I grew up with in California, all of their children want to buy homes, but they can't buy homes in California. So they started moving to Arizona as my kids graduated college, I found a nice little niche, started encouraging young kids, don't buy a car when you graduate college, buy a house with down payment assistance. We can get you into a house for less money than you can get into an apartment. So that was my wheelhouse. I did a lot of small dollar volume transactions every year. Very rewarding. Unfortunately, our market has changed and some parts of our market went up 32%. November, November night, 20, 20 to November. 20, 21 housing prices went up, up to 32%. So entry level buyers, there's not a lot for them anymore. So last year, I kind of struggled and looked around at the craziness in our market and realized survival of the fittest is being adaptable as not being a strong bullet being adaptable. So I had to kind of reformulate what I was doing. As much as I love the entry level buyer, there's just not enough there to sustain my business. So I started looking at, you know what is selling in our market because prices have gone up so high. Who's who's buying and we have a lot of out-of-state money and we have a lot of investors. So I've kind of restarted Restrategize and I'm now marketing more towards the buyer. And a lot of investor buyers.

Absolutely invested buyers. So let's talk that. I know that in our market here in Calgary, where we're seeing people who stay there are investors, but they're not really investors, so the deals aren't going through and such. How do you do that? Who is a real honest to goodness investor? Or and somebody who is playing in it and I apologize. It seems that we have frozen up here so.

I have found you find.

Okay. You have me find yourself. Yeah. So I'm just curious because for an example here in the Calgary market, we had a property that was listed at just over the four mark. 400,000. And that's a very hot market for investors here in Calgary. And we had three offers come and those investors supposedly had the money when they put the offer in and put in clothes. So how do you decipher from real investors and I want to be an investor.

Sure, sure. So investors have changed. You know, it's interesting. I don't know if it started with COVID, but people have kind of reassessed money and what they've done with money and people seem to have a little bit more free income these days. So what I would consider an investor is somebody who obviously owns their own home, whether they're in state or out of state, and then they have investment properties, usually anywhere between one and ten properties. I have a few investors who are just getting into the investing market. I try to provide them with the pros, the cons, a bit of a prospectus on what to expect and what your return on investment is going to be. So this is where my marketing has had to change. I have to put together all of this data now, but also I need to vet my investor, of course, and no offer goes in ever without proof of funds and then a decent earnest money and decent amount of earnest money and typically waiving any repairs and inspection. So there's only a few days to do an inspection and I have yet to have an investor back out of anything. Investors are so grateful when they finally secure a property, they're happy to take it. Our rents have gone up significantly. Our market here in Phenix has gone up far higher than the rest of the nation. So this is an excellent place to be investing right now. So there's no shortage of investors. There's just a shortage of properties that we can get them into.

Absolutely. I'm originally from Wichita, Kansas, and my brother in law I think owns 19 properties there. And they've actually seen in the last six months which to go up 25% year over year So needless to say, with 90 properties, I mean that's, that's, you know, he's been in this for a long time and, and he's a professional investor and a professional landlord. So it is absolutely a great space. And I agree before you go and do and you know buy the new car and spend all the money definitely looking at you know, putting your foot in the real estate pool. There is speculation out there around real estate in North America because North America, when you look at Canada and the United States, we are some of the last kind of affordable, developed countries in the world where it's safe to live, safe to walk the streets, safe to do business. And still where housing has been very affordable well up to this point. So when we look at our European counterparts, you know, you look at them in the UK, the townhome in London can run you well over £1,000,000. And to gas up your car is, you know, for four or $5 a gallon. So, you know, where do you think if we were to put a you know, a hypothetical on this you know, just watching the development of what's happening in the United States and in Canada and and see kind of how the world is unfolding right now. And with the United States having such strong welcoming immigration policies, where do you see the real estate going? A lot of people go, when is this going to stop? What are your thoughts on that?

Sure. You know, I focus on Arizona's real estate and we are a bit of an anomaly. We don't follow the national trends typically. I belong to a group where we look at Mike Orr's database and it's real time data. It's the oldest and largest database of real estate transactions in the nation. And Arizona is, as I said, an anomaly. We don't follow the typical trends, although I think things are really changing for us. And that is thanks to COVID. I don't know if it's a good thing or a bad thing, but we've seen so much of Silicon Valley moved to Arizona. People are working remotely now. My four clients right now are from Seattle. Again, people are working remotely. They're not quite ready to retire. Really interesting dynamic group that's not quite ready to retire, but I can work remotely, so I'm going to move to Arizona and that's who's buying right now. That seems to be my new wheelhouse. So, you know, we were a state that was driven by tourism back in the day. So when, you know, things like Nine-Eleven happened, this economy crumbled. But we're no longer driven by tourism. I think we are the new and what, three the second largest tech community we have, Taiwan Semiconductor is just a couple of miles down the road here, building one of the largest chip manufacturing plants in the world. So our dynamics are really, really changing. And I believe that because our median incomes are going up, I think we have a very healthy economy here in Phoenix. And regardless of what happens with the rest of the nation, we're watching the inflation right now in the rest. I mean, everyone is suffering right now with inflation, but our market here in Phoenix still seems to be thriving. And I think we will continue as the rest of the nation is hurt and reeling from high prices, they're escaping to Arizona, which still is affordable. We're one of the most affordable markets in the nation. So I think for now we're in good shape.

So let's talk locals. You've been there ten years now, right?

Oh, I was 18 years old.

Ten years. Okay. So then, you know, I am dollars to donuts. I know you have heard in the last little while somebody say I remember when housing prices was so when we look at markets. So for example, Boise, Idaho. So my sister lives in Boise and Boise, Idaho is one of the most elevated pricing in North America in the last 12 months. And that is all you had already mentioned the market Seattle that is all due to influx from San Francisco Portland and Seattle. So you know second silicon is kind of what it's being dubbed because it has topography so forth and so on. So when we look at that, because I know that I've talked to agents in Boise and that's one of the things they're hearing is that the locals are getting priced out of the market. They can no longer afford to live there, and now they're pushing outward. What are some of your thoughts around that and how do you help, especially from the listing side, you get a call and somebody like I can't afford my taxes anymore because my taxes have gone up three times or or, you know, I'm not making the money I need to make an or to live now in this neighborhood. What are some of the ways that you help the locals navigate and still feel connected to their city that they've lived in and supported and loved?

Sure. So talk about expansion and that is the big thing here in Phoenix. I live on the west side of Phoenix. People who grew up here would turn their nose up at the west side. It was all orange groves back 25 years ago. I came from Los Angeles. I thought it was beautiful, so I decided to settle here. People don't even realize I had a client that grew up in the Chandler area last weekend, and I met her at an investment property in the West Valley and she is in her mid-fifties early sixties. And she was shocked that people lived out here and were so taken back and so impressed at how beautiful the homes were and the area that has been in her backyard for years. People don't realize the expansion in Phoenix. So where are we expanding? East Valley expanded maybe ten years ago. I'm really big on expansion in the West Valley and the north west Valley. I've kind of speculated on that, and I've bought my own investment properties and done very, very well on them. And that's where I tend to put my investor clients and also my neighbors whose children need to buy or neighbors who just need a different house. But as you said, they're priced out of our market or they just want to take some equity out of their home. And, you know, downsize, which usually means more square footage in one story, by the way. But so I'm finding you know, through my background is marketing. I went to USC. I have a degree in marketing, so I read a lot. Phenix Business Journal is my go to I get alerts on my phone all day long who bought land where and what they're doing with it. So between the businesses that are buying the land and developing jobs and the builders who are mowing down those mountains and putting up new homes, there are still opportunities to buy in Phoenix that you talked about in the $400,000 market. I know our dollars are a little different, but that's a market that you know, I used to get people into homes for $180,000 and that wasn't that long ago.

The very first home I sold in this market was $137,000. That same house today is about four 50 in Calgary.

I used to call myself the Queen of the $89,000 condo. It no longer exists. It's about a $400,000 condo now. But that's what I used to do and I used to do a lot of them. So we do have new build and I don't want to let my, my secrets out, but I have been sharing them with, with other, you know, neighboring and friend realtors. There is a new build going out west. Some of the communities have prices in the mid 300 thousands, but they've got waitlists of 300 people for those homes. They're not doing lottery. The systems are kind of weird. It's it's hard to get in but every now and then I'll find a community that's friendly. There's one that's opening on Saturday. So opening day in the new community is where you want to get in. You're going to get entry level prices for that community. They will continue to go up every time there's, you know, a release of ten homes over the course of the year. So by the time your new build is done in a year, you'll have $100,000 equity in that house before you even sign the papers. So that's where I'm taking my clients. But it is a matter of educating them as to the beauty and the value of the Northwest Valley people. It's a little stigmatized. People don't understand what's going on out here but everything's new and it's shiny and it's great and it's less traffic.

I think. I think that our younger generations are less about name brand, a more about value, and they also do their research. They will know that if it's good value and it's a safe community it is worth putting their money there. It's funny because I am seeing chefs away from I always joke that I'm not. I'm more like a bowling bag. It's bright, it's colorful, it's fun, you know, and I personally have never been able to understand and I've always been to survey knows very, very clearly. I have always been a mid-market agent and I've always worked predominantly as a listing agent in single family homes. And I think part of the reason I never truly transitioned to the luxury market is because I am pulling back and I'm totally cool with that. But I think our next generation is looking at what is useful, what is safe, what is, you know, affordable. They're not they're not as swayed by you must have this because of this name brand, they're going, this couch is good enough. I don't need a chancing company couch. I don't need it. Ethan Allen couch. This one's good enough. So on that note, I'm going to do a little game because I've got this whole thing around modular homes and carry gated communities that are financial bridge communities, but more so for the like 45 and over. Okay. So if you were to be in your market if somebody came and said, I have money, we're going to develop a modular kind of RV type of thing because we have this whole thing happening with no nomadic lifestyle. Right? What would that look like? How would you design it for the people in your community, the people, you know, that think that are somewhat fascinated by that? If the money was not an issue and you could design a cost effective modular nomadic style community to fit the 50 plus that wants to travel and move and own what would it look like?

So it's interesting you brought that up because this is such a big topic right now. First off, I have a girlfriend who's an investor. She's a neighbor here in the community. And she developed a modular home community in the Costa Grand area, which is east of Phenix going towards Tucson. The homes were sold before she finished the community. So there is a huge demand simply because it's affordable housing and the nomadic lifestyle is huge. Everybody here has big mobile homes and they're buying land in places where everybody can park them and they can go on vacation. I'm not quite on board yet with this kitchen. I like my creature comforts, so but I have a feeling it's in my future, you know, it's it's I think it's in all of our future. Here in Phoenix, as I said, housing still affordable land is pretty cheap. People are taking plots of land and they're developing them more into multifamily, maybe four and eight plex, as opposed to the modular home community. So I'm not going to go any further on that comment because I'm concerned for Greece yeah.

It's something that we're where we talk to a lot of people. We're looking at all the different building products and concepts and everything because the United States is quoted to be 4.8 million homes short for servicing affordable housing. So on to one. I have one final question. You're going to, I know you're going to have to answer this. I ran across and I'm so glad to have you agreed to share some time this morning with me because I've been tracking this down and trying to remember what it is. And I know that they do it in Phenix, where they do an energy reading. What is the term for energy trading? On homes like when they go in, they say this home, the windows are this and the roof is this.

Sure. Is it her rating that you're?

What you're.

Referring to yes.

Can you share a little bit about that? Because with the cost of living and with inflation hitting, I believe that this is something we're going to see because I believe I believe Arizona is on the forefront of this. And it actually does affect I believe that it does weigh in on your mortgage rate and and what you qualify for and such like that. Do you share a little bit can you spell that for me? It's what is it?

Hers reading HCR? I think it may have a Z in it.

Yeah, I think so.

Yeah. So electric costs have gone up 30% in the last year. I was looking into solar and opted not to do solar. The payback just wasn't there. And we have a huge electric bill and we don't have a pool and I can't quite figure out why it's so big, but it's just huge. But because our prices have gone up so significantly in the last year, the return is there now for solar. So it's something we're just starting to look into. Solar is huge here in Phoenix there are leases that are predatory. You find them in a lot of the retirement communities. When people go to sell a home, the leases are in and the homeowner is at a complete disadvantage. They're paying more for the lease and the electricity than they would be without solar. But what we can do now, as realtors, as listing agents, is renegotiate those leases for the buyers. So it's not making deals fall apart any longer. So solar is huge. New homes are going to have the high energy rating that you're referring to. That's another reason that I pushed for new homes simply because everything from your appliances, you know, through your windows and the insulation, everything is the highest rating possible for energy efficiency. And in Arizona, with the heat, that's huge. That's really, really important. It's good for the environment. And it's good all the way around. So we are a state that's very proactive with energy conservation, but we are seeing a big, huge push for solar here in Phoenix.

Yeah, absolutely. Well, we have communities that are being built here in Calgary. And when you talk about energy bills, ours has literally doubled here in Canada. And the reality is Calgary, where I'm where I live, we actually sit on one of the largest natural gas pools globally. And our delivery, it's for us, it's all the taxes that go into the delivery of energy. And so we actually have some communities being built in that 45 minutes out of core that are actually wired and the roofs are all solar.

Yes solar roofs Tesla is doing the solar roof and I'm fascinated by it.

Oh Tesla Tesla is Elon is crazy crazy. He's such a forward thinker and visionary. Yeah to think that at 16 years of age he decided to leave South Africa, go to Canada, go to school out East and then go to the United States like he's done all this on his own folks. So anybody out there who says they're afraid to branch out or do something on their own is you know really think about it. Some of the greatest minds out there work on their work on their own. Right. And do it from a very early age. So yeah, we're talking solar. So I'm going to look up more information on this because we're starting to see that here in Calgary because like I said, it's -16 today. Oh, I've got a heating pad on my floor that I put my feet on. So my toes don't get cold, so I'll swap this weather. Actually.

I may have to sell you a house here when you were using it. Actually.

Actually, we will be in Phenix with the Resilience Series, so April 30th. So we will definitely connect at that time for sure because then I'm going down to Yuma to get all my dental work just across the border because that's where I go from my dental work. Excellent. But is there anything words of wisdom? I know that you had a really great, great quote that is an inspirational quote for you, and I'd love for you to leave us with that today as to how to quote an insight, because real estate is not an easy business. It is. It is a business within a business that makes you step outside of your own skin and treat yourself as a commodity. And say, I am a business. It is a business that a lot of people don't understand the complexity of it. And, you know, I always like to have inspirational quotes that we can share.

What we are. Sure. So Herman Cain is who this quote is by, but I believe it goes back to Einstein, and it's been said by many people different variations of it, but it's about success. And it says success is not the key to happiness. Happiness is the key to success. You are doing it when you're if you're doing what you are, what you love, you'll be successful. It's just that simple. You have to love what you're doing. And when you love it, you'll see that it absolutely.

And you know, our now NAS stats show that 62% of all residential real estate agents are women. And ladies. We got to, you know, support each other and celebrate each other. And I know we're this week as International Women's Day Week and they're celebrating women around the world. And Kimberly, thank you for sharing your time and celebrating this week with me because you know, I think, you know, it's all about girl power getting out there, getting the job done and caring for people. This is a hard time for a lot of people. So just remember, if your clients are being a little weird or a little anxious, that's not unexpected. Just be a little bit kinder and you'll get the job done. So again, things that you share with us, your website, your email, how do we get a hold of you?

You're sure my email is my name? You are just my original name. Kimberly Caruso at me dot com. My website is Kimberly Caruso. Home scum loved you.

Awesome. So if you want to explore homes in Phoenix and do it fast, you know who to call.

Kimberly, please reach out. Kim, thank you for having me. Cheers to you. And success on your show.

Absolutely. Thank you, everybody. Please like share, subscribe and comment. Your support will make this grow faster and faster. Bigger and bigger. And I'm Kim hayden. This is Kim talks all things real estate Thursday. We'll talk to you soon.