You may be hearing stories on the news related to the Real Estate recovery here in Phoenix. Here is our opinion of the state of play based upon experience out in the trenches.
In our area of expertise out in the NW Valley. We have seen an average price increase year on year of about 30%. This seems like a huge increase but dont forget its still down 60% from the highs of 2006. Yes, the recovery is happening but the increases are coming from an extreme low point so they need to be weighted accordingly.
Some of the recovery has been fueled by investors, hedge funds and cash buyers. As we move further and further away from the bottom of the market, the low hanging fruit is less abundant and so these types of buyers are also less prevalent. This gives the traditional first time buyer and move up buyer some kind of chance of competing. Just when you thought good news was here for the everyday buyer, enter low inventory. This beast is causing more problems for those every day people wanting to buy a house. Competition is fierce for the 18,000 or so active listings in the valley (A healthy normal inventory has more like 30,000-40,000 homes) and it seems that for every house that's out there, multiple buyers are trying to bid for the same property. This problem is most noticeable in the $200,000 - $250,000 price range with the average house price in Phoenix being right around $230,000.
Lets talk about distressed properties. 18 Months ago the market consisted of approx 69% distressed sales (shorts sales and REO's). I am glad to say that fast forward to today and that number is somewhere around 18%. Welcome back traditional sale!!! This is the most solid indicator of a more healthy market. With the 30% rise in prices, some people who have been sitting on the sidelines not wanting to short sale are now finding they can get out and break even or even make a small profit.
Interest rates are continuing to fuel the recovery. Despite a recent jump of about 1%, the rates for a 30 year fixed loan are still hovering around 4.5%. Historically, this is an incredibly low rate and should be treated as such despite the departure of the 3.5% interest rate. In other words, it's still a great time to buy from an interest rate perspective alone!
As realtors we are happy to see this positive activity in the market. Sometimes we flinch a little if prices go up too quickly, or if a client makes an offer thats seems just a little too much higher than the supporting comps. We all hope that the market behaves itself and doesnt have short term memory. None of us wants to see another bubble.
Feel free to contact us at any time for a free comparitive market analysis of your home, or if you have any real estate questions or concerns.