Sunday, December 15, 2013

Phoenix 4th Quarter Market Update

As we wrap up 2013 we have a very different market to the one that greeted us in January. Earlier in the year and as late as August it was not uncommon for properties to hit the market and be greeted with multiple offers, some above list price. Several things have happened since the end of Summer that have affected the market. 
  • Inventory has grown from approximately 20,000 to 27,000 properties valley wide. With the large price increases experienced in the last 18 months, many people are in a position to try and sell their home for the first time since the bubble burst. 
  • It is this authors humble opinion that the Government shutdown in the fall led to a short term lack of confidence in the market. This caused some buyers to temporarily place home buying plans on hold.
  • The Federal Reserve starting hinting that their $85 billion a month support of mortgage backed securities might begin to be scaled back as the economy showed signs of a serious recovery. This in turn caused a jump of about 1% to the avergage interest rate of a 30 year mortgage. The Fed then reassured the markets that scaling back would not be imminent and the rates dropped back a little but still ended much higher than earlier in the year. The jump was roughly speaking from 3.5% to 4.5%.
The result of these changes has been less buyers and more properties becoming eligible for sale. In short, the market is moving steadily from a sellers to a buyers market.
The chart below shows average days on market for the whole valley and neatly reflects the changes throughout the year. If you are wondering why the days on market value dips between October and November this is due to the sudden influx of new listings entering the market and skewing the number with their low average days.

As we enter into 2014 we expect to see price increases level off, more choice for buyers and the return of a slightly less volatile marketplace. 
If you have any questions or need advice on all things real estate, please dont hesitate to drop us an email or give us a call! 

Warm Regards

Chris & Michelle Spalding

Monday, August 5, 2013

Phoenix Real Estate Market Update - August 2013

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.