The only thing consistent about The Phoenix-area housing market the last few years has been inconsistency. Phoenix was one of the hardest hit cities in American when the housing bubble collapsed. It was also one of the quickest housing markets to rebound. All of the volatility in the Southeast Valley housing market has had many residents asking what will be the next dramatic shift in the housing market. Well according to Troy Reeves and “The Reeves Team” it appears the Phoenix area housing market may be starting its slow march back to normal.
As the year’s peak home buying season comes to a close, the market is showing signs of stabilizing, suggesting that the rise in home values in the near future will likely be driven by market demand, rather than inventory shortages.
Phoenix Area Highlights:
Widespread Inventory Recovery – The inventory recovery is broad and growing. The number of listings increased even though the summer season is ending, and the market registered a net increase in inventory over last month.
Prices Stabilize – Despite the increase in inventories, the median list price did not change compared to July. Absent a significant weakening in economic conditions or significantly higher rates, prices should continue to slowly rise alongside typical cost of living increases.
Sales Prices Are More Dependable – August marked the third consecutive month that sales prices in the Phoenix area, covered by the Arizona MLS, registered at over 97% of there list price. This marks a sharp increase from the begging of this year, when volatility in the market made it much tougher to price a home.
Troy Reeves accurately predicted that home values would rise significantly during the first half of the year and then ease after the upward pricing pressure of the summer months. However the upward pressure is likely to return after a short break once the snowbirds return in a few short weeks.
A benefit of housing inventory and price fluctuation returning to normal levels is that buyers will now have more of a selection to choose from. Many buyers who were turned off by the bidding wars and low inventory will now re-emerge as potential buyers.
According to Troy Reeves, the Phoenix Area market appears to be ending the 2013 home buying season on a positive note, with more balanced inventories, shorter time on market, and higher listing prices compared to one year ago.
So what do you think? Are you ready to see a return to normalcy in the Phoenix Area Housing Market? Leave your thoughts in the comment section below.
Lately it seems like all anyone is talking about is Arizona real estate. The Phoenix metro housing market is seeing a rise in home prices and a decline in the number of houses on the market, putting the area ahead of most other U.S. cities on the road to recovery. The national media has pointed to the valley as an example of what is to come for the rest of the nation. However, the road to recovery has been a long slog, and there have been many false starts and reversals in the market.
Home owners have been fooled before, and because of this they look to industry experts for advice on where the housing market is heading. Troy Reeves has an understanding of the Arizona market like few others, and because of his accurate predictions in the past, Troy and his team are frequently asked where the market is headed next.
While it is true that valley home prices have risen sharply over the last few months, we are going to dive in a little deeper and answer the question so many of you have been asking, where is the market heading next? Will it continue to rise at the same rate? Are we heading into a double dip recession?
Troy Reeves gives us a detailed analysis of the factors that will determine the future price of homes in the valley, and what we should expect in the near future. Here are 7 of his top focuses:
Buyers With Short Sales and Foreclosures Can Now Re-Enter The Market
When the housing market collapse happened in 2008, it wasn’t just the massive flood of foreclosures that hurt real estate prices, the problem was actually two-fold. When homeowners decided to let their house go, either through foreclosure or short sale, they declared themselves ineligible to purchase another home for the next few years. So not only was the housing market flooded with homes, there was significantly less people with the credit to purchase them.
All of this is starting to change. It has been almost 4 years since the housing crisis was at its worst, and many homeowners are now able to re-enter the market. Currently it is just a trickle of people that are eligible to purchase again, but that trickle is poised to turn into a flood in the next 6 months to a year. This will lead to even further reduced inventory and pricing increases.
Much like the height of the housing bubble in 2005 there is currently a shortage of homes available to be purchased. This is one of the leading contributors of the recent increase in the price of housing. When valley prices were at their lowest there was over 40,000 homes available, currently there is less than 13,000.
As you can see from the graph above, inventory levels are still trending downward. There are two major reasons for these lower inventory levels. The first is drastic reduction in the number of foreclosed homes banks are putting on the market. The second reason is that many homeowners and still priced out of the market. These are the homeowners who are upside down, but are not willing to hurt their credit by selling their home short. There is still a very large group of home owners out there that are unable to sell their home, even if they would like too. As home prices continue to rise the number of homeowners price out of the market will be reduced, this will allow inventory levels to loosen up.
Bank Owned Properties
This brings us to the banks. The banks are very secretive about their plans and future intentions. Currently the banks wield more power over the real estate industry than any other time in recent history. We hear all kinds of speculation regarding the future plans of the banks, but for this article we will stick with the facts.
The facts are this, after the housing crisis the big banks were over run with houses and the market was flooded with bank owned homes. Recently however, the bank owned homes placed on the market have dried up in Arizona. Instead they have announced different strategies to get these homes from reaching the market. Many large banks have started selling large chunks of homes to large investors. Other strategies include allowing more homes to be purchased at auction instead of being returned to the banks and sold through a management company. The banks have also announced plans to rent homes back to homeowners who have been foreclosed upon.
All of these strategies have one theme in common, they keep the homes from entering the market, and at least temporarily keeps the inventory suppressed. Look for these trends to continue from the banks, as inventory levels shrink and home values climb, the banks will be encouraged by their recent decisions and continue down the same road.
Out Of State/Out Of Country Buyers
It was no secret that Arizona was having a once in a lifetime fires sale on home prices over the last few years. The media may not have realized it, but investors did. Nearly 50% of home sales in the valley over the last 2 years came from someone outside of our state. Investors that were able to see past the short term knew there was no way to make a bad purchase with the prices where they were.
However as prices have steadily increased, investor interest has steadily decreased. This is not to say that they are gone, because they are far from it. But we have seen the ferocity of investor interest wain from its all time highs. Arizona real estate is still on sale, prices will with out a doubt rise over the long run. But as prices continue to creep upward, buyers can expect fewer investors in the market, and all cash offers like we are currently seeing will decrease.
Media – What country is saying about AZ
Arizona is the talk of the nation when it comes to real estate. As we have become the first state to shrug off the months of negative trends, the media is looking to us as an example of what is to follow for the rest of the nation.
TV shows like the new Property Wars Series with Doug Hopkins from Posted Properties, who has been our business partner and good friend for many years, highlight the insane competition among bank foreclosures.
It is important to realize when listening to the national media that they report on what is happening and they do it well, however they are not always as accurate at predicting the future.
Rental Prices Stabilizing
It is easy to get lost in the statistics when looking at the housing market. There are so many different metrics to study and analyze. At the end of the day however, looking at the price of renting vs the price of owning a home is a great way of telling if homes are over or under priced. At the peak of the housing collapse it was twice as much to rent as it was to have a mortgage on that same home. This is without factoring in tax breaks and other incentives for owning a home.
Prices are going up, more renters are again qualified to purchase a home, and the rise in rental inventory are all helping to stabilize rental prices.
The last four years have been very hard on home builders. The majority of home builders when out of business and the ones that were able to make it through typically had to sell homes at a loss. But like the saying goes, whatever doesn’t kill you makes you stronger, and now that the market is turning around home builders are poised to start making a profit again.
Because home builders are now able to make money they are starting to develop again, driving around you may have already noticed this. There are many new projects set to take place throughout the valley in the next few months. So what does this mean for prices? The increase in inventory levels provided by new housing starts should help reduce the shortages we are currently seeing. In addition these brand new homes should help raise the median home price.
The media is starting to pick up on something The Reeves Team has known for quite a while, its a hot market out here. The attention we are getting in Arizona will continue to add to the idea that now is the time to buy. It is important to understand the future of Arizona housing prices is a complex subject. It is not as simple as the national media would have you believe. In the near term buyers who have been struggling to get offers accepted on homes should find it easier to get into that home over the next several months. As more and more homeowners will be priced back into the market there will be more traditional sales available to potential buyers, which we are already starting to see. You can expect the out of state buyers and investors to cool off considerably over the coming year, this again will make it easier for a traditional buyer to get those offers accepted. When you couple that with the continuation of the historically low interest rates(we just hit a new all time low today) we are finally approaching a very favorable market in the valley. At the end of the day prices should continue to go up, though not nearly as quickly as we have seen over the last quarter. We should see the market continue to get healthier with slower sustained growth and more traditional buyers.
Do you have any predictions of your own? Please leave your questions and comments in the section below.
Before you begin throwing down offers on properties its important to understand how much house your budget will allow. Below you will find a good idea of just how much of a house you can afford in Gilbert Arizona for $300,000.
Moving can be stressful, especially if you wait until the last minute to plan. It’s important to hire professional movers or enlist the help of your family and friends well ahead of time. Before you move, you should make a moving checklist, so you can make sure that you are prepared and confident when moving day arrives. When creating a moving checklist, be aware that you should write it up in phases since there are different things you need to do, starting at least 6-8 weeks before the moving date.
6-8 weeks before the move
date is when you should start getting yourself and your belonging organized. Make a list of what needs to be done before the move. Start cataloguing your belongings, what you want to have moved, what you’re going to sell, give and throw away. If there are items you want to take with you that you think you won’t use or need before you move, start packing them now. If you haven’t already reserved a moving company, this is the time to do it. You want to give yourself and the moving company enough time to get everything organized and to reserve a moving date that is accommodating to all parties. If you have children, start getting their school and medical transfers and histories in order. Notify your bank, post office, work, different insurance companies, etc. of your address change. Start checking what else you need to change before you move. Things can get chaotic when packing up your house, so you may want to get a lock box or a safe place to put your valuables and important documents.
4-5 weeks before the move
You should start intensifying your packing. Finalize what you will be bringing with you and what you will be leaving behind. This is pretty much the last chance you have to decide whether you will need a moving company or whether you will be moving your belongings yourself. Even if you are moving your things yourself, you should contact different moving companies and start asking about costs and policies for renting a moving van. Start finalizing your change of address. Contact your utility companies, cable companies, get a change of address form from the post office, credit card companies, your friends, etc. and give them your new information.
2-3 weeks before your move
You should have a pretty good idea of what you will be moving. Make sure that your valuables are in a safe and secure place and have been itemized. If you are moving your car with an auto mover, finalize all the details. Even if you are driving your car to its new location, you should get it looked over to make sure everything is running OK. Finalize your moving reservations with the moving company. If any changes need to be made, now is the time to make them. Start cleaning out your house of anything you haven’t sold, given away, or packed. If you have pets, get their affairs in order. Make sure you have all your pets’ and, if you have children, medical documents in order. Make sure to return any borrowed books, and you might want check and make sure that you have picked up anything that was in a repair shop.