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The Phoenix housing market has seen stable growth over the last several years. This stability has been a welcome change from the turbulent times that are still fresh in everyone’s mind. The housing market in the phoenix area started growing at unsustainable rates in 2005, this unsustainable growth eventually lead to a collapse in 2008 that caused the housing crisis and great recession. The phoenix area was hit particularly hard during the recession. Since 2012, we have seen a very different picture, instead of huge rises and crashes the market has seen steady sustainable growth.
Recently however, Troy Reeves and “The Reeves Team” have started getting questions on whether or not we are starting to enter another bubble. So, are we entering a bubble? Or are we just suffering from a case of recency bias that is making homeowners, and potential buyers nervous that the past is doomed to repeat itself?
To answer these questions let’s start by taking a deep dive into some of the metrics that determine the health of the phoenix housing market.
We will start by looking at the Absorption rate of homes in the Phoenix metro area over the last 12 months. Absorption rate is a very important statistic to measure the health of the overall housing market. The absorption rate is calculated by looking at the current number of homes sold in a month versus the number of total homes on the market. The result is the total amount of months it would take to sell out of the current inventory. Three months is the ideal number for a healthy housing market. We were around the 3-month mark in March of 2017 however we have been dipping under that number since that point.
So, what does it mean that our absorption rate has been steadily under 3 months? The biggest takeaway is that there is not an ideal supply of homes on the market to meet the demand from the buyers looking to purchase a home. This points to a rise in housing prices in the short to medium turn. While the current absorption rate is not dramatically under the ideal mark if it continues lower look for even sharper price movement upwards. If you are looking for additional insights into the absorption rate and what it means for your housing situation please reach out to “The Reeves Team” for an even further in-depth analysis.
Next let’s look at the most straight forward metric of them all, price. While price may not give us as good of a gauge of what’s going to happen in the future as absorption rate, it gives us a great idea of what has happened in the past. While the past in real estate doesn’t necessarily repeat itself, it does often rhyme.
So what does the price analysis over the last 12 months tell us? The biggest take away is that we have a great deal of stability in the market. Unlike from 2005 to 2012 these lines are fairly smooth instead of having huge spikes upwards and huge drops downward we have slow sustainable growth. As you can see towards the end of the chart there has been a recent uptick in the median listing price and in the median sales price, this is to be expected as we continue to see an absorption rate of under 3 months.
As a side note this pricing graph demonstrates something we at “The Reeves Team” always explain to our clients. If you want your home to sell quickly and for the highest possible value, it is important to price your home correctly when you put it on the market. Look at how close the <strong>new median list price</strong> and the <strong>sold median list price</strong> are. This tells us that the homes that are priced correctly are selling and the homes that are overpriced are sitting on the market. In the Phoenix housing market buyers have options so it’s important to be competitive if you want your home to sell for top dollar. If you are interested in putting your home on the market or just want to have an idea of how much your home is worth, contact “The Reeves Team“.
Next up let’s look at inventory. Inventory is a measure of how many homes are on the market, versus how many are being sold. As with price you can see that the number of new listings and sold listings are very similar.
What is striking about inventory going into 2019 is how stable is has been since the housing market started recovering around 2012. Take a look at this article written by “The Reeves Team” in July of 2012. This was one of our most viewed articles ever as you can see by the over 30 comments that were posted when it was written. Troy Reeves correctly predicted that the housing market was returning to normal and that normalcy has continued on until today.
The last item we are going to look at before we zoom out to the big picture overview is the Sold Days On Market. This metric takes a look at all the homes that were sold during a given month and averages how long it took those homes to sell. There are a couple of takeaways from this data over the past year. The first takeaway is that the metric has been under 90 days for the entire last year. The Sold DOM under 90 days for a span of an entire year reinforces what the absorption rate told us above, that buyers are wanting homes faster than sellers are listing them. While the margin is not to wide at this point, it is something that could lead to a run up in prices in the short term if it continues to fall.
The second take away from the Sold Days On Market is that buyers want to buy homes during the summer. As you can see the days on market dips dramatically during the summer months when kids are out of school. You can expect this pattern to repeat for the foreseeable future.
After reviewing the detailed short term metrics we can see that prices and inventory seem very stable, and point to continued sustainable growth. Now that we have looked at the short term lets take a look at the bigger picture and zoom out and look at prices before and after the run up and crash of the housing market.
Looking at this chart that began in 2000 and runs to today we can get a great perspective on just what happened and where we are today. First you can see that we had sustainable growth from 2000 until 2005 when the housing boom, fueled by the rise in subprime mortgages, took off. As you can see by the parabolic rise in prices from 2005 and peaking in 2007 these prices were not sustainable. In 2008 the housing prices absolutely fell off a cliff and bounced around at the bottom until around 2012. Its clear to see looking back that during the 2010 to 2012 time period we were clearly in oversold territory and a rebound back to normal prices was needed. This rebound was accurately predicted by Troy Reeves” in November of 2012. To give you some perspective “The Reeves Team” drew a red line that continued out from the original sustainable growth between the years of 2000 to 2005 up until today. What is remarkable is, even with the parabolic run up and huge crash and recession that followed, the market has stabilized back to where it would have been if the slow sustainable growth had continued from the beginning.
There are many reasons to be optimistic about the housing market moving forward. The biggest reason to be optimistic, is that it does not appear that we are in a bubble. While housing prices have had growth at a slightly faster than average pace over the last few years, it is mainly fueled by the fact that prices previously were to low and we have been catching up to where we need to be all along. With that being said, it is always a good idea to keep an eye on prices in the future, and if you see another parabolic jump in prices be cautious. However, looking at the data we have reviewed, including the absorption rate, prices, sold days on market and inventory a bubble does not appear to be an immediate threat.
Wouldn’t it be great if there were no downside and everything was looking positive? Unfortunately we are not that lucky. Interest rates have been on the rise in recent years and the Fed Chairman Jerome Powell has indicated he plans on continuing to raise them, possibly even increasing the rate at which we see rates rise. So what does this mean for the Phoenix Housing Market? The biggest takeaway is that if rates go up, the amount of money home buyers will be able to finance will go down, as more of their monthly payments will be eaten up by interest.
The effects on the rising interest rates may take time to play out, but for now “The Reeves Team” remains cautiously optimistic that we will continue seeing long term sustainable growth in the Phoenix Housing Market. The market appears to have completed its return to normalcy and the deep dive that we did on the short term numbers appears to say the same thing. If you want any additional analysis on the market or your home in particular please reach out to “The Reeves Team“.
Let us know what you think of the analysis below!
Troy Reeves received the ARMLS monthly statistics for the Phoenix metro area as of August 14, 2014. The report included commentary by Tom Ruff of The Information Market.
Please read Tom Ruff’s commentary below;
For the last year I’ve been faced with the challenge of seeking new ways to describe a real estate market that has been uninspiring but consistent. As we report data for July 2014, I’m faced with the same challenge, how to repackage boring.
There were no surprises in July with the median sales price, average sales price or total sales volume. They all came in as expected. The ARMLS Pending Price index for July 2014 projected a 1% rise in the median sales price to $197,000, an average sales price of $249,200 with a projected sales volume around 6,600. The final numbers were $197,000, $249,700 and 6,775 respectively. The reason I point out the accuracy of our projections is simply to say our market is and has been quite “dependable.”
The charts for July speak for themselves shouting more of the same with only a couple minor expectations. The most interesting change comes under the heading of new inventory. For the second consecutive month, first in June and now July, we’ve seen the lowest total of new listings for each of these months respectively in the 14 years ARMLS has been reporting this data. This possible trend, if it continues, will have significant implications moving forward. One final point to consider when viewing the numbers this month — we are now through “our season.” History tells us sales volume will decline each month through November as was the case in July. Sale volume in July was 6.2% lower than June.
Real estate is a cyclical business, and our current phase just turned one year old this past week. A cycle by its very definition is a repeated sequence of events. The characteristics of our present phase include flat prices, tepid demand, and typical supply. Sales volume figures and sales price data receive the bulk of media attention each month, while very few pundits discuss the dramatic improvement we’ve seen in the composition of our sales. There has been a measurable shift away from a market
once dominated by distressed sales and investor purchases to a much healthier more traditional market.
While I’ve struggled with new ways to describe this maturing phase where sales volume is less than desirable but where the quality of these sales is improving, our journalistic friends this month had no such problems. In July I saw several reports where the mundane numbers of the past few months were packaged into something truly astonishing.
Our current housing market is not perfect by any means, but I do believe we’re continuing faithfully down the long path of recovery, showing subtle and consistent improvement each month. We are definitely not the ugly picture the articles above paint. Time and time again in STAT we’ve described 2014 as being a transitional year, a year in which we move closer to a normal, robust and sustainable housing market. In a recent report, Doug Duncan, a senior vice-president and chief
economist at Fannie Mae stated, “We have always believed that for the housing recovery to be considered robust, we will need strong and sustained full-time job and income growth. Recent data indicating the creation of more than 200,000 jobs over each of the last six months, combined with this month’s improvement in the share of consumers reporting significantly higher household income than a year ago, does provide some reason for optimism. If these trends continue, they could lead to some upside in housing in 2015.
As mentioned earlier, the Pending Price Index (PPI) projected the median sales price in July to be $197,000, with the actual median price coming in at $197,000. Our sales volume projections also came in as expected with sales volume in July lower than in June. In August the median sales price is projected to fall to $194,900. Let’s not jump to rash conclusions if the median price falls as expected. When the median sales price rose from February through June we not only cautioned against interpreting these increases as rising home values but we also suggested the median home price would retreat later in the year, most likely in August. Home prices have been stable, remaining flat for the last 12 months. Sales volume will be lower in August than July with expected sales volume to be around 6,350.
Benjamin Franklin once said, “An ounce of prevention is worth a pound of cure.” This age-old axiom is very applicable when it comes to preventing water damage within your home. Water damage can affect your home’s value, increase costs, and cause a decline in indoor air quality. There are several ways you can prevent water damage by inspecting and maintaining the systems in your home that involve water.
There are three main water-involved systems in your home – piping, washing machine hoses, and water heaters.
It is good to know what type of piping your home has. Different pipe type develop different problems and challenges as they age. At the time of your home purchase if you had a home inspection, the home inspection report will tell you what type of piping your home has. If you don’t have an inspection report, a licensed plumber can do an inspection for you
The U.S. Department of Housing and Urban Development provides the following plumbing lifespan guidelines.
Brass – 40 to 70 years
Copper – 50+ years
Galvanized Steel – 20 to 50 years
Cast Iron – 75 to 100 years
Polyvinyl Chloride (knows as PVC): Indefinietly
Pipes can be older than the lifespans listed above, and doesn’t necessarily mean they need to be replaced. If well maintained, they may last longer. If poorly maintained, or if you have hard water, then they may fail sooner. With proper care, the majority of pipe materials will last for decades.
Washing Machine Hoses
A broken water supply hose accounts for more than half of water damage insurance claims related to washing machines. These claims can be very costly, with the average claim running more than $6,000. If unattended, a burst washing machine hose can spill hundreds of gallons of water an hour, causing a significant amount of damage in a very short amount of time.
There are various reasons washing machine hoses break, including:
According to a study by the Institute for Business and Home Safety, one of the leading causes of water damage claims in residential properties is water heater malfunctions.
The study also found the following:
• 69 percent of water heater failures were due to leaking or burst tanks.
• The chance of leaking or failure rises steeply in water heaters that are more than five years old.
• Nearly 75 percent of all water heaters fail before they are 12 years old.
• Very few water heaters last longer than 10 to 12 years.
Eventually every water heater will need to be replaced due to weakness developed over time. The useful lifespan of a water heater ranges from about five to ten years, but this depends on how high the mineral content is in your water, the intensity of use, and how well you maintain the water heater. Though you may be put off by the cost of purchasing and installing a new water heater when it seems your current one is working just fine, keep in mind that waiting until after a failure has occurred may cost more as you will then have to deal with the cost of repairing water damage as well.
It’s a good idea to know where the water shut-off valves are in your home so you can easily turn off the water source in the event of a leak or problem. It is recommended that if a problem does occur, immediately remove standing water and all moist materials. Take action to prevent further damage when possible. Acting quickly will help minimize damage which means less time and expense for repairs.
Troy Reeves and the Reeves Team try to share as much information that we come across. We want you to continue to enjoy the home you purchase through us.
Gilbert is known as a big city with a small town feel. Below a few things that you must visit while in Gilbert.
1. Gilbert Days – Everyone loves a parade but if you haven’t experienced the rest of the town’s signature Western heritage celebration, then it’s time to pony up to Gilbert Days. The November week-long celebration starts off with a Pony Express ride. The celebration barrel racing, a rodeo, a dance and a parade. Troy Reeves & The Reeves Team have sponsored the parade for many years. Click on the link above to see some of the excitement.
2. Cosmo Dog Park – Cosmo Dog Park is worth visiting even if you don’t have a dog. One of the most popular parks in Gilbert, the park offer a lake for dogs to play in and several fenced areas for them to run in along with doggie drinking fountains, wash stations, an obstacle course. There are also fun items for humans a well such as walking paths, benches to enjoy the scenery and tables to enjoy lunch with your furry child.
3. Big League Dreams Park – Don’t have time to visit Yankee Stadium and Wrigley Field? You can see a version of them at the Big League Dreams park. There are eight-diamond baseball stadiums featured in scaled-down renditions of both parks. The complex is home to several outdoor youth baseball and softball games. The park is open year-round and features a 20,000-square-foot indoor soccer pavilion, flag-football fields, batting cages and the Stadium Club restaurant.
4. Heritage District (Downtown Gilbert) – Visit Gilbert’s Heritage District where history meets entertainment and modern restaurants and breweries are all over the area. There are several new restaurants opening a few expanding. Let’s not forget the Hale Centre Theatre that puts on wonderful plays throughout the year
5. Freestone Park – The city’s popular park – Freestone Park offers 65 acres with a lake, baseball fields, basketball courts, skating park, playgrounds and a miniature train. The park offers several picnic ramadas, a carousel, a mini Ferris wheel, waterless wave runners, concessions, and so many picturesque, secluded spots that it’s ideal for family photos and romantic strolls.
These are just a few of the many destinations Gilbert has to offer for entertainment yet still gives you a small town feel.
Please contact Troy Reeves & The Reeves Team if would like some additional information on all that Gilbert has to offer.
As the temperatures are still rising and it sure feels like summer, it is actually time for school to start.
Chandler students returned to school this week. Gilbert and Mesa will start the beginning of August.
Have you been thinking with the start of a new school year that you would like to it in a new home?
Schools have often played a factor in Real Estate. Parents want the best for their children and often having them attend a specific school is a main decision factor on where they purchase a home.
You often hear of parents having to try to obtain boundary exceptions so their child can attend the same school that friends are. Why worry about having to obtain that approval? Why not just find a home within that schools boundaries?
With the hope of selling your home for the highest price possible, there are a few factors to consider when putting your home on the market.
Location – Buyers take many factors into consideration when purchasing a home. Location being one of them. Buyers may look at what’s been happening in the community as far a recent sales activities. Local schools may also be a factor they are considering. With today’s gas prices location of their new home to their place of employment could also play a factor.
Many buyers look at what the community has to offer as far as amenities and distance to shopping, eating and entertainment. If there is enough to do by either walking or riding a bike, buyers will see it as a plus to save on having to use a car. Buyers also take into consideration if the location has an negative features; poor views, to close to the freeway, large power lines, industrial nearby or possible noise from trains or planes.
Floorplan – While buyers tour homes they are visualizing how their belongings will fit in the rooms and how many rooms they truly need. Gone are the days when buyers are looking for big with lots are rooms. Today’s buyers are thinking more about what they “really” need and not so much on what they may think they want. Recently we posted a blog about de-cluttering and getting your home ready for sale. More and more people are realizing they don’t need a lot of things and a lot of space. Click here for the blog about clutter.
Floorplans are a key factor when choosing the right home. Having a spacious floorplan can make even a smaller home look larger. Why have too many small bedrooms when you could have fewer larger size ones.
Wear and Tear – Buyers hope to get the most for their money. When making an offer on a home, buyers are more likely to submit a better offer when the home looks move in ready.Historic homes can be worth as much as new homes if they are maintained properly and show their value. It can also be helpful when maintaining homes and upgrading them that the seller provide the paperwork showing what was done. Buyers like to see as much documentation on the home improvements as possible.
Renovation – Sellers need to make wise renovations, it is possible to make too many renovations. Over doing it can actually hurt the property’s value. You want to keep consistent with the other homes in your subdivision with the same square footage. Take into consideration when it’s time to sell, your home will be compared to the other models with the same square footage in your area.
Thinking about selling? Give Troy Reeves & The Reeves Team a call. We can stop by and give you suggestions to get your house ready and share with you the price that homes like yours are currently selling for.
A successful real estate transaction requires team work between the realtor and the seller. It becomes frustrating when both parties are not on the same page as to what it is going to take to get the home sold.
When a seller is not willing to take advise on what needs to happen to get their home sold it can take the home longer to sell. As the market becomes increasingly competitive as more homes are listed, it is important for your home to stand out above the rest. With buyers having more homes to look at, they begin to notice more defects in homes and draw their attention to homes that stand out above the others.
Here are some helpful tips that will make your home stand out about the rest:
Light & Bright – Open those blinds, pull back the curtains and turn on some lights. Enhance lighting in the rooms help show off your rooms and by opening the curtains buyers will see the beautiful scenery outside your windows. Also keep in mind that you would not want to show off clutter or storage or a wall that may be on the other side of the window.
Stage & De-clutter – Have a garage/yard sale and get rid of what you had planned on before moving. The more spacious your garage and rooms look the more buyers feel the spaciousness of your home. Click here for a blog we recently posted on staging.
Smells – When potential buyers tour your home you want them to walk in and go… Wow it smells nice in here. The last thing you want to hear is that they smell pet orders, smoking or cooking odors. Don’t overdo it either, keep the aroma pleasant and not overwhelming.
Decor – Think about adding some fresh paint before listing. Often buyers are put off by bright or dark colors when touring homes. The dark colors often make a room seem smaller in size. Also, consider touching up door frames and the front door. Remember the front door is the first impression buyers get of your home. Click here for a recent blog we posted about updating your front door.Landscaping. As potential buyers arrive at your home the first impression is going to be of your landscaping. As we mentioned in an earlier blog (click here) temperatures are rising and you want to try and keep your plants looking a fresh as possible. Try to keep up on the mowing and trim any overgrown plants.
$$ Price $$ – With inventory on the rise and home values decreasing having the right list price is a major factor to take into consideration when thinking about how fast you want your home to sell. As buyers are shopping the market they want the best deal. Watch your subdivision and see what your neighbors are doing. We set up our sellers on an automatic e-mail so they see what is happening in their neighborhood.
Troy Reeves & The Reeves Team want to make your selling experience a happy one. We offer our clients many suggestions that will help them get their home sold as quickly as they want for the best price possible.
People love touring model homes to see how the rooms are decorated to get ideas for their current homes.
Why not take some of those “staging” ideas and use them when you decide to put your home on the market?
You would be surprised just by looking around your home how many items you probably already own that put in the right location can make the room show ready to sell.
You want to make your home inviting and help potential buyers feel welcome. The more they enjoy the tour of your home, the more they might consider purchasing it.
Where to begin in getting your home ready to show? Go Room by Room.
• Do you have a room that seems to be where everything ends up? That might be the place to start. Get that room back to what it is intended for. (Guest room, or Den).
• Step back and look around each room if you feels it looks cluttered, remove items. Spacious rooms seem to receive a better response from potential buyers than small rooms.
• Neutral colors on the wall is something else to take into consideration. Buyers often don’t have a paint allowance within their home purchase budget. Not everyone enjoys bright or dark colors on the wall. You can still have some color throughout the home with the use of throw pillows, tablecloth or towels.
• A few other suggestions in getting the home model ready, have the blinds open and lights on to show the brightness of the home. It helps to have the mindset that your pickiest relative is coming to visit and will look at the ceiling fans, baseboards and door frames. You would be surprised living in the desert where dust seems to land and settle.
Troy Reeves & The Reeves team are here to help you get your home sold in the quickest manner possible. When we meet with sellers we often give them suggestions on both interior & exteriors that could be “spruced up” to help get the home sold.
A successful real estate sales transaction involves both the agent & the seller working as a team to get the home sold. The Reeves Team is here to guild you through every step of the transaction.
The U.S. Census Bureau reported the other day that among the 36 million people who moved between 2012 and 2013, 5 percent said the most important reason for moving was to be closer to work or for an easier commute.
Another 8 percent cited the desire for cheaper housing.
The most common reasons for moving in 2013 were wanting a new or better home/apartment, other housing reasons and family reason.
For people who moved from one county to another, moving because of a job-related reason rose with the distance of the move: 23 percent of moves less than 50 miles and 48 percent of those 500 miles or more.
Other highlights mentioned in the article were:
• Men were more likely than women to move for job-related reasons.
• Better-educated people were more likely to move for job-related reasons than those with lower levels of education.
• Married respondents were the least likely to move for family-related reasons.
• Moves within the same area were typically for housing-related reasons, while long distance moves and moves from abroad were more for job-related reasons.
• Several individual reasons, such as change of climate, health reasons and natural disaster, were each cited as the main reason for moving by fewer than 1 percent of householders.
The data are analyzed by a range of demographic characteristics, including age, sex, race, origin, educational attainment, marital status, labor force status, type of move and distance moved. These national-level data were collected by the 2013 Current Population Survey’s Annual Social and Economic Supplement.
Have you been thinking about moving? Troy Reeves & The Reeves Team would love to assist you with that move. Our website relocateaz.com allows you to search homes that are listed. We also have resources that will also you to look at properties all over the world. Buying a home can be a stressful experience. You want to make sure you have the right person by your side to help guide you through every step of the transaction.