Gilbert Real Estate At All Time Highs, Where Do We Go From Here?

What a year we have had so far in the economy.  We have spent most of the year worrying about a recession, while the stock market and phoenix housing markets slowly crept into all time high territory.  Looking around it seems like a recession is nowhere to be found.  But sometimes looks can be deceiving.  So what are we expecting from here?  Are we going to continue higher?  Or are we ready for a correction in the Gilbert housing market?

It has been all over the news lately that the stock market is at record levels.  For the last few weeks it has been nearly a daily occurrence that we close the day higher than any day in previous recorded history.   This seems incredible given that only a few months ago everyone was worried about a possible recession and an inversion of the yield curve.  While the increase in value in the stock market has been widely covered, what has not been covered as much is the increase in housing prices.

Phoenix home values have been exploding over the the last year with a 15% year over year increase in the value of home prices from October 2018 until last month.  The jump over this past year has been enough to catapult us above the all time high prices we saw during the housing bubble of the early 2000’s.  The difference this time is the fundamentals appear to be much stronger and we are not being propped up by a subprime mortgage crises.

Short Term Outlook

So what is next for the Gilbert housing market for the rest of the year?  The rest of the year looks like clear skys as the trade talks appear to be on pause, the federal reserve has stated interest rates will remain low for the foreseeable future and consumer confidence remains extremely high.  Now that fall is here and school is back in full swing the prime buying window has closed but that does not mean that prices will necessarily dip.  There are fewer people looking to buy homes, but there are also fewer people looking to sell their home so it tends to even out.  With a market as hot as this one has been its possible we could even see prices rise between now and the end of the year.

Long Term Outlook

The long term outlook of the market is not quite as clear.  As with any election year there are going to be ups and downs.   As many Democrats have been promising increased regulation and taxes on the wealthy many analysts are worried we could see a massive dive in the stock market if one of the more liberal candidates were to win the presidency.  A few people have went as far to say if Elizabeth Warren were to win the election the stock market would decline by over 25%.  While many of these statements are hyperbolic there may be some truth to them.  The Reeves Team will keep you up to date throughout the election season to make sure you stay informed.  The other side of the coin is that President Trump will be doing everything he can think of to spur on the economy next year to help his reelection effort, so there will be large economic forces fighting each other as the 2020 elections unfold.

So what do you think?  Will we continue to see Gilbert housing and the stock market hit all time highs or are we destined to see a large correction in the near future?  Let us know in the comments below.

How Could Climate Change Affect Gilbert Housing

Climate change is a hot button topic.  Most people have a strong feeling one way or the other if climate change is man made or just a part of the earths normal cycle.  At The Reeves Team we aren’t here to pick a side.   What we do know is that, regardless of if its because of man made carbon dioxide, the earth is getting warmer. The planet’s average surface temperature has risen about 1.62 degrees Fahrenheit (0.9 degrees Celsius) since the late 19th century. Most of the warming occurred in the past 35 years, with the five warmest years on record taking place since 2010.  We also know that this has caused more sporadic weather patterns.  Here at The Reeves Team we don’t take sides we just tell you how it can affect you and the Gilbert housing market.

Coastal Migration

A huge number of mortgages each year are written for high risk homes near or on the coast.  Up to $100 billion worth each year. Over 300,000 existing coastal homes will be repeatedly flooded, or lost altogether, within the next 30 years, according to sea-level calculations that the Union of Concerned Scientists publishes. Many high population states including California, Texas, Florida, and New York are vulnerable. Currently with housing prices continuing to rise in these areas the market is not properly factoring in these long term risks.  As the volatility in weather continues to rise over the coming decades many homeowners will give up on the coastal regions and head to other areas in the country with similar weather.  Arizona is in a great place to accommodate these homeowners, and in particular California residents.  We are within driving distance to California, we have similar weather with no snow year around and our house properties look like massive bargains compared to what people are currently paying on the coast of California.  We have already started to see a shift and many of the newer residents of Gilbert and the surrounding areas come from California and other high value coastal areas.

Warming Of The Valley

So the good news is that we should see a rise in transplants from coastal areas that feel like our housing is a bargain.  On the negative side we will see more of something else we already have an abundance of. Heat.  The Phoenix metro area is the second fastest warming city in the U.S. and our average summer temperature is nearly 2 degrees hotter than it was in 1970.  Some of the negative affects this may bring include; An increased need for water while at the same time a decrease in our water supply. An increase in the length of our mosquito season.  We will also see an increase in the amount of days with extreme heat.  We currently have over 6 more days a year with heat reaching above 110 degrees than we did in 1970.  We will also see an increased likelihood of drought as the temperatures steadily increase.  So what does this mean for home prices?  Well as we see an influx of people moving in from coastal areas, we can expect those gains to be offset somewhat by those that are trying to beat the heat and decide to migrate elsewhere.  With increases in technology including advancements in home insulation and multi pane windows as well as increases in Air Conditioning efficiency we can hopefully offset some of the negatives by continuing to keep our living environments sheltered from the elements.

Back To The Midwest?

Over the previous decades we have seen a mass exodus of residents of the mid-west.  Populations in rural Midwestern cities have plummeted and even major cities populations in the Midwest have stayed stagnant to slightly down, such as Chicago.  In the meantime cities populations in the west and near the coast have exploded.  Arizona has been one of the biggest winners as we have seen our population continue to grow steadily over the previous decades. With the increases in population in the coastal areas, as well as increased weather volatility and increased prices will we see a reverse in this trend?  Will people eventually look at the costs of living in the Mid-West and determine the costs are just to good to be true?  One major reason people have shifted out of the Midwest has been jobs, but now that America’s employers are starting to allow for a more remote workforce this could allow for people to acquire a relatively high paying job while still having the incredibly low living expenses of living in the Midwest.

So what do you think?  Will we continue to see the temperatures rise?  Have you considered moving from Arizona back to the Midwest?  Let us know in the comments below.