The Phoenix real estate market is off to a hot start this summer. Many new listings are getting multiple offers within days and weeks of being listed. Many buyers making offers are running into multiple offer scenarios. Historically the market moves and heats up with the summer temperatures due to families moving before the new school year starts. Couple that with low interest rates and it creates the perfect summer storm. Let me know if you or anyone you know is interested in buying or selling or just want to learn more about the local real estate market.
Affordability!!! According to CNBC, based on a weaker than expected first half, the second half of the year is going to be driven by housing Affordability. With many new apartment complexes coming on online this year, renters and buyers have more choices. While mortgage interest rates are still very low, pricing could squeeze out some first time homebuyers should rates start to tick up. So the key to selling more homes will be based on buyer affordability.
With popular reality real estate shows all over TV these days, many consumers are buying homes that they can afford and then start DIY projects once they close. Buyers are realizing the value of their dollars go further when they improve the home themselves. That said, many homebuyers still opt to buy that “move in ready” home that doesn’t need a bunch of renovations like paint, carpet, flooring, and updating the kitchens and bathrooms. For those who have tried DIY projects at home, they are not always that easy and can be time consuming and frustrating without the proper skills and tools to complete the job correctly.
Let’s see how things unfold as we move through the rest of the year!
Getting back to basic economics, supply and demand continues to drive the housing market. According to the ARMLS June update, the supply and demand for AZ housing continues to be unbalanced and slightly favors buyers. YTD homes sales are down for the first half of the year, more inventory is Active on the market (current monthly supply of almost 4 months) and with many distressed sales (and investors buying distressed homes), the market changes quickly.
Many sellers are starting to wonder why their home is not selling as fast as they anticipated. The Avg. days on market is up to 83 while sitting just under 66 a year ago. So what gives? Well, for starters, home prices are up significantly higher then last year (up almost 10% year over year median). Interest Rates, while still very attractive, have moved up just slightly. So with the combination of higher prices, less buyers and moving interest rates; this equals fewer sales and longer time on market for actively listed homes.
That said, there still spells opportunity for both buyers and sellers alike. Many “Boomerang Buyers” (those that have been previous homeowners that were displaced due to short sales or foreclosure) are now re-entering the market. They have sat out of the market for the past few years and many are now eligible for financing under conventional and government loan programs. So buyers have many choices in today’s market, while sellers are getting a fresh pool of buyers to assist them with the sale of their home.
All in all – a great time to sell or buy in Arizona!
Here is the latest update from RealtyTrac.
With the latest rise in mortgage rates over the last month, many fear that home sales will decline as a result. The truth of the matter is that with the nominal rise in rates, that won’t slow down homes sales much at all. Many of the recent homes sales in Maricopa County have been sales from “cash” buyers. Many investors have helped to fill the gap with regards to the distressed housing market and many of those homes were purchased and now being rented. Many people who were effected by the economy and that had to short sale or foreclose on their home are now renting many of these “cash sale” homes.
While interest rates do effect the end mortgage payment for a buyer, rates will still have to dramatically climb, and house prices would have to continue to surge to make a true slow down happen.
Mortgage rates are still very affordable and continue to be in the 4% range and that still makes it very attractive for home buyers to continue to purchase. Many home owners have also been able to capitalize on this low interest rate environment and have been able to refinance and lower their current housing payment. With the housing appreciating, many others have been able to sell as a result and then take advantage of a new home at low interest rate as well.