Arizona Real Estate Update Sept, 2015
Arizona Real Estate and Housing Market Trends Update
For anyone interested in Arizona real estate, this is a housing market update. This is a snapshot of the Arizona real estate market for the past twelve months. These are some very exciting changes. This is a great time to sell, and a great time to buy.
Total Inventory is down for Arizona Real Estate
Over the past year, the total number of available homes for sale is down. (See Chart) [market_stats title=”Arizona Real Estate Inventory” width=”250″ height=”150″ type=”inventory” display=”ActiveListings,NewListings,PendedListings,SoldListings” property_type=”A”]
What does this mean? With the previous 12 months having a shortage of inventory. Now more Arizona has less homes for sale and the same number of buyers should reflect increasing prices, assuming other factors remain constant.
Total Average Sales prices Are Leveling Off from Previous Increase
Average selling price is up year after year (See Avg Price Chart)
[market_stats title=”Arizona Real Estate Prices” width=”300″ height=”200″ type=”price” display=”ActiveAverageListPrice,PendedAverageListPrice,SoldAverageListPrice” property_type=”A”]
Arizona (greater Phoenix Area) property prices are up over the past twelve months. San Tan Valley real estate prices, for example, has increased approx 10% over the last twelve months. In the past few months we have seen a decrease or correction in prices.
What does this mean? The Arizona real estate market is in high demand.
Total Days on Market Up
The data below is very telling. Days on market refers to how long a property is listed before it is sold. The lower the number, the faster you can expect an offer on your house. Notice the very sharp upward trend followed by a reversal in Jan of 2015 then a sharp steady downward trend.
[market_stats title=”Listings days on market in Arizona” width=”250″ height=”150″ type=”dom” display=”AverageCdom,AverageDom” property_type=”A”]
What does a sharp downward trend mean? There are not enough homes for sale and prices will likely keep increasing until the inventory gets higher. You can see from the chart the trend has changed.
Summary for Arizona Real Estate Trends
All signs are pointing to increasing property value trends for at least the next few months. There are a few things that could rain on our parade:
1. Looming foreclosure inventory- The banks, Fannie Mae and HUD have less and less of Arizona real estate mortgages that are in default every month. However property prices have reached levels not seen for years allowing previously “upside down” homeowners to now be “right side up”. Putting their homes on the market and increasing the inventory. At our last meeting with Fannie Mae we learned that Fannie Mae’s goal is not to liquidate these properties but rather strengthen the neighborhoods and communities by pricing properties to sell in 90-120 days versus a quick sale. If this is true, and holds true, there should not be any major market shifts initiated by Fannie Mae.
2. Interest rates- Interest rates are probably the biggest threat to the Arizona real estate market pricing increases and stability that we are now seeing. The interest rates on a thirty year mortgage have been at record lows for years and historically these rates have increased drastically after periods of super low rates.
How do interest rates affect house pricing? Most people who buy a house are very concerned with how much per month they are going to pay. Let’s take for example a $200,000 home– at the approximate current interest rate of 4.39% the payment would be around $1,000. If the interest rates rose to 8.8%, that same house, at the same price of $200,000 would cost around $1,580 per month. If the rate rose to 16%, like they did in the 1980’s, the house would cost almost $2,700 per month. Rate hikes depress housing prices. Obviously, the buyer would now be looking at $100,000 homes and would no longer be in the market for a $200,000 home. Less buyers, less people to buy you house, prices start to drop. This is a drastic comparison, but not unrealistic. It happens by degrees and dollar by dollar. By watching the trends you can protect your real estate investments.
3. Investors have all but removed themselves from the market. In large number over the past few years investors have been chipping away at this inventory and keeping it down. Homes were on sale in Arizona. Now prices have gone up and rents have stayed static. The sale is over, and the CAP rates just don’t pencil anymore, for most houses. Now that the investors are out, inventory will go up. There are now fewer buyers in the marketplace. It does give a measure of comfort to hope that if prices start to decline they may jump back into the market as the CAP rates improve. This, in theory, creates a floor for Arizona property values, however the stock market will play a major role in how this plays out.
Its a great time to buy and a great time to sell– The perfect storm!
Great time to buy- Interest rates are low and you can get much more bang for you buck.
Great time to sell- If interest rates start to rise, prices will probably start to fall. If days on market continue to rise, prices will fall. Sell while things are high.
We cannot tell how long this trend will last with the looming issues of increased inventory and interest rates being major factors. If you are in the market for Arizona real estate, call RCP today for a free consultation in regards to your options and specific Arizona real estate situation. RCP: your Arizona Real Estate Agent!
**Disclosure – “Value”, when referred to on this site, should be considered synonymous with price. No appraisal was developed and the Uniform Standards for Professional Appraisal Practice was not followed for the conclusions developed on this site. This should be considered a broker’s opinion of price. Every property is different and if a value of a specific piece or portion of real property is desired, an appraisal should be performed. Do not rely on the data and charts provided unless you consult with an appraiser and have an appraisal performed first.**