There are several Henny Penny’s out there claiming that the real estate market in Arizona is still in recovery mode when in actuality it is the most balanced it has been since 2007.
Much of the misconception is a result of unrealistic bumps in fictitious equity that investors and homeowners experienced in Arizona from 2004-2006. While recent neighborhood market snapshots show that home prices have climbed back to their original value, many analysts are still basing their overall evaluation of the market on those aggrandized values. The problem with this is that it causes potential home buyers and sellers to hesitate unnecessarily, resulting in the loss of time and money.
Below are three clear indicators from realtor.com that the Arizona housing market is in fact stable.
1. Mortgage Interest Rates Are Still Low … For Now
According to Freddie Mac, 30-year-fixed-rate loan averages 4.16%, but many economists believe we will see upwards of 5% rates next year. As interest rates increase, so do your monthly payments. An example, a $300,000 home at 4.16% with 20% down would have a monthly payment of $1,168. With a 5% interest rate, that payment increases to $1,288. That is a saving of $120 a month or $1440 a year.
2. Home Prices Are Going Up
The average price of a home in June 2014 was $223,300. That is 4.3% higher than the same time last year — making it the 28th consecutive month of year-over-year price gains — and economists expect that trend to continue. However, home prices are still 20% lower than the peak prices of 2006.
Jonathan Smoke, Chief Economist for realtor.com® said it best, “attempting to buy a home when the market is at its lowest point – or to sell at the peak – is tricky.” Smoke continues, “It all points to purchasing power, and that is a reflection of price and interest rates, which will both be higher in the future.” The moral of this story is trying to time the market simply does not work.
3. Employment Is on the Rise
When it comes to buying a home, perhaps nothing is as important as showing financial stability and steady employment. The U.S. Economy has been in a recession for several years, however, we continue to see an increase of approximately 200, 000 new jobs per month, which is promising. The nation’s job slump has taken particular toll on our next generation of home buyers (Millennials). Not only has finding gainful employment been challenging, but student loans and tight lending restrictions have made it next to impossible. Many Millennials have opted just to live with their parents and save money until the economy picks up.
So my advice to those interested in making a real estate move: don’t listen to the Chicken Little’s out there “predicting calamity without accurate justification.” Have courage and trust in the advice of your experienced real estate professional and let’s get to work on your next real estate transaction.
Have additional questions? Don’t hesitate to send me an email or leave me a comment in the section below.