We're officially in the 4th quarter! Where did the year go?? Despite low demand, low sales volume and a relatively high, but now retreating supply of homes for sale in Phoenix & Scottsdale, 2014 has been a rather unremarkable year. There are still tons of buyers out there kicking tires and pondering their options, but there's not much actual movement happening. Despite all of these "fence-sitting" buyers, 2015 looks like it's going to be a good year. Why, you ask? Let me show you.
If you'll recall, I posted this chart about a month ago from Fannie Mae showing the revised waiting periods for borrowers with "derogatory credit events" (i.e. foreclosures & short sales called "Preforeclosure Sales" here) to get a new home loan:
Now, look at the next chart showing actual foreclosures for Maricopa County (as measured by recorded trustees deeds) as they occurred from the boom market till today:
The period between 2008 to 2011 shows the bulk of these foreclosures, in the 4-year period. The first 3 months of 2008 show about 2,000 completed trustees deeds each month before spiking in Q2-2008 and peaking in 2010 at over 5,000 per month!
Next, here's a chart of completed short sales in Maricopa County:
Again, the bulk of them occurred between 2009-2013, but they peak between 2011 & 2012 where ~1,800 (probably because it took the banks that long to figure out they actually cost less than foreclosures, which were really expensive to maintain and sell!
If you look back on our waiting period after a foreclosure to qualify for a new mortgage and add 7 (years) to 2008, you get 2015. Do the same and recall the 4 years required for borrowers who completed short sales to qualify for a new mortgage and add 4 (years) to 2011, you get... 2015. Add that to the typical spring demand (if the market does the "usual" thing) and you get the potential for quite a lot of borrowers who can purchase homes. Mind you, as of August 2014, only 22.1% of purchases are made with cash in Maricopa County from a peak of 41.9% in February 2011.
Noting the basic laws of supply & demand (Economics 101), if supply stays in balance and we get a surge in demand, values (and eventually prices) will go up!
How does this affect YOU, you ask?
If you're a BUYER, a few recommendations:
- Buy before the end of 2014
- If you plan to buy after that, get your finances in order & educate yourself on the market & areas you want to buy now
- Be prepared for lots of competition
- Potentially plan on coming up with more cash and or setting your sights a little lower if prices do increase
If you're a SELLER, your recommendations are:
- If you were thinking about listing your home soon, you might consider waiting until spring, if you can
- Get your home show ready by ~February 2015
- Get a professional to start watching the market for trends that would impact the sale of your home
Regardless of which side of the coin you sit, call me (Camille 602-810-1750) for sound guidance to navigate through this market. I'm glad to help and look forward to the opportunity!