The real estate market is stable in Phoenix & Scottsdale.
Home sales in Metro Phoenix under $300K are very strong. Above that, things are improving in spots. The overall market favors sellers, but that's more to do with supply and demand than anything else. We started to run short on inventory across the board, but that's changing now too. There are lots of new trends emerging.
Here are the most notable shifts I see in our market:
- YoY sales are increasing in the middle price ranges of our market. This is likely due to prices also increasing. As sales vanish from some segments, they reappear in other segments.
- Inventory is increasing. It's sill tight in the most desirable areas- specifically 85251 (half of Arcadia Proper & Old Town Scottsdale) & 85018 the other half of Arcadia and a good portion of Arcadia "Lite". Listing counts usually drops during summer, but come fall we start to see new listings come to market. This is welcome relief for a lot of these buyers. In other areas where homes are closer to the median sales price for Metro Phoenix (low $200,000s), i.e. SW Valley (Tolleson, Laveen, S. Phoenix), inventory also has been tight, but we're seeing a few more homes come on the market.
- Contracts are increasing. The market jumped about a month ago after our seasonal summer lull and sellers across the valley got a lot of encouragement. At the opposite end of the spectrum (Paradise Valley, North Scottsdale), many high end homes $600K+ that were sitting collecting dust all year are selling, and many others were recently cancelled or expired. Many had BIG price reductions. That reduced supply to get in line with demand... now cyclically, we're seeing new listings again. Just when these sellers getting who've been hanging thought they'd get some breathing room, a fresh new listings are popping up to compete with. However, even this increase may petering a bit.
- Rentals are still hot, but not like they were. There are a lot of new apartments communities being developed to ease the multi-family housing shortage that persisted over the last several years. As they come to market, older properties that aren't as well-maintained or in desirable areas are starting to feel the heat. Houses for rent are faring a little better, but are still out of reach for those in the lower price ranges.
In general, there are some overall trends driving the shifts above.
- On Friday I posted on Instagram & Facebook about trends that economist, Mike Orr (Cromford Report), has been starting to share more loudly & persistently. For months, he's been generating reports and sharing stats that Arizona's population is aging. The median age in Maricopa county jumped from 34.7 (2010) to 36.1 (2015). Unchanged, this one trend WILL change our housing market significantly over the next 5-10 years and beyond.
Source: Cromford Report - The Baby Boomers are one of 2 generations that comprise a large portion of the home-buying population today in our area. They're seeking access to lifestyle amenities (airports, recreation, shopping, dining, healthcare, etc).
- The Millenials are another big buyer segment. They're migrating towards 2 things: jobs & the same stuff the boomers want- access to lifestyle amenities (airports, recreation, shopping, dining, etc.). Here's where the jobs are: http://www.azcentral.com/story/money/business/jobs/2016/09/09/arizona-companies-hiring-100-more-september/89976120/
- Those wish list items each generation is seeking all tend to be interconnected. The biggest hotbeds of activity are centered around economic development, which is expanding around Downtown Phoenix, N.Central Phoenix, Arcadia/Camelback Corridor, Old Town Scottsdale, Tempe, Chandler, Gilbert & Glendale. Additionally, these areas generally have decent freeway infrastructure and things to keep people occupied, outside of working. We'll call it the "fun stuff".
- The Boomers arguably have the most spending power, but the Millenials have force "en masse" because their collective dollars add up. These days, both groups tend to favor an "unattached" lifestyle, desire a smaller home footprint & value location over lots of "stuff".
- If you put a bullseye on the center of Metro Phoenix, the middle is kind of "where it's at". There are new restaurants, businesses, shops, housing, schools, etc- all the good stuff, most people want within proximity of their home. The outskirts also draw buyers, but as people migrate in and out of our state, they'd better have lots to offer in lieu of convenience so people will want to be there (Big shout out to Chandler & Gilbert here!).
What does all of this mean to me, Camille??
Consider how these trends will impact YOU specifically in the near future... Going back to the 2 maps I shared, did you notice quadrants with the most houses/sellers weren't completely aligned to where the contracts/buyers are needed most? That said...
Buyers:
If location matters to you (and it should), figure out where you want to be and become intimately familiar with the real estate market there. If you hate long commutes and plan to be at the same job for a while, figure out whether now is the time to jump in or sit out and wait to get your ducks in a row.
If you're under 35 and don't own a home, you might want to reconsider that conclusion. I've got something to share with you:
If you don't want to be dependent on anyone and you're not saving, contributing to a 401K or some other stable investments, it's time to think about owning a home... Interest rates are low. Young buyers today are lucky! I paid 6.5% interest for my 1st mortgage. Fourteen years later, I'm in the process of refinancing into a 3.625% interest rate. I'll be paying about $500 more per month to OWN a home roughly 3 times the size of the last home I rented in LA 15 years ago!
I'll write another blog about how much the net worth of some of my younger clients has increased in the last 5-7 years with real estate alone... There's no voodoo magic. Instead of paying someone else's mortgage (rent) and improving their bottom line, pay your own. Improve your bottom line. Just sayin'...
Sellers:
How does what you've got to offer compete to what's out there for other buyers to see? If you don't know the answer to that question beyond what you've seen in MLS in the last few months, it's time to get real and figure it out. If you live on the outskirts of town and have a home that isn't in an area desirable to the largest segments of buyers and/or your home can't physically accommodate the needs and whims of these buyers, how are you going to position your home?
If your home is not on the market yet, but know you know that it's not in great shape or doesn't offer some hook to some buyer, how are you going to hook a buyer? If your house is on the market today and not much is happening, but you've watched competing listings around you get snapped up, what is your unique proposition to get buyers to see it? Or worse, if you've kept pace with the same bunch for a long time and none of them are moving either, what are you going to do to stand away from the crowd? Price is one, but there are other creative options...
I know it's a lot to take in, but of all the info I've shared with you, find what's relevant to your situation and factor it into your plans. If you need more info, say so!
I've got a lot of answers to help both buyers and sellers. Call or text me when you're ready for me to position you for success!
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Top 5 Features of Metro Phoenix Homes Over $500K Sold Recently