WHERE IS OUR MARKET NOW?
Yet 58% of the public believe we are still in a housing crisis. The majority of people have not yet realized that the crisis is over in most of the nation and definitely over here. Anyone that bought a home prior to 2004 or from 2009-2013 has equity again as long as they did not borrow against that equity.
The luxury market is still lagging behind lower priced homes (anything below $2m) but even Paradise Valley that had a -8% appreciation two years ago is now up 13%. The town has gone from nearly 4 years of inventory to less than 5 months. Once the luxury market comes back strong, the rest of the market will shoot up even faster!
From The Arizona Republic, Saturday May 11, 2013: “Analyst Offers His View of Market”
Tom Ruff has been tracking the Phoenix housing market since the 1980’s and is currently an analyst with The Information Market, a data provider for the Arizona Regional Multiple Listing Service. He wrote for The Cromford Report prior to taking his position with ARMLS.
The paper asked him three questions and here is the summary of his responses:
1. Where do you see home prices heading? His reply includes the fact that we have a huge imbalance between supply and demand. The foreclosures have all but stopped so the banks will no longer be able to bolster our supply with these homes. Builders will not be able to fill the gap any time soon as we have lost a great deal of our work force and infill land is scarce. Over 80% of our closings right now are normal sales. Tom thinks that another 10% rise in home prices in the next year would not be unreasonable.
2. How were you able to tell the height of the boom and the bottom of the market? Tom answered that he analyzed public records data daily but basically it was his gut that told him where the peak was in 2005. He looked at the demand at that time and saw that it was driving the measurable data. He saw that there was a vast spike in California buyers and saw what was happening. He also looked at the buyers’ intended uses of their properties (not as primary residences) to determine where the market was headed. For the low, it was a combination of his data gathering and monitoring the REO and distressed housing levels. The declining of the distressed market indicated that the bottom of the market was approaching. He also watched the so-called Shadow Inventory that never materialized. As normal sales increased, it was only a matter of time for us to get back to a healthy market.
3. What’s going on with foreclosures? Tom feels that we are headed into a market where foreclosures will be lower than they have ever been. He said it won’t be normal, it will be extremely low. We dropped 82% from March to April alone! This drop keeps the pressure on rising home prices as the foreclosures were pulling our market down.
Here is his most critical quote about the housing market:
With the four years’ trends of stringent loan guidelines, higher than normal cash purchases, and two years of rapid appreciation, people who have bought homes during the past four years have equity. And with equity comes options!
If you have been waiting to sell your home, let us evaluate the prices in your area now. Remember, if you wait for the market to rise more before selling, you will also pay more for your next home. If your goal is to buy up, now is the time! There are more homes in the market priced over $600,000 than below.
