Central Phoenix Real Estate Market Recovery
News outlets, business blogs, economy specialists and others are constantly churning out statistics and information sharing the current state of the real estate market and the economy. While it is necessary to follow this information and keep updated on market trends, mortgage rates and property values it can be difficult to understand the industry-speak and lingo that is used in these articles.
We do believe that as current or future homeowners it is extremely important for you all to understand current market trends and to follow the news about the state of the economy.
We also understand that the news and the statistics can be overwhelming and confusing. This is why we like to keep you all updated and to share the most important information about current real estate trends and the most recent Central Phoenix market recovery news.
We will discuss how the market kicked off in 2014, whether property values are rising or falling, current mortgage rates, foreclosures and debt and where we think the recovery will go in the next year.
Beginning of 2014
The Central Phoenix housing market ended 2013 on a low note before it plummeted further in the New Year. While this may sound discouraging, it’s actually normal.
December and January are usually the quietest seasons for real estate due to residents traveling for vacation and the holidays. In January, the median single-family home price stood at $196,900 according to a report released by Arizona State University. That is actually four percent lower than December of 2013, but 21 percent higher than December 2012.
There is also a little more inventory to work with so buyers aren’t in a rush to go out and invest in real estate.
The luxury market, which is defined as homes priced above $500,000, started the New Year off well with 24 percent more inventory than last year and an increase of 14 percent in sales over December.
The Central Phoenix housing market has experienced incredible highs and crashing lows in the past few years. While home prices significantly rose in 2013, they seem to be taking a dip in 2014. It’s a simple case of supply and demand.
Many people want to sell their properties, but there aren’t many looking to buy. What was a seller’s market has quickly turned into a buyer’s market with many houses sitting on the market for months.
Although price gains are weak right now, they are actually back to the level they would be if the recession and recovery never happened.
Those who are looking into buying a new house may be tempted to go for a floating rate mortgage despite all the risks that come with an interest rate linked to prime.
The five-year fixed-rate mortgage has dropped to as low as three percent and major banks aren’t too far off that rate. Many banks and lenders are offering special deals and discounts as well. Floating rate mortgages are as low as 2.35 percent.
This may not sound like much, but mortgage specialists say that it means that a homeowner with a $300,000 home, who puts five percent down, needs two percent less income than they did a few months ago.
Foreclosures & Debts
Roughly 22 percent of Central Phoenix homeowners were upside down on their mortgage in the fourth quarter of 2013.
Central Phoenix foreclosure levels remain below the normal trends, and foreclosure notices are down by 55 percent from January 2013 to this year. Completed foreclosures are also down by 54 percent. The uptick in home prices last year significantly helped Central Phoenix homeowners who were underwater on their mortgages.
Nationally, negative equity has fallen over the past year and a half, freeing almost 3.9 million homeowners from high debt.
While the pendulum on the Central Phoenix real estate market recovery may continue to swing back and forth, the city is continuing to push for improvements that will invigorate the housing market.
New homes and high-end condos are being built in Central Phoenix and 2013 saw a spike in people purchasing vacant lots for development. Since more sellers are putting their homes on the market, buyers have more inventory to choose from, which in turn means longer wait times for sellers to see an offer as well as cutting prices.
The slowing of the market is mainly due to rising interest rates and lack of confidence in the market. Many individuals who want to buy property don’t have the money or credit to get approved for a loan. The current market conditions don’t mean that the recovery is over or at a standstill, it simply means the market is finally coming to a stable norm.
Spring and summer are generally the strongest months for real estate so we should see forward movement during that period. The real test for the recovery will come in the second half of the year.
Buying or Selling in this Central Phoenix Real Estate Market?
If you would like to learn more about the current market trends, predictions for the 2014 market or the Central Phoenix real estate market recovery then connect with us at Phoenix Urban Spaces.
If you are thinking about buying a home, now is the perfect time to do it since the market has turned in favor of buyers with lower prices and more inventory to choose from.
Photo courtesy of Collier’s