House Prices Trend Upward But at a Steady Pace
So where is the market headed as of May 2015? As broker/owner of Cactus Mountain Properties, LLC, I access a lot of statistics to help me get the best perspective possible. Sometimes, I just dust off my Magic 8 Ball to see if I can get some answers. The first question I decided to ask was “What is my home worth?” and the answer was “outlook good”. If I look at the statistics (which I do often) from the Cromford Report, the S&P/Case-Shiller Price Index, the FHFA housing price index or even from the ARMLS stats, I see an improving market valley wide and that is a good outlook.
From a seller’s perspective, there is a lot of encouragement with demand slightly above normal. For the market as a whole, we are currently seeing and average of 3.1 months supply, which is below normal, but not excessively so.
Buyers might be dismayed to see that the price per square foot rose by almost 3% the month of April. The low supply, while great for sellers is leading to multiple offer situations and and strong upward price pressure for buyers. There are fewer and fewer homes being built below $200K, which could create a struggle for buyers because prices are likely to to rise faster than earnings.
The next question I asked was “What does the future hold?” and my answer was “Better not tell you now”. I did not like that answer so I tried again and got “Outlook not good”. This is because there are new loan and closing regulations going into effect August 1, 2015. These new regulations aim to simplify the closing process by making it easier for the consumer to understand but will make the closing process longer. The loan and closing documents are nationwide forms and not specific to just Arizona. We will go from a typical 30 day close of escrow to a minimum of 45 days if the buyer has a loan. There will be a lot of frustration for sellers, buyers, real estate agents, loan officers and escrow officers with the delays until we get accustomed to the new documents.
The economic outlook is brighter than it was at the beginning of the year. It is predicted that Arizona will regain 314,000 jobs this year that were lost during the recession. This positive outlook is good for both buyers and sellers.
Regardless of the economic outlook, sellers are still moving on, buyers are still falling in love with a home, and both are moving forward. 2015 continues to be a good year with prices continuing to climb at a rate to help sellers but not so fast that it frightens buyers.
Owner/Broker, Cactus Mountain Properties, LLC