Greater Phoenix Metro Area Real Estate Market News

“I’m a greater believer in luck, and I find the harder I work the more I have of it,”

Thomas Jefferson

Years ago, until I was in the market to buy my first home I was not paying attention to real estate prices, inventory or interest rates.  Once I became an active buyer I was very aware of what was happening in my local market.

Shortly after I bought my first home I became a real estate agent and continued to be very aware of ongoing market conditions.  During my career I have seen mortgage interest rates over 18% as low as around 2.68%.  Average time to sell a home now less than a month and in the past over 18 months.

Home Owners have been seeing their equity grow for years.  So most home owners can sell at a substantial profit today.  Due to the situation with Covid-19 some sellers are waiting for things to get resolved before putting their home up for sale.  Another issue is that instead of homes being sold every 5-7 years the average holding time has increase to 8-12 years or more. Both of these issues are impacting our inventory of homes for sale.

Real estate is very local and the phrase: Location, Location, Location still holds true today. You can get information on National Real Estate Market, which may be very different than the Greater  Phoenix Metro Market.  Drilling down further, what happens in one zip code or one neighborhood can be very different in terms of price and availability of homes from another. 

2021 so far is seeing an ongoing shortage of homes for sale, rising prices and interest rates.  Interest rates are still historically low.  However, a higher interest rate lowers your buying power while home prices are increasing.

Interest rates averages and high and low rates since 2018:
2020 Average Mortgage Rate 3.11% with high of 3.62% and low of 2.68%
2019 Average Mortgage Rate 3.94% with high of 4.46% and low of 3.61%
2018 Average Mortgage Rate 4.54% with high of 4.78% and low of 4.03%

Since the beginning of 2021 rates have been steadily climbing. We started the year according to the Freddie Mac interest survey at 2.68% and are now at 3.05%. Due to the increase many home buyers have lost up to 3% of their purchasing power which equates to roughly $9,000 on a $300,000 house. 

Interest rates change daily and even sometimes throughout the day depending on the volatility of the market.  As a buyer you generally aren’t able to lock your interest rate until you have a home under contract with a definite closing date.

Your interest rate will also depend on your credit, money available for down payment, closing costs and reserves, income, type of home and the mortgage programs you qualify for and is also the best choice for you. In the meantime, interest rates will float. 

Beware of lenders advertising mortgage interest rates lower than everyone else.  Look carefully for the small print that shows they are charging points that may range from 1% to over 3% of your mortgage amount. So you are being charged $3000-$9000+ for a $300,000 mortgage. 

You generally have the ability to buy your interest rate down. However, with interest rates at historic lows does this make financial sense?

A number of national companies have gone into the home buying business.  This appears to be a quick and simple solution to selling your home.  However, ask yourself are you going to get more money in your pocket if you sell to investors or if you open your home to all the buyers in the market place.

Buyers who are purchasing a home to live in are not only making a financial decision, but an emotional one. The sales prices from investment groups appear to be competitive and they need to show competitive sales prices in order to not negatively impact appraisal values when they go to sell the home.  However, what you aren’t initially seeing are the fees, charges and repair credits being deducted from your proceeds.  There is a cost for convenience which can be quite substantial.

If you are thinking of selling your home and buying another, but are concerned about your home buying choices and stiff competition there are a number of ways to deal with this situation.  Contact me to find out what your options are to proceed successfully.

If you have been considering selling or buying a home or both, would like help getting started or just curious how your neighborhood is doing please let me know.

Also, I am here if you have questions or would like to talk, catch up, share how you are doing or whatever.
Stay Safe! Stay Healthy!

Monday March 15th, 2021 Our Local Weekly Market Stats
As home prices rise the homes under $500,000 have been shrinking as more home prices increase.

Homes under $500,000 made up only 63.52% of homes for sale.
Not that long ago this was 70-72% of our active homes.
$500,000 -$999,999 has grown to 22.2% ( 2018 this was 18.2%) 
And homes over 1 million has grown to 14.3% of the market   (2018 this was 10.7%)

As of Monday March 15th Only Had .56% of a month of inventory.  To get back to a more normal market inventory should be 3 month to 6 months.

We have not only local renters wanting to become owners, but also strong migration into the valley from more expensive states like California.  The Greater Phoenix Market is predicted to continue to be one of the top areas in the country for inflow of out of state migration.       

Average Sales prices for the week prior was averaging 100.64% of asking price. So many homes are being sold over asking price. Sellers remain in a very strong position. In a more normal market sellers will tend to negotiate 2-2.6% with buyers.  Currently seller don’t need to be that flexible.