TRENDING REAL ESTATE NEWS_________________
The 10 Fastest-Growing Housing Markets in Arizona
For decades, Phoenix has been the poster child of housing growth in Arizona. Now it’s the suburbs and exurbs’ time to shine as people increasingly turn to less dense, more affordable communities. But what are the fastest-growing housing markets in Arizona?
Our recent study of housing trends in over 4,100 U.S. cities from 2013 to 2022 shows that suburban development is far outpacing urban growth. As a result, as once-idle communities are now brimming with new housing options.
Among the major cities in Arizona, housing inventory in Phoenix has only increased by 6%, similar to Tucson. Chandler and Mesa are in the middle of the pack with 17% and 12% growth rates, respectively. Gilbert is growing the quickest among traditional Arizona hotspots, with a 24% increase in housing inventory.
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Arizona Homeownership Surges with Seventh-Highest in US, Arizona’s Housing Market Is on Fire!
New research has revealed the state with the most significant increase in homeownership since 2014, with Arizona taking seventh spot. Arizona had the seventh-most significant rise in homeownership over the past ten years, with an increase of 8.41%.
Real estate experts Agent Advice analyzed a recent housing vacancy and homeownership survey from government census data to determine the states that had experienced the most significant increase in homeownership rates from 2014 to 2023.
Photo by Kindel Media on Pexels.com
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MARKET UPDATE_______________________
Mortgage Rates Drop Again – Homes are 10% Off
Record Share of Sellers Paying Buyers’ Fees
For Buyers:
On August 5th, everything went on sale in the housing industry. As discussed in last month’s edition, multiple factors are pointing towards improvements in mortgage rates this year. Well, it happened faster than many were expecting at the beginning of August as average mortgage rates dropped abruptly to 6.3% before settling at 6.5%, a significant improvement from last April’s average rate of 7.5%. The net result for buyers was a 10%-11% drop in the principal and interest payments regardless of loan amount. Loans between $300K-$400K saw calculated payments drop from $200-$270 per month, while those between $450K-$550K saw drops between $300-$370 per month.
The drop spurred an immediate 16% increase in refinance applications week over week, per the Mortgage Bankers Association, as homeowners who decided to buy and “date” their 7%-8% rate over the past year started thinking about a break up. Purchase applications also increased, but by just 1%. This is not unusual because when mortgage rates make big strides down, the first response by buyers is to wait and see if they decline further. Once rates stabilize under 6.5% for a little while, more demand may materialize.
Incentives for Buyers
In the meantime, a record share of sellers are paying for their buyers’ closing fees. So far in August, 55% of sellers agreed to concessions, with half of them paying out $9,800 or more. Even as mortgage rates decline, tools such as the 2/1 buy-down are still the norm. Temporary 2/1 buy downs are contributions by the seller used to supplement 10%-20% of the buyer’s payments for 2 years. They typically cost around 2.3% of the loan amount.
On a $400,000 loan, the rate change of 7.5% to 6.5% from April to August drops the monthly principal and interest payment from $2,797 to $2,528, saving a buyer $269 per month. Combined with a 2/1 buy down courtesy of the seller, the buyer pays the equivalent of 4.5%, instead of 5.5%, for the first year, dropping the PI payment to $2,027, saving an additional $501 per month. That’s a total of $770 in monthly savings to the buyer as a result of the recent rate change this month and more than half of sales with seller-paid incentives
For Sellers:
As mortgage rates hopefully continue to improve gradually with emerging economic data, sellers will still need to drum up all of their available patience when listing their home. Buyers don’t move nearly as fast as the stock market does when the Federal Reserve speaks or employment reports are released. While all eyeballs are on the demand line to see if it moves higher, buyers still have to fill out applications, submit paperwork, and get moving. Meanwhile, half of sellers who accepted contracts so far this month were on the market for 37 days or longer before they tasted success.
Balanced Market
The good news is that the demand index, seasonally adjusted, has stopped declining since the rate drop and there’s little movement towards a buyer’s market at this time. Greater Phoenix remains in a balanced state. The bad news is prices are stagnate, rising only 1.9% from this time last year. While it’s tempting to test and push the market to achieve the highest price possible, the consequence for that strategy could be longer time on the market and multiple price cuts, which are up 67% compared to last year.
Managing expectations is key to a positive selling experience. Balanced market conditions cannot meet the high seller expectations of a seller’s market. Listings typically require more work and a solid strategy, even if they’re in perfect condition. At a time when real estate professionals are experiencing intense scrutiny and change, this is the market where they are needed the most.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2024 Cromford Associates LLC and Tamboer Consulting LLC
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FOR THE HOME_______________________
PKA Architecture Unveils Luxurious Scottsdale Home
Minnesota-based PKA Architecture recently unveiled a brand new Arizona desert home. Nestled within the Lost Star community in Scottsdale, this residence provides the perfect spot to watch the gorgeous Arizona sunrise while taking in stunning mountain-side views. The luxury amenities are fit for a homeowner seeking elegance and comfort.
Outside the home sits a gorgeous pool with a spa and pool shelves. There is also a back patio with an outdoor fireplace perfect for barbecue nights and get-togethers with friends and family. Louvered exterior details for shade and a butterfly roof design add to the unique features.
Inside is an open-concept living area that is designed to flow seamlessly. Large windows and sliding glass doors frame the picturesque views, allowing natural light from floor to ceiling. Contemporary finishes, clean lines and a neutral color palette reflects the natural beauty of the desert. Therefore, this creates a serene and inviting environment. Within are two dedicated guest bedrooms, a guest lounge (that could be a future bedroom) and an office.
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LOCAL ADVENTURE_______________________
Arizona’s First Hard Rock Hotel to Open in Scottsdale
Hard Rock International is bringing its $60 million Reverb brand to Scottsdale. The hotel will open in late spring or early summer 2026.
Only one Reverb hotel is currently operating in the U.S. in downtown Atlanta. Reverb by Hard Rock Scottsdale will be one of several cities set to open Reverb hotels. Other locations include Tampa, Fla., and Kalamazoo, Mich.
The 195-room music-focused property will cater to music fans and feature several spaces to encourage creatives and grow social connections. Developed in partnership with Denver-based ERES Capital, the Scottsdale location will anchor The Sydney. The Sydney is an entertainment-focused development. As a result, it will feature a wide variety and mix of uses including co-working spaces, an outdoor pool, and a rooftop bar.
“Our objective is to create inviting spaces for every traveler while honoring the rich cultural legacy of the Salt River Pima-Maricopa Indian Community,” says Mike Elliott, CEO of ERES Companies.
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See something that interests you in the August 2024 Newsletter? Contact me and we can check it out together!
Feel free to call me directly at 602-791-0091.
