TRENDING REAL ESTATE NEWS_________________
I’m a Real Estate Expert: These Are 8 Cities Homebuyers Should Be Buying In Post-Pandemic
With high interest rates, massive price increases (post-pandemic) and skyrocketing insurance costs, it’s tough to be in the housing market right now.
But poor affordability and higher costs have presented some interesting opportunities for real estate investors and homebuyers. While some markets have become overheated, others are still growing. And some markets have even started seeing a correction in prices. As a result, this may be a boon for real estate investors and homebuyers.
Phoenix is the land of retirees, but it has seen quite a bit of recent growth. It is one of the largest cities in the U.S. by population, with over 1.7 million residents.
Phoenix has seen substantial population growth over the past several years. The housing market remains very active. There has been a significant increase in inventory and moderate price appreciation. Investors benefit from a strong rental market, steady appreciation and a diverse economy. In addition to the rental market, industry serves as a growth engine. Phoenix’s expanding tech and healthcare industries further support long-term growth.
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MARKET UPDATE_______________________
3 More Cities in a Buyer’s Market – Incentives Continue to Rise
Rate Drops Equal Major Savings for Buyers
For Buyers:
The second half of 2024 is expected to be better than the first half for buyers in terms of mortgage rates. Last year from July to October rates rose from 7% to 8%, increasing payments by hundred of dollars and knocking many buyers out of the market. This time around, housing analysts are not expecting more dramatic rate increases. Instead, multiple factors are pointing towards improvement.
All eyes are on the Federal Reserve Board to determine when they may drop the Federal Funds Rate this year, but the Fed’s eyes are on annual inflation rates and the labor market. June’s inflation report came down more than expected to 3.0% and the response from mortgage rates was immediate, dropping sharply to 6.82%. That’s a major improvement from the 7.51% recorded on April 30th, and a savings of $187 per month on a $400,000 loan. If rates continue to decline over the summer, then prices may not need to decline to make homes more affordable to buyers.
Market Improving for Buyers
The market continues to get better for buyers. Half of the homes that went under contract in June were on the market for over a month prior to an accepted contract compared to 21 days last year. Price reductions are up 88% over last year, and 51% of sales involved seller-paid incentives to the buyer, the highest percentage this year so far. In June, the median concession paid to the buyer was $9,900, up $500 from May.
As the market has shifted out of a seller’s market and into balance, it has become a friendlier space for not-so-perfect buyers, especially first-time home-buyers. Buyers looking to assume FHA or VA loans with rates under 5%, or purchase with a low down payment, or down payment assistance, will find more opportunities with sellers today. Those same sellers would have scoffed at them 2-3 years ago in preference for cash buyers boasting guaranteed 2-week closing dates and prices that defy appraisals. As with many opportunities in real estate, these conditions will not last forever if mortgage rates continue to decline.
For Sellers:
The Greater Phoenix market has been in a balanced state for two months and the buyers are getting their groove back at the negotiating table. Over the last 30 days, there were two cities that shifted from a seller’s market into balance: Peoria and Paradise Valley. There were 3 cities that shifted from a balanced market into a buyer’s market: Surprise, Goodyear, and Cave Creek. In the meantime, 14 out of the largest 17 cities in the Valley showed a weakening in their market measures in favor of buyers.
There are 9 cities in buyer’s markets in Greater Phoenix as of July, located primarily in the West Valley and Pinal County. These areas have significant levels of new construction. These growing communities increase competing supply as builders create shiny new inventory for buyers to consider. Single family permits are up 56% to-date compared to last year, reflecting a strong optimism here that isn’t reflected in other parts of the country. As the second lowest count of new resale listings hit the market, new construction has little competition and comprises 27% of all single family home sales in the first half of 2024. New builds are formidable competitors for resale sellers.
Need for Professional Representation
Meanwhile, sales prices are still holding steady. The median sales price has only increased 1.9% from last year and the average sales price per square foot is up 2.6% annually for the month of June. It’s expected that annual price appreciation in a balanced market will stabilize around the rate of inflation. This is a market Greater Phoenix hasn’t seen since 2014-2015. Sellers need to prepare their home for sale, adjust their expectations, market and price their listing, and negotiate buyer concessions. It’s markets like this that demonstrate the need for representation and guidance from a professional real estate agent.
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_______________________
What are the Benefits of One-Story Homes in Arizona?
Arizona experienced a stream of people moving to the Valley in recent years. Whether it’s the year-round sunshine or love for the desert, real estate has taken off. As a result, this contributes to the growth of the state. In the evolving landscape of residential architecture, the timeless appeal of one-story homes continues to hold strong. These homes are often referred to as ranch-style or single-story houses. They offer advantages that make them a popular choice for various demographics, from young families to retirees. Learn about the key benefits of one-story homes and why they remain a favored option in modern living.
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LOCAL ADVENTURE_______________________
The Ultimate Summer Grilling Menu and Recipes from Williams Sonoma
Ready to spend some time on your patio this summer? Fire up the grill and enjoy this collection of recipes from the Williams Sonoma Test Kitchen. Terrific chicken and rib recipes, amazing vegetables, and irresistible side dishes. To top it all off, try some barbecue-friendly desserts including pies and S’mores Doughnuts!
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See something that interests you in the July 2024 Newsletter? Contact me and we can check it out together!
Feel free to call me directly at 602-791-0091.
