In the Arizona real estate market we tend to be in the heat of the action when the end of the calander year comes rolls around. New Years business resolutions, solutions, and goals are easy to overlook as the buyers are picking up and activity is heightened.
As a residential real estate agent, investor, and owner i find its best to celebrate NEW YEARS IN SEPTEMBER!!! At this time in the year we can look back and review the last 12 months. We can evaluate the market condition and how it will react in the next 12 months. We can review past success and failures, investigate new opportunities and plan for the upcoming year. If you are an owner, investor, or tenant in Arizona Real Estate market I suggest you do the same.
The Arizona Real Estate market is currently in a strong but balanced position. We find the current supply of homes for sale at slightly below average and almost exactly the same number as 12 months ago. Cromford Associates LLC describes the current level of supply with a Cromford Supply Index of 67.0 with 100.0 being average or expected. The new home inventory in Phoenix Metropolitan Area is largely suburban and priced between $300,000 - $1,000,000. There is significant lack of new home supply in desirable central Phoenix and at price points below $300,000.
Demand of homes for sale in the Phoenix Arizona area is very close to average or expected but slightly higher than 12 months ago. Interest rates remain very low and the local economy relatively strong. The population in Arizona continues to grow and create demand for housing. However a significant lapse in local birth rates over the last 5 years will affect our market in the longer range. Paired with lower supply our current demand will continue to increase values of Arizona homes and support the new construction offerings in our market. New home sales in Phoenix are up 30% over a year ago and will continue to strengthen as resale values bump up against new home prices in many locations.
The area annual appreciation rate is currently 3.4% according to the Cromford Report. 12-months ago we observed an apprecation rate of 4.6%. The current market statistics indicate we are likely to see a slightly stronger 4-6% appreciation rate over the next 12 months. However appreciation has not and will not be equal across all price points. Homes valued between $1-2,000,000 have seen slightly negative appreciation over the last 2 years and this should continue. Homes priced below $300,000 have been appreciating closer to 10% per year and will also continue to do so. The influece of a growing rental community and federal mortgage regulations has made the properties priced below $300,000 significantly desirable.
The number of local residents that choose to rent rather than purchase their home has continued to grow. Thousands of multi-family residences have opened over the last 2 years and many more are under construction. Occupancy rates remain high. Changes in the job market, values of the millenial population, and lingering negatives from the great recession are all increasing the number residents choosing to rent. I trumpet the long-term value of homeownership to all my clients but it is simply not the right solution, right now for many people.
How does this information affect your goals and desires for 2017? Are you looking to purchase your first home after rentingin the Phoenix metro area? Are you looking to upgrade your home for your growing family or downsize to preferable location? Are you looking to strengthen your investment or retirement portfolio with real estate? Now is the time to evaluate and act before the Arizona real estate market is in its full winter swing!