With Autumn arriving today and the year of 2019 well intp the second half, one's mind turns to the coming year and real estate decisions that may need to be made. Buy or Sell a home? Is this the right time to invest in real estate if a recession coming? Will the strong growth of past 3 years continue or run into a stone wall? Mortgage rates are low now, can I afford to wait another year? What about home prices?
An Important Lesson
One important lesson that has been reinforced for me during the last decade is that real estate prices are cyclical. Oh yes, we have seen that over the last 100 years as real estate prices have ebbed and flowed as economic expansions and recessions have come and gone, but for real estate through these changes prices have in the end gone in an......up, up, up, upward trend.
Over the Past Decade Since the Dowturn Home Prices have returned to where they were
Oh yes, I recall in the Summer of 2006 in the Phoenix metro and in other areas around the US, prices were booming and then the real estate crash. Prices went down 25% in 12 months and continued to drop for several years. At the time, someone told me, the same as in a stock market downturn hold on don't sell for a loss that in 10 years the market will be back.
Prices are Back
Well, that is exactly what happened! Prices now in the Phoenix metro area are back or have exceeded the price downturns of 2006 through 2011. Those that held on are doing well, they have weathered the storm. Others even profited by buying short sales, foreclosures or steeply discounted properties. The old investment adage is to BUY LOW and SELL HIGH. When prices are low, do notget desperate. Wait it out. If you are living in the home, you need a place to live anyway. Live and enjoy your home. Why wait it out? Well as in the case of the 2006 price crash......THIS TOO SHALL PASS!
Jeff Masich showing homes for sale in Scottsdale Arizona...Prices are back to where they were
Trying to "Time" the Market
So I tell this to my clients when they worry about trying to time the market. Yes prices will go up and down, but over the long term they will go UP!
Real Estate Cycle
This is what is called the real estate cycle or cyclical events of real estate pricing. Cyclical Definition: "Something that is cyclic follows a cycle, a sequence in which things begin and end in a predictable rhythm. Cycle comes from the Greek word kyklos, meaning "circle, wheel, any circular body, circular motion, cycle of events." So something that is cyclic shares that same pattern." Real Estate goes up and down but the overall end is result is a continuing UP.
To further illlustrate this cyclical nature in our local Phoenix Arizona metro market:
Catherine Reagor in the Arizona Republic reported on July 13, 2019, "Buyers hoping for metro Phoenix home prices to fall this year as they are in some other U.S. cities have been disappointed. The Valley’s housing market is still hot with prices setting new records and sales soaring. Real estate experts don’t see signs of a crash looming. “It’s not happening” said Tina Tamboer, senior housing analyst with the Cromford Report, about a potential plummet in the area’s home prices. She told nearly 200 Valley HomeSmart real-estate agents Tuesday that, thanks in part to lower interest rates, demand for metro Phoenix homes began climbing again in March.
Phoenix Market Prices Now
Still a sellers’ market Metro Phoenix’s median home price hit a new record of $278,000 in May and likely climbed to $280,000 or more in June, according to the latest report from the Information Market, owned by the Arizona Regional Multiple Listing Service. Valley home sales hit 10,341 in May, the highest monthly tally since the housing boom in 2005. Mortgage interest rates are down from nearly 5% last November to 3.75%. And the supply of Valley homes for sale priced below $400,000 is down, after climbing in January. “It’s still a sellers’ market, but people need to be reasonable and not crazy about pricing their home,” said veteran agent Bobby Lieb, who held the HomeSmart meeting. He has seen several Arizona real-estate cycles and doesn’t see a crash coming either. No housing crash looming...."
So, if you are ready to buy now and raise your family, give me a call....I can help!
Meet Jeff Masich REALTOR®
Meet Jeff Masich, REALTOR® and ask about homes for sale anywhere in Phoenix metro