In all honesty, I had thought about tying up this week’s Phoenix real estate year in review series with a cute little bow and bringing it to an end similar to what you’d see in your local newspaper or what you saw when you watched Shogun back in the day on NBC.
Except it’s not really that simple. I can end the series but the story of the Phoenix real estate market is ongoing. The changing of the calendar from one year to the next, one decade to the next doesn’t really change the look of things from today to tomorrow.
Yesterday, a client with whom I was having lunch asked if we’ve hit bottom. So I told him the same thing I’ve been saying since April. I don’t know if this is the bottom and I’m not even sure there will be the type of bottom everyone asking about the bottom seems to expect, a finite point where the skies lighten and a booming voice announces “yep, this is the bottom, folks. Moose out front should have told you.”
We’ve been bottoming since the beginning of April when sales started to spike back to 2005 levels. Prices haven’t followed suit because of the influence of low-priced bank owned homes and that trend likely is going to continue forward, though there seem to be exceptions in some of the lower-priced areas where there’s not much room left to drop.
At some point, though, the law of supply and demand will take hold and prices will start to creep higher – not to the degree we saw in the insanity of 2005, but at least a little bit.
In the interim, affordability could be a challenge even ahead of an increase in prices. I’ve blatantly stolen this tidbit from the wonderful Kris Berg’s San Diego Home Blog.
From Matt Carter at Inman News:
The Mortgage Bankers Association forecasts a more abrupt rise in 30-year fixed-rate mortgage rates, from 5.2 percent during the first quarter to 5.7 percent in the fourth. By the final three months of 2011, the MBA expects 30-year fixed-rate mortgages will average 6.2 percent.
What does this mean if you are waiting for the mother of all recession discount sales? If you believe that a 1% bump in mortgage interest rates is in the cards, you had better be hoping for a more than 10% price reduction to go along with it. Otherwise, you will be no better off.
Call this the American equivalent of yesterday’s discussion of Canadian exchange rates. Watching prices is all well and good but if you’re not also watching mortgage rates, you could find yourself priced out of the market anyway.
Which reminds me of one other trend …
So many would-be buyers have a series of check boxes that need to be marked before they feel it’s safe to proceed, which is prudent. Others continue to add check boxes even as the others get checked off. These are the folks who, once prices start to move or interest rates start to rise, are unlikely to purchase because they “missed the opportunity.”
My best advice as we enter 2010 … figure out what your parameters are for purchasing and stick to them. Don’t push your budget too far and don’t rush when you’re not ready. But when all the conditions are a go, don’t find other reasons not to purchase. And if you keep finding these other reasons, save yourself some time and relax where you are.
Wishing you a Happy, Safe and Prosperous 2010.
And from Tobey, Merry Beneful to All and to All a Good Night.[tags]Phoenix real estate[/tags]