Market Update September 2020
The housing market in the Greater Phoenix-area continues to break records.
The monthly average sale price per square foot broke the record in August, standing at $190.97. The previous record was held in May 2006 at $190.61. Many Valley residents remember after the peak in 2006, there was a drastic fall from June 2006-March 2009, leaving a lot of people wondering – have we hit another peak, only to expect another fall?
The short answer is, no. Experts say signs are pointing to the housing market being a strong survivor within the recession, actually helping the economy recover.* In fact, the luxury market, which usually peaks in the second quarter and falls in the third (likely due to everyone escaping the heat) has been opposite. We saw the luxury market fall during the height of uncertainty at the start of the pandemic, only to have recovered stronger than ever.
The issue buyers are facing right now is low inventory causing a feeding frenzy with available homes. Buyers need to come prepared with their pre-qualification letter and in many cases, be prepared to submit their offer with multiple other offers on the property already received. So why is inventory so low?
Phoenix Market Expert, Michael Orr points out, “In Maricopa County between 2007 and 2020, the population grew 18%. If we examine the County Assessor's database, we can see that there was only 12% growth in inventory in the county during that same period. Even if we see significant rises in foreclosures and evictions, there are still not enough homes to match the population growth numbers.”
Because of the State and Federal programs in place, many homeowners have protection from foreclosures for now. Maricopa County just recorded the lowest number of pending forecloses this month. If these assistance programs go away, we will likely see that number increase, but not like we did in 2007.
My bottom line is, be patient if you are trying to buy. Be reasonable and prepared to move if you are trying to sell.
Mortgage Market Minute with Carla Hancock with Bay Equity Home Loans:
Great News: Interest Rates are still at an ALL-TIME LOW.
Economic News: The Federal Housing Finance Agency (FHFA) announced an imposing 50-basis point loan-level adjustment for all refinance transactions. In everyday language, interest rates are slightly higher on Refinance loan products then on Purchase loan products at this time. The good news is rates are still extremely low and should have pressure on them to stay low for an extended time period.
More good news: Jumbo Loan Investors (loans that are above $510,400) have overall improved their interest rates and have backed-off from their once conservative stance during COVID financial uncertainty.
Did you know that Reverse Mortgage products assist clients at or over the age of 62 with purchasing a home or for the refinance of their existing owner-occupied home? This loan product could be an attractive alternative to traditional home financing alternatives.
