(Published on - 12/13/2022 8:46:34 PM)
The Emperor is Naked
Do you remember when the little boy yelled, “The Emperor has on no clothes!”? Well, if you listen to current media coverage of the housing market, you’ll hear detailed descriptions of the finest gold silk you have ever seen. But even the slightest scrutiny will reveal that the man is naked and the headlines are hype.
Phoenix Tops the Nation in List Price Reductions
The top story making my phone ring this week is Phoenix leads the nation in list price reductions. Keep in mind this refers to the number of homes that have reduced their price, not the amount of reduction. In most cases the number was artificial to start with. But let’s be real, the number is based on a prior number of ZERO, since there were zero price reductions for the last two years, so of course any reductions would look like a huge jump.
Prices hit their Peak this Summer
Over the last two years, buyers faced fierce competition. A shortage of inventory and historically low interest rates provided Sellers with offers above asking price immediately. This phenomenon obviously encouraged other Sellers to ask more than what they typically would have been happy with in a normal market, selling for normal reasons like downsizing or moving or illness of a family member. It also encouraged Sellers who really didn’t care if they sold, to join the party, willing to sell if they got a high enough price. Once they started to get excited about a move, many decided to get realistic in order to make it happen, others took their homes off the market and turned their attention to the holidays.
Home Prices are Not Expected to Crash
According to the National Association of Realtors, top experts don’t believe home prices will crash anything like they did in 2008. Keep in mind, anyone who has owned a home for two years most likely has a lot of equity, that was the opposite case in 2008. Experts believe that home prices will moderate at various levels depending on the local market and the supply and demand in that area. That’s why some experts are calling for slight appreciation. However, even the worst case of 5.1% hardly makes a dent in the 40-90% appreciation of the last two years.
Mortgage Rates will Come Back Down
While mortgage rates have risen dramatically this year, the rapid increases we’ve seen have moderated in recent weeks as early signs hint that inflation may be easing slightly. Where they’ll go from here largely depends on what happens next with inflation. If inflation does truly begin to cool, mortgage rates may come down as a result.
When that happens, expect more buyers to jump back into the market. For you, that means you’ll once again face more competition. Buying your house now before more buyers reenter the market could help you get one step ahead. As Lawrence Yun, Chief Economist for NAR, says: “The upcoming months should see a return of buyers, as mortgage rates appear to have already peaked and have been coming down since mid-November.” When mortgage rates come down, those waiting on the sidelines will jump back in. Your advantage is getting in before they do.
Listen to the Experts
So, before you repeat the news anchors, take a few minutes to learn from the experts. Here are a couple good reports and predictions for the 2023 Housing Market.
Have a great holiday! Warmly, Denise van den Bossche
Celebrating nearly 40 years in the Arizona Real Estate Market
Greater Phoenix now Balanced
According to the City of Phoenix, the Valley tops the nation in population growth for the fifth year in a row. The Valley includes dozens of communities, townships and villages and an extremely efficient freeway system. I relocated here in 1982 for graduate school at ASU when the Valley was just 1.5 Million, and still find that it retains its "small town" charm. The communities all blend together and you may eat at a restaurant in Scottsdale, and have coffee across the street in Tempe.
Arizona best place to find deals in real estate
According to azcentral on December 6, Taiwan Semiconductor, already under construction and dramatically changing the housing market in the northwest Valley, plans to expand their presence here. This will triple the company’s stake in Arizona from an original estimate of $12 billion to $40 billion. This will more than double the number of permanent jobs at the TSMC facility to 4,500. That is in addition to an estimated 10,000 construction jobs.
. The key words for sellers in this market are condition (buyers are demanding full updates), price, concessions (such as rate buy-downs) and patience.
A new factor is coming into play, as over half of all homebuyers in 2022 were Generation X or millennials. Interestingly, a survey by Bank of America found that these young and wealthy consumers prefer assets like cryptocurrency, real estate, and private equity over investing in the stock market. "Individuals ages 21 to 42 with at least $3 million in assets have only a quarter of their portfolio in equities, compared with more than half for those who are older," according to the study. This is significant, as Baby Boomers are expected to transfer over $84 trillion of their wealth to Generation X and millennials between now and 2045, according to market research by Cerulli Associates. It is also contributing to our housing inventory shortage.
As far back as 1930, the gas cooktop was glamorized to be sleek, sexy, and sophisticated. A new generation of homebuyers, focusing on more time at home raising young families are switching to induction as a healthier and safer option. Gas generates carbon monoxide, formaldehyde (a carcinogen), nitrogen dioxide (NO2, a respiratory irritant and asthmagen), and other nitrogen oxides into our homes, and our lungs. It also requires constant supervision (during which time toxins are the strongest). Induction is quicker, easier to clean, with the ability to set a precise temperature and no open flame risks for children, tenants, or the elderly. 
Spooky or Balanced? 
ven Buckeye, with the lowest current demand for housing, has recently learned of top new employers moving in. Hurricanes are rare in the Sonoran desert, as are earthquakes and other natural disasters. Sunshine 300 days provides a beautiful view, even if it is hot for 3 months. And a dry heat is so much more preferable when it is hot. These are some of the reasons people and businesses continue to move to Arizona and maintain a strong housing demand.
