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BHS Prediction for 2015 Real Estate Market

by John & Marta Baxter

By now you’ve probably heard that 2015 is expected to be a pretty good year for real estate. It’s a prediction that most chief economists are all fairly aligned on.  We are confident this is a defining year for the housing industry, as it comes down to three simple factors:

  • Home sales should increase.

  • Prices should increase

  • Mortgage rates should increase.

When combined, those three indicators point to an extremely strong real estate market. Potential home buyers should move fast if they want to spend less.

 

Buyers should act now––delayed purchases will only result in higher monthly mortgage payments as prices and rates rise.  So, buyers beware: The clock on these low mortgage rates may be ticking.

 

From a macro level, the economy and the housing market are in far better shape now than a year ago. We are creating jobs at a pace now that we haven’t seen in 15 years.  Friday’s initial report on fourth-quarter GDP came in at 2.6% growth. Underneath the number was mounting evidence that consumer spending is indeed strong and wage growth is finally accelerating.

 

Low prices at U.S. gas pumps have turbo-charged consumer confidence and are enabling households to spend more and save more for big purchases like buying a home.  Besides global factors that bode well for buyers, the U.S. housing market is also in much healthier shape. Foreclosure inventories have fallen to nearly normal levels everywhere except for a few slow markets. As a result, distressed sales are no longer weighing on the market.

 

We’re back to a normal and upward trajectory for housing prices, and there’s little risk of prices declining because the inventory level has declined in the Phoenix market over the past few months. This is the lowest number we have seen since September of 2013We are more worried about listings and new home construction not keeping up with the demand.

 

The market is primed for first time buyers and sellers. 2015 is the year of the millennial when it comes to real estate. Millennials are at a critical demographic tipping point where their sheer numbers will naturally drive demand for more home sales. Most first-time buyers move into their first home when they’re between the ages of 25 to 34.

 

Sellers should also be encouraged—especially if they’re sitting in affordable homes waiting for a long-overdue upgrade. With recent clarification of mortgage standards, new low-down-payment programs, and lower FHA insurance premiums, access to credit should improve. That means those folks who’ve been sitting on equity in entry-level homes can finally upgrade to bigger homes and retirement homes.

 

There are some risks to keep in mind.  Supply must keep pace with demand, otherwise affordability declines more rapidly and would-be buyers can’t find the home of their dreams.

The U.S. economy could hiccup from global weakness.  Consumers could take the money they’re saving on gas and spend their money on items other than new homes.  The probability of those risks completely reversing the recovery is slight, but it is strong enough to limit the potential. On the flip side, if the economy ends up growing more than expected and first-time buyers come roaring back, we could end up in an even stronger market.

 

Here’s to a robust and strong 2015!

 

January 2015 Real Estate Market Update

by John & Marta Baxter

Market Report - Maricopa County
 

Here are your real estate statistics for last month.  Be sure to call if you have any questions about this report or about how the market is performing.  This report includes MLS data for the past 36 months for Maricopa County only as provided by the FlexMLS system.  Please note that MLS search results fluctuate as data is added to the system and the figures below were obtained on 1/3/2015.
 



Closed Sales Report Analysis:
 

Sellers: As is normal for the month of DECEMBER, our market showed a significant increase of 29.7% in closed sales between November and December as buyers wanted to finalize the sales process prior to the end of the year. Last month’s numbers showed that we had 5,827 residential properties sell in Maricopa County compared to 4,493 in the month of November. This number is 11.5% higher than December of 2013 and 7.2% lower than December of 2012.

Buyers Buyers remained very active at the end of the year. It will be important to see what 2015 brings to buyers in the way of pricing, terms, and inventory. Your real estate professional will always be your best resource for the most current information.
 


Average Sales Price Analysis:
 

Sellers Last month saw the average sales price increase from $258,837 to $266,711, a trend that is normal in the month of December. This is the third month in a row we have seen the average sales price increase. This is the highest average sales price we have seen in the past 36 months.  However, Sellers need to be aware that many buyers are now requesting home repairs, buyer concessions, and other credits that will impact the bottom line of a Seller. The first quarter of each year normally brings a large influx of inventory that will bring more competition for buyers which may have an impact on pricing, time on market, and terms.

Buyers:  This stat is an indicator that buyers paid more, on average, last month. Although this may vary from area to area AND from price range to price range, buyers need to make sure they are fully informed regarding the individual market in which they have an interest. This will give them the best chance of being competitive in the search for a home.
  


Pending Sales Analysis:
 

Sellers:  There was a 6.5% decrease in the number of active listings from November to December. We have a total of 18,865 residential properties actively listed in Maricopa County as of 1/3/15. This is the lowest number we have seen since September of 2013. Sellers need to continue to watch this trend as we move into a brand new year AND into a month where many sellers decide to list their home for the first time, potentially creating “new” distractions for potential buyers.

Buyers:  The current market means that buyers had fewer new homes to consider this past month.  Continue to monitor this statistic, as it WILL be the statistic that indicates how any options you will have in your home search and how quickly you will need to act … the higher the number, the more choices a buyer will have. As always, market activity is local and should be researched with your real estate professional to determine the activity and desirability of the homes that are of interest to you.
 


Average Days on Market Analysis:


Sellers:  Last month s aw the average days on market once again remain steady at 85 days. A little over one year ago, we were at 56 days. The longer a home is on the market, the more costly it is to sellers, as they continue to pay mortgage payments and all the other fees associated with home ownership. Days on market are controlled by appeal to buyers – in condition and in price. Staging and realistic pricing can dramatically impact a seller’s success in today’s market.

Buyers:  This statistic shows that buyers are still remaining active in today’s market BUT they are taking longer than in the past to make decisions because of the increase in inventory.  Buyers need to remain aware that the great homes will always draw lots of attention regardless of the real estate market we are experiencing.
 

STOP!
 
As a reminder, you need to meet with a real estate professional to see how statistics impact the area where you are considering selling or buying.  Blended statistics will not be as accurate as a more detailed report that your real estate professional can provide to help you with your decision making.
 
Would you like to know what is happening in your neighborhood?

Would you like to know the value of your home?

Do you need help deciding whether to sell or not or would you like to know if now is the right time to buy?

We would be very happy to get you that information for you!
info@baxterhomesales.com or 623-536-1111

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Photo of The Baxter Home Sales Group Real Estate
The Baxter Home Sales Group
Keller Williams Realty Professional Partners
2403 N. Pebblecreek Parkway Suite 101
Goodyear AZ 85395
(623)536-1111
623-298-8916
Fax: 866-500-2647

Buying and selling real estate is something that only happens a few times in one’s life and should be handled with utmost professionalism and exceptional customer service. The Baxter Team has one goal—to build relationships and to make clients for life. They plan to play an integral role in the West Valley and to make a difference in the lives those who reside in this fabulous community.