So it’s been about a month since the last time I shared an update on the current market inventory in Maricopa County. Maybe it’s a shock, maybe it’s not but as of today, we have more sale pending homes than we do current available inventory! As of this morning, Maricopa County is reporting 16,391 active homes and a combined total of 17,996 between pending sales and sales with contingencies. Last month I talked about the why – robo signing, etc. This month I want to talk about history, the future and what I want to call the “ebb and flow factor.”

The metro area is roughly 4 million in population and we are the 14th largest city in the U.S. In reality, the median home price has dropped 53% since the peak of 2006 where we are currently hovering around $120,000 – pretty brutal, huh? But history will remind us that Phoenix is no stranger to a “boom and bust” market. But it was not that long ago (late 1980’s) after the savings-and-loan nightmare took down several local developers, including Mr. Charles Keating (who served 4 ½ years in prison for fraud after his Lincoln Savings and Loan collapsed in 1989) that Phoenix experience what we thought at the time was economically catastrophic. The future then? Well, we recovered.

Home sales were up in June by 22% according to NAR (National Association of Realtors) and it was the second consecutive month of strong sales with June reported to be the best since December 2006. Good? I remain optimistic – I have to believe we are on the road to recovery in some fashion, even if it’s by way of a Flintstone vehicle.  

The future – well in reality, we sold a total of 4,725 homes in the month of June – a large degree of those home sales were to non-owner occupants. Nearly half of the foreclosure sales over the past year have been turned into rentals – either with International monies or investors capitalizing on the opportunity to buy low and hold.

The ebb and flow factor? I think so. Evictees have to rent – which has caused rental rates to go up by 9% - which on the surface may not seem like a positive but in the big picture it is. Let me explain.

A few years ago there was a rash of catalytic converters stolen out of parked cars. So some genius came up with the idea to create a cage for your vehicle to protect the catalytic converter – while one thing is a negative, the other is a positive – thus creating a win-win for the economy. Right? The ebb and flow factor.

While the rental market has shifted greatly, home affordability has improved tremendously. With home prices down, mortgage rates practically free (today they are 3.750% for a 30year fixed FHA loan) this is the best time to buy in Phoenix is over 20 years – in some areas of the Valley, prices have come down below values in 1998. People who thought homeownership was completely out of reach for them in 2006 are now able to buy their dream home – for cheap.

So yeah the higher rental rate might be a negative but for every person who has to rent, there are 2 or 3 who can afford to buy – and that is the positive – or the ebb and flow factor. The future? Although I do not have a crystal ball, I will say this – if you are sitting on the fence, its time to jump before you miss out on history! Call me today to get started – first time, inventory, 2nd home – it doesn’t matter what you want, we can help you do it. I look forward to hearing from you.