John Karadsheh
With the local housing market heating up like an Arizona summer, here are five good points to contemplate with regard to purchasing a home at this time.
We Are Now In A Buyer’s Market
Between 2012 and 2013, we saw local property values appreciate year over year by more than 20 percent. During those years, inventory was historically low, and we had a lot of investors in the marketplace who were attracted by the large inventory of distressed properties. Now, in 2014, investors have moved on to other markets, while the increased values have made it financially possible for homeowners to put their homes up for sale again. With less demand from investors, and a greater supply of traditional listings, buyers are in the driver’s seat. For buyers, this means more properties from which to choose and less competition from multiple offers.
Interest Rates Are Still Low
At the beginning of the year, it was expected we would see substantial increases in interest rates. However, by early May, the average rates for 30-year fixed mortgages fell to their lowest point since the week of Nov. 7, 2013, and were about .32 percent lower than at the beginning of 2014. While rates still are expected to rise by year’s end, the increase is expected to be very gradual.
The Real Estate Market Is On The Road to Recovery
This past March, foreclosure starts fell to the lowest level in seven years. The Valley real estate market is more balanced than it has been in years, leaving the big ups and downs behind us for now. Furthermore, unemployment levels are dropping. While unemployment was 9.1 percent in April 2011, this April, it was just 6.3 percent. Jobs allow people to purchase homes, and home purchases stimulate other related sectors, such as construction, residential maintenance and home improvement, etc. While values are not skyrocketing like they were 18 months ago, they still are moving up, and it is anticipated they will continue to increase over the next few years.
Investing Is Still A Good Option
While the opportunity to buy discounted properties on the courthouse steps may no longer exist, purchasing a home to use as a rental can still be a good idea. Because many people are not able to re-enter the market due to short sales, bankruptcies and foreclosures, rentals remain popular. Household creation also is declining as millennials find it difficult to save for a down payment and juggle their student loan debt. Further, they also are getting married later and choosing to spend their money on entertainment, dining and travel over housing. So, instead of buying, they are renting. If you have children who currently are renting, you might want to consider investing in a piece of property, which they could rent from you. You also may consider helping your kids buy their first home, so they can appreciate the tax benefits of homeownership and long-term property appreciation.
Banks Are Lending
When the new lending regulations went into place, we saw an initial market slow down, as lenders and borrowers struggled to figure out how these new guidelines would be implemented. Now, things have settled down, and lending has opened up again. In mid-April, a survey of the Mortgage Bankers Association revealed the fact it is easier now for individuals to get mortgages than it has been at any other time over the last three years. Furthermore, in mid-May, Mel Watt, the head of the Federal Housing Finance Agency, instructed Fannie Mae and Freddie Mac to make more credit available to homebuyers. This has yet to trickle down, but, hopefully, it will continue to encourage the availability of financing for homebuyers.
John Karadsheh is a licensed REALTOR® with Coldwell Banker, Trails and Paths Premier Properties. He also is an Associate Broker, Accredited Buyers Representative, a Certified Residential Specialist and was the No. 1 residential real estate agent in Arizona by Ranking Arizona, the Best of Arizona Business. You can contact John with any of your real estate questions. Call him at (602) 615-0843, or go to his Web site at www.BuyAndSellAZ.com.