Since the recession, the Valley real estate housing market has been difficult to predict.
Each year, it seems there have been unexpected wildcards, ranging from the burst of investor influx, to the tightening of the lending market, which resulted from the implementation of the Dodd-Frank Law. While the market had been relatively flat in 2014, I had seen a busier than average November and December, which bodes well for this year. Here are my predictions for this year.
Financing Will Loosen. In an effort to increase the liquidity of housing credit, Fannie Mae announced in October it would back loans with down payments as low as 3 percent (previously 5 percent). The hope is this will stimulate the private lending market to loosen its purse strings, and make loans available to a broader spectrum of borrowers. However, with the relaxing of credit, I predict we will start to see interest rates tick upward.
Buyers will return. After a foreclosure or short sale, the waiting period to purchase a home again is seven years and four years respectively. If any individuals had a foreclosure in 2008, they will be poised to return this year. Whether or not these buyers will have the means to return to the market is yet to be seen.
Rents Will Continue to Increase. Valley rents have increased 5.7 percent over the last year, and they are poised to continue upward. As rents increase, this often motivates renters to become home buyers.
New Home Building Will Flourish. According to RL Brown Reports, homebuilders are on track to construct about 12,000 homes this year. But with low unemployment and an expected 50,000 jobs to be created in the Valley this year, the number of new homes could be much higher.
We Will Have A Boost From Tourism. The Valley is poised for a lot of positive attention in the first half of this year, with the return of the car shows, the Phoenix Open and Spring Training. Additionally, this year we will have lots of activity from the Pro Bowl and the Super Bowl, as well as sun seekers escaping what is predicted to be a harsh winter nationwide. With this many people coming to the Valley, we should see a boost in the market.
We Might Be The Hottest Market. Realtor.com has predicted Phoenix will be one of the United State’s top 10 hottest housing markets to watch this year. This is based on a predicted 22 percent increase in housing starts. Our local economic recovery historically has been tied to new construction. So, if that prediction comes true, all aspects of the Valley real estate market and economy will see growth. This, plus tourism, loosening credit and the return of sidelined buyers, could make for a banner year.
In a nutshell, I expect to see steady growth this year, with the possibility of a sudden boost in values if housing starts to pick up. I think buyers are in the better position at the moment, with great deals remaining in the market. An interesting indicator is that I have sold many custom building lots in the last few months, a trend I have not seen for many years. This is a very positive market indicator, as it signals confidence on the part of builders and investors.
Wishing you all a happy and prosperous New Year. Please don’t hesitate to call me for a New Year’s market evaluation, or to help you find your next dream home (or lot).
John Karadsheh is an Associate Broker with Coldwell Banker Trails and Paths. He has been a multi-million dollar producing agent for more than 12 years, and is an Accredited Buyers Representative (ABR) and Certified Residential Specialist (CRS). In 2014, John was voted the No. 1 Real Estate Agent in Arizona by Ranking Arizona. You can reach John at (602) 615-0843, or visit his website at www.ArizonaHomesandLifestyles.com.