We always like to stay on the cutting edge of what is happening in the local economy, and this year we can confidently say we have not felt this positive about the local economy and real estate market since 2005.
If you are looking to move up, now is the time to jump. If you are looking to downsize to a more expensive market (i.e. Mesa to Scottsdale), now also is the time to move. If you are on the fence about buying, don’t hesitate too long or rates and value increases will price you out of the market. The word is out that the Phoenix metro area is the place to live, work and play. Cost of living and great sunshine are luring buyers from across the country. Here is some more good news and our predictions for this year:
Metro Phoenix Real Estate Will Be at the Top. According to Realtor.com, Phoenix will be the top housing market in the United States this year. The website is predicting Valley home prices will climb 5.9 percent and sales will increase by 7.2 percent. With the Valley’s steady growth and short supply of foreclosures, it is one of the healthiest real estate markets in the country.
The Valley Economy Will Boom. We are on track for great things in the Valley. According to Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the WP Carey School of Business, at Arizona State University, Arizona is expected to add 81,000 new jobs this year, and unemployment should drop to 4.8 percent. Population growth for the state is expected to stay at 1.6 percent and, while that is only half of what Arizona has averaged long term, it is double the national rate.
We Can Stop Obsessing About the Bubble. When real estate hit its last boom in 2005, the economy was overwhelming, based on construction. Over the last 10 years, leaders and economic developers in the Phoenix metro area have worked tirelessly to diversify our regional economy. We now have a more stable, vibrant and attractive job market not exclusively driven by home building. We have seen increases in the fields of health care, education, tech and financial services. More companies also are moving to Arizona simply because business and living costs are more affordable.
Interest Rates Will Increase. Last year, we predicted in this article that mortgage rates would rise a solid 1 percent or more, and we have seen just that. The historically low interest rates ended the day after the election and are only expected to continue to rise. The Mortgage Bankers Association’s chief economist, Mike Fratantoni, said while refinancing will decline, he is expecting new mortgages to increase by about 10 percent in this year “based on the strengthening economy, employment and housing demand.”
Vibrancy Will Come To The Suburbs. For the last few years, we have seen great infill restaurant and retail projects in the downtown areas of Phoenix and Scottsdale. As the price of land in those areas has increased, investors have looked to other parts of the Valley. Tempe and Gilbert already are the poster children for this movement, with many urban restaurant operators opening secondary outposts in the East Valley.
The Deals Are Fleeting. Looking for a deal? Don’t wait. Luxury inventory still is heavy, which offers some fantastic buying opportunities for those looking to move up. The election and holiday lulls also have caused some properties to linger, which, again, offer opportunities for buyers. With property values and interest rates increasing, this may be your last chance to get into that property about which you have been dreaming.
While 2016 was the year Arizona finally fully recovered from the recession, 2017 will be the year the Phoenix metro area gets nationally recognized as the place for growth in the country. We also continue to believe the East Valley will continue to offer some of the best real estate deals in Maricopa County.
Wishing you all a happy and prosperous New Year. Give us a call, and let us help you plan for 2017.
John Karadsheh is the Designated Broker for KOR Properties. He has been a Multi-Million Dollar producing agent for more than 14 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 (480) 568-8684, or visit his website at KORproperties.com. KOR Properties also is the creator and one of the founding sponsors of Mesa Food Truck Fridays.