Lorraine Ryall
As our summer begins to fade, and we head into the fall, we become the envy of everyone else because, let’s face it, the weather is the reason we all live here in Arizona.
With the cooler temperatures comes our annual flock of snowbirds, ready to relax and stay warm while enjoying our perfect winter weather. With the exceptionally cold winter many parts of the country had last year, we can expect more visitors from the United States this year, too. Both groups are ready to escape the freezing temperatures lurking just around the corner. After all, you don’t have to shovel the sunshine.
CANADIAN BUYERS
Canadians always have been at the top of the list for buying second homes in Arizona. This year, however, we are expecting fewer Canadian buyers due to the weaker Canadian dollar, the loonie. At the time of writing this article, the Canadian dollar exchange rate for U.S. dollars was just $0.75. Not only will fewer Canadians be purchasing homes this year, but some may see the current market conditions as a great selling opportunity to take their profit and run. While this is very appealing to some, others want to keep their second home, and just have a place to come visit every winter.
The Canadian housing market still is very strong, and new figures from the Canadian Real Estate Association show actual home sales activity in August was up year-over-year, the third highest August sales on record. This is good news for Arizona sellers. If the Canadian home sales and home prices continue to rise, the Canadian buyers will be flocking to invest in the U.S. real estate again, as soon as the exchange rate becomes more attractive. All eyes will be on the exchange rate from now until next spring.
REGULAR MARKET
So, you may think we are in for a slower selling season this winter due to fewer Canadian buyers, but this is not the case. This year, the big story for the winter season is not about the Canadians and the second homebuyers. Instead, it’s about supply and demand. Simply put, demand has increased while supply has decreased.
As you can see from the statistics below, which are taken from the Cromford Report, our homes sales and under-contract homes for August are significantly higher than this time last year. Demand has increased, while supply has decreased, causing 47 percent more demand than there is supply. Nothing creates a hot market more than supply versus demand, and when the spread between them is this high, we are in a seller’s market as we head into the winter months. So, even though the second home market, from the Canadians, may not be as strong this year, we certainly are making up for it with regular sales and supply versus demand.
| 2014 | 2015 | Change | ||
| Aug. | Sales | 548 | 617 | 12.6% |
| Under Contract | 638 | 793 | 24.3% | |
| Listings | 1745 | 1461 | -16.3% | |
| Sep. | Supply | 81.5 | 68.3 | -16.2% |
| Demand | 87.6 | 100.8 | 15.1% | |
| Supply vs. Demand | 7.5% | 47.6% | ||
GREAT TIME FOR BUYERS
Mortgage rates are still very low, and, if buyers sit on the fence and wait, spring, which is our peak selling time, will be here before we know it. If demand is still significantly higher than supply, as it is today, finding a home in the spring could be a lot harder and more expensive than buying now.
Without that crystal ball, we can never know for sure what is going to happen, especially in the housing market. So, all we can do is look at where we are today, how we compare to the past, and what we safely can predict going forward. We know interest rates are likely to increase. They certainly aren’t going to be going down any significant amount. Currently, there is a lot more demand than there is supply, and nothing on the horizon showing that will be changing any time soon. Mesa home prices have increased more than 9 percent in 2015. So, buying today is likely to save you money on the purchase price, get you a better interest rate, and find a home easier than in the spring.
If you are considering selling your home, you can get a free home estimate at www.InstantHomeValueAZ.com, or call me directly to set up an appointment.
If you are considering purchasing a home, you can search the MLS like an agent on my website at www.Homes2SellAZ.com, or call me directly at (602) 571-6799 to start viewing homes.