Scott and Sandy Krestan discuss the rate drop and the impact to you. What does it mean to the real estate world and the mortgage rates? Watch to find out!
There’s no doubt that today’s housing market is changing, and everything we see right now indicates it is time to sell. Here’s a look at why selling now is likely to drive the greatest return on your largest investment.
Home values have been appreciating for several years now, growing at a strong, steady, and impressive pace. In fact, the average annual appreciation rate since 2012 has nearly doubled the average rate from the more normal market of the 1990s (think: pre-bubble).Appreciation, however, is projected to shift back toward normal, meaning home prices will likely keep climbing over the next few years, but they are not projected to continue to increase at such a high rate.
Here’s What That Means for Homeowners:
As noted in the latest Home Price Expectation Survey (HPES) powered by Pulsenomics, experts forecast an average annual appreciation rate closer to 3.2% over the next five years, which is more in line with a historically normal market (3.6%). The good news is, there’s still time to take advantage of the current strength of home prices by selling your house now.Looking at the projections as they stand today, 2019 is slated to drive the strongest appreciation as compared to the upcoming few years. With average home prices still on the rise, the pace at which they are predicted to continue increasing will likely soften by 2020.
If you’re thinking about selling your house, now is a great time to make your move. Don’t get stuck waiting until projected home price appreciation rates potentially re-accelerate again in 2023. You’ll likely earn the greatest return on your investment by selling now before the prices start to normalize next year.
2019 Scottsdale North Mid Year Real Estate Market Update
A Teachable Moment
Wow. The results for this quarter provide a great opportunity to better understand the Scottsdale North market dynamics. Below I will show you how critical patience is to the real estate selling process.
My last two quarterly updates in this paper detailed an unprecedented decline in housing demand in the Valley. I described the dramatic affect it had on sales. To illustrate the trend, I showed the graph below displaying the last three years sales numbers in Scottsdale North. It is easy to see the plunge in sales numbers starting last fall, and the lingering effects of low demand through 2019.
In each of the quarterly updates, I stressed that while these while these changes appeared to be dramatic, the fluctuations were really normal and consistent. I tried to make clear that there was no reason for panic or even alarm. Markets continually struggle to achieve balance and can change very quickly. I ended my Q1 Market Update in April by predicting you should, “watch for a flurry of sales to happen in the next quarter…” Below is a graph of what actually happened:
As you can see, the shift in the market was quick and dramatic. We went from an unprecedented decline in sales for two quarters, to seeing the largest unit sales count ever measured for a calendar month in the Greater Phoenix market in May. June had the highest dollar volume total for any June in history.
What does this mean for Scottsdale North?
We don’t have the space here to explain the specific reasons for that shift. The larger point is that the Scottsdale North Market is healthy and thriving. The only obstacle keeping sales down is the chronic lack of inventory. Even when seasonally adjusted, there are just not enough homes available to meet the demand. When you compare 2019 to the last two years, you see a 38% decrease in inventory:
We need more homes to sell to meet demand. Economic theory tells us that when demand increases and supply remains the same, the higher demand leads to a higher equilibrium price.
Here is my advice about the market moving forward:
For Buyers: If you are price conscious, you might relax your standards. Try to find a home that is close to fitting your needs now, because it looks like waiting could be expensive;
For Sellers: You are in good shape and patience can be a virtue. I have two tips:
- If you need to sell, pricing in a market with low inventory is difficult. Make sure the market gets complete exposure to your home. We had one recent sale that sold at $26,000 and another at $37,000 above the listed price, because we allowed the market the chance to speak and set the right price.
- If you have a home with a wart – something that makes it less desirable to the market like a dysfunctional floor plan, lack of updating, or proximity to a major road – this is your market. Low inventory means fewer choices. This helps buyers to get past their unreasonable pickiness.