Phoenix Metro housing shortage, turning into a crisis.

As a real estate agent in the valley for over 10 years I have seen a lot happen. I was newly licensed as the housing market imploded onto itself as a result of the failing mortgage backed securities. I jumped right into helping many home owners sell a home that had almost no value left.

I learned that you can in fact sell a home that is just about worthless even though you owe the bank arm and leg for it. My clients were so extremely grateful that I was able to help them out of a financially stressful situation. So many of my past clients have rebuilt their credit, gained solid financial security and have been able to purchase a home again. They were smarter the second time around, they didn’t fall for adjustable rates or the zeal of purchasing a McMansion. They purchased what they could afford and have been able to savor their quality of life without a giant housing payment.

Life has been grand, the economy has been good, junior is about to go off to college, but something is looming. Something dark and ominous is looming in the housing industry. Many of my REALTOR colleagues can feel it. So many of the home buyer’s definitely feel it.  It starts with “I can’t afford that”.  My new home buyer clients have been coming out in droves, they get approved for a sound mortgage. They tell me what they need out of a home and I tell them what’s available. It’s inevitable, the words flow out like Kanye on Twitter….”I can’t afford that, what else do you have?”

NOTHING. I have nothing else for you to see. They get mad and call 3 other REALTORS that all tell them the same thing. See, the crux of the matter is if you look at the actual inventory of homes for sale, you will see that your options are limited. As I type this, the amount of single family homes currently for sale in the Phoenix Metro 13,938. If you want a condo/town home or mobile home you have 3,004 to choose from. But once you add in your budget, bedroom requirements and location you will probably only have 6 to choose from. Yep, that’s it. We have over 5 million people in the metro and we are all fighting for the same 6 properties because the majority have the same budget and median income.

WHERE IS ALL THE INVENTORY?

Straight up, people are not moving. If people don’t move, homes don’t become available. Here are some of the reasons why people are not moving:

  1. They bought when the market crashed, they bought a home for $100,000 with 3.4% interest rate. They are happy little clams with a low housing payment. They look at homes prices and interest rates now and say, “No thanks, I’m good right here.”
  2. Interest rates are rising. As interest rates start the to rise, they can afford less home , so why bother?
  3. The Phoenix Metro economy is pretty great now. People have jobs, big tech has quietly been coming into town and people are getting better paying jobs. Life is good, why move?
  4. Phoenix is still affordable compared to other Metros. Why move? Where are they going to go? Seattle? Can’t afford it. San Francisco? (or any part of Cali for that matter) Can’t afford it. Austin? Can’t afford it. Vegas? Nah, we can just drive there for the weekend. Connecticut is broke and it snows. Florida is, well humid and they have all those taxes and hurricanes. Chicago is, well guns. I heard Ohio is affordable, might have something to do with lack of jobs.  Meh, why leave? It’s pretty good here comparatively to other options.

WHY IS IT TURNING INTO A CRISIS IF EVERYTHING IS SO GOOD? 

For all the reasons I listing above on why people aren’t moving out of Arizona are the same reasons people are moving in. Maricopa County is the fastest growing county in the entire nation.  Thousands of people move into the metro every month, but barely anyone is leaving. Our current supply of homes & apartments can’t keep up with the population boom. Rents are going up & home values are going up at a staggering rate. There is no doubt that all this growth will break us if we don’t address this issue now. Look at the teachers and the schools. Their funding was gutted as a result of the housing crisis we fell into in 2008.  Teacher’s can barely afford housing as it is, home ownership for many teachers is simply unattainable. Incomes in Arizona job markets have NOT been rising as fast as housing prices.

Arizona isn’t the only state with a housing shortage. Just google housing crisis and you will see it has turned into a nationwide phenomenon. Nearly 1/4 of the population spend 50% or more of their paychecks on housing. It’s only bound to get worse. People will WANT to leave, but will have no place to go.  San Francisco’s median housing price is $1.3 million. If you don’t have a roommate in San Francisco you are considered bougie. Seattle’s median home price is nearly $820,000.  Phoenix is still at $227,000 for the median home price, just 5 years ago is was around $140,000. Expect that to continue to rise at staggering rates as Maricopa County continues to be the fastest growing county in the nation.

WHAT WILL COOL DOWN THIS MARKET? 

  • Eventually growth will cap and our metro will be left with affordability & congestion problems brought on by unbridled growth. But, how long will that take?
  • The United States as a whole is feeling the effects of housing shortages. Until it’s addressed on a national level we are going to have to fight this on a state level. The local and national governments needs to address the housing shortage so that people can relocate and move for job opportunities. The opportunities are out there, but why move if your quality of life is going to be compromised by spending more than 1/2 your paycheck on rent?


Amy Gerrish, REALTOR
The Phoenix Metro Group
Brokered By Homesmart

Will the Phoenix housing market lose more affordability in 2017?

Affordability and the Phoenix Housing Market

Will Housing Affordability Be a Challenge in 2017? | MyKCM

Some industry experts are saying that the housing market may be heading for a slowdown in 2017 based on rising home prices and a jump in mortgage interest rates. One of the data points they use is the Housing Affordability Index, as reported by the National Association of Realtors (NAR).

Here is how NAR defines the index:

“The Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national level based on the most recent price and income data.”

Basically, a value of 100 means a family earning the median income earns enough to qualify for a mortgage on a median-priced home, based on the price and mortgage interest rates at the time. Anything above 100 means the family has more than enough to qualify.

The higher the index, the easier it is to afford a home.

But, wait a minute…

The Phoenix market is different from the national average. We are predicting an upward price surge over the next 3 months and stabilizing around the end of June into July/Aug. In fact, in the past few years home buyers in the $150,000 to $170,000 have seen themselves priced out of the market in Phoenix proper because home values have been on the rise since 2012. Many people in this price range still have options in the outskirts, like San Tan Valley or Maricopa.

Let’s remove the crisis years and look at the current index as compared to the index from 1990 – 2008:

Will Housing Affordability Be a Challenge in 2017? | MyKCM

BOTTOM LINE

We can see that, even though prices have increased, mortgage rates are still lower than historical averages and will remain affordable with homes to choose from if you are in the $200k+ range. If you have been priced out of the market in Phoenix proper, you may need to focus on a townhome or condo for Phoenix or venture out to Maricopa or San Tan Valley for larger home options with low interest rates.

Phoenix Home Prices are up! But there is a challenge.

Phoenix Home Prices Are Up…but there is a Challenge
By Amy Gerrish
Appraisal-Challenges-STM

Phoenix home prices continues to climb and are projected to increase by about 5% over the next twelve months. That is great news for anyone who owns a home. However, it could present a challenge for a family trying to sell their house.

If prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the sales price when performing the appraisal for the bank.

The National Association of Realtors (NAR) recently released information revealing just how prominent the challenge is in today’s market.

Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal).

Home Prices Are Up…but there is a Challenge | Simplifying The Market

And the challenge is deepening…

Every month, Quicken Loans measures the disparity between what a homeowner believes their house is worth as compared to an appraiser’s evaluation in their Home Price Perception Index (HPPI). Here is a chart showing that difference for each of the last 12 months.

Home Prices Are Up…but there is a Challenge | Simplifying The Market

As we can see the difference has increased each of the last two months.

Bottom Line

Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, let’s meet up so I can guide you through this, and any other obstacle that may arise.

Get Your Phoenix Home Value

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Amy Gerrish
Direct/Text: 480-294-8680
amy@phoenixmetrogroup.com

Gilbert Homes SOLD! by Homesmart March 2015

Gilbert Homes SOLD! by HomeSmart March 2015

Gilbert Home Values vary month to month. See what our brokerage sold in March 2015

Find Out What Your Home Is Worth

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march homes sold

Real Estate Wednesday! Mortgage rates are doing what?

Real Estate Wednesday! Mortgage rates are doing what?

It’s been an intergalactic planetary week, and just like the Beastie Boys are known to let the beat… MMM drop, so have interest rates. The average rate on these 30-year mortgages has been declining fairly rapidly. It averaged 3.81% on Monday and 3.94% for last week, ended Jan. 2. For the same week a year prior the average was 4.63%.

Yay! Rates are low. But what does it all mean???

Simply put, you get MORE house for LESS money!!!

3.9% Mortgage for a $175,000 home is an estimated $942.36 (including principle, interest & property taxes)

4.9% Mortgage for a $175,000 homes is an estimated $1042.10 (including principle, interest & property taxes)

Wouldn’t you like to save $100 on your mortgage? That’s why hitting these low rates IS so important!

Let us know if we can help you! There are millions of dollars sitting in $0 & low down payment programs. We also have corporate discounts!

Get started here: http://liveplayphoenix.com/buyer-home-programs/

*The coming months could be the last chance for some homeowners to refinance before the Federal Reserve pushes interest rates considerably higher. Consider refinancing if you are able to shave your mortgage rate by at least one percentage point.

Here are some thoughts of Loan Officers across the nation:

“Mortgage rates make another move lower to best levels in quite some time. Anytime rates set new lows, it isn’t a bad idea to consider locking. Many people want to lock at the bottom, but the problem with that approach is you don’t know where the bottom is until it is past. Without a doubt, if you are within 15 days of closing, I would be locking today.” –Victor Burek, Open Mortgage

“Nothing to consider here, if you are within 30 days locking is by far the most intelligent option.” –Constantine Floropoulos, Quontic Bank

“This movement down is moving pretty quickly, probably a little too quick. When this typically happens, it will often be followed by a few brutal days the other way! Just be prepared and don’t be greedy!” –Jason York – VP of VA Operations, Prime Mortgage Lending, Inc

“Our rally continued today, as both government and mortgage bonds posted large gains. We’re now at levels not seen since mid May 2013. After a run like we’ve had the past 7 days, it’s likely we’ll pull back, at least short term, soon. The main market motivation, however (deflation, EU economic distress and QE) remain intact. I can see going either way here….locking at best pricing in 20 months, or holding out for further gains. In any case, borrowers who missed the refi boat in 2013 have been given a new opportunity!” –Ted Rood, Senior Loan Originator