The Orange Paper: Truth in Real Estate

The Orange Paper Volume 2

 The Orange Paper Truth in Real Estate

The first quarter of 2019 is but a fading entry in the history books, but the market has been robust to say the least. Numerous buyers and sellers ask if it’s the “right” time to buy or sell real estate in the Valley, more specifically North Scottsdale, Cave Creek and Carefree.

Here are our thoughts about why the window of opportunity is great for both sides of the transaction. 

Inventory remains low. Due to a step back in mortgage rates, a very high and volatile stock market, and the continued flow of California buyers coming into the marketplace (surpassing Canadians as our largest demographic moving in), the atmosphere is ripe for selling... These factors, however, can change quickly and can lead us to a slowing marketplace, especially once we enter an election year.

Currently in zip codes 85262, 85255, 85331, 85377 the annual appreciation rate is running between 5% and 10%, respectively. While these numbers are general in nature, we operate in a living, changing subset of micro-markets that can vary from community to community.

So, if this is all true, why wouldn’t buyers wait? Well, for most of the same reasons. Mortgage rates have stepped back, thus increasing buying power, loan limits have increased, it is NOT an election year, and the future is hard to predict.

Even though inventory is low there are still homes for every buyer, especially if you are willing to do some improvements. Full-Service brokerages have access to non-MLS listing inventory and the spread between new and existing homes continues to widen. This widening leaves opportunity to build equity in all price ranges, especially in the luxury market where large properties (6,000 sf +), in need of remodeling, are becoming a relative bargain.

Those looking for properties for extended families can see real value in the larger homes. We have seen the median size of homes with over $1,000,000 in purchase price drop from a high of 5,600 square feet to 4,700 square feet. This translates to a declining price per square foot for homes the larger they are.

We are beyond the typical 10-year cycle of real estate recessions. While the Federal Reserve is expected to monitor interest rates to keep the economy rolling, they can also raise the rates to slow the rate of growth. This leaves 2020 in somewhat unknown waters as far as which type of policy will be implemented. 

As for election year jitters, the negative tone that is blasted at us during a campaign cycle can have a discouraging effect on home buyers. Historically, home values have increased an average of 4.15% per year over past elections dating back to 1980, but in recent elections there has been a negative short-term impact. 

Jay Jasper Associates, of Berkshire Hathaway HomeServices Arizona Properties, comprises a small tight knit group of real estate professionals with diverse backgrounds. This enables us to provide the highest level of service and insight from our different perspectives. We are constantly studying the market conditions for our clients and we are excited to share our observations, professional opinions and conclusions. 

To check out past Orange paper reports go to www.OrangeisTruth.com or send us an email and we will be happy to send you a copy or customize our reporting to your community