Good Grief! Another New Year sneaked up on me and took me by surprise. Welcome, 2007, I wonder what you have in store for us all. Hopefully, happiness, good health and prosperity to keep you in the manner to which you have become accustomed. I no longer ask for warm, sunny days as that is a given here in the Valley of the Sun.
So what will the new year bring to the greater Phoenix area real estate market? Of course, no one truly knows the answer to that, but we can make some informed guesses.
Firstly, as a nation, the economy is robust; interest rates remain low as does the unemployment rate, which is all good. The balance of power in Washington D.C. is changing and commentary in that direction is beyond the scope of this article, but I suspect that for most politicos it will be business as usual.
What effect will all this have on the Phoenix, Scottsdale metropolitan area? I still see 2007 as a slow year in terms of sales and a relatively flat one in terms of prices. We still need to recover from the massive (over?) building of 2005 and 2006. We have yet to pass on to real end users all those homes that were purchased by “investors” in that period. There are some communities where “investors” own between 50% to 75% of available homes. Believe me, they do not like leaving them vacant, nor do they like renting them out below cost. How long they will actually hold them is a game of steely nerves that we will monitor carefully in 2007. All the while, developers continue to churn out more properties that are able to be priced very competitively with current inventory. Remember, and I have said this before, those same builders that were selling homes, identical to yours, for $150,000 for a profit, three years ago, could do it again today if market forces demand it. Translation: if you can sell that home today for $225,000, then do so; do not squander that equity by being stubborn.
All is not gloom, however. The laws of supply and demand are very much in effect. Buyers have many options both in new and resale homes. Sellers do not have to sell their homes, but if they need to they must price accordingly. Too often, a stubborn seller is merely an expensive “re-owner”. You have that right, but don’t whine about it.
Remember also, now is a great time to trade up. Sure your house may be worth a little less, but the big house up the block is also worth a lot less. The actual cash differentials have closed making it easier to move up. Just be sure to sell your current home first.
Best wishes to all for the New Year.
