2019 Predictions for Phoenix Real Estate Market Part 2

By Buying, Mike's Articles, Phoenix Metro Real Estate News, Renting, Selling January 14, 2019

Last week we started to look at real estate projections for the Valley (Phoenix Metro) for 2019. We began with sales and home prices; you can read last week’s article here.  Following this we will look at mortgage rates, rentals and new home construction.

Mortgage Rates: Up! As I indicated last week, no one on planet earth can make any ironclad prediction on anything, let alone economic issues. After all, the same people who laugh at fortune tellers take economists seriously. Another good one-liner I borrowed is that economics is the only profession where you can gain great eminence without ever being right. Therefore, I can guess with the best.

Long term mortgage rates rise and fall with what “the market” thinks will happen with inflation. If the market believes that inflation will be moderate, rates will remain moderate which right now are in the mid 4% range. If the market thinks the economy is slowing and maybe heading towards a recession, rates tend to drop. And vice-versa if the economy is running strong on all cylinders, prices and wages are rising, this would be an indication of higher inflation which will affect long term investments.

Believing (guessing) that the economy will continue to hum, and that wages will also rise, I think that mortgage rates will head north to near or at 5% later this year.

Rental Supply and Pricing: Down and Up! Our state and Valley population continues growing. New home construction (see below) is not adding enough supply of homes for the demand. Homeowners seem to be holding onto their homes longer as well. Since I think that home prices will keep rising this year, along with mortgage rates, it follows that rentals will remain in high demand and scarce supply. Rents will continue to increase!

“Rents will continue to increase!”

 

New Home Construction and Pricing: Up! Over the past 7-8 years, the Valley has seen tens of thousands of multi-family properties developed, especially in urban areas. This has enabled Phoenix metro to somewhat contain single family detached housing prices at a strong but reasonable level. Builders have bought up much infill land and developed much needed rental supply. This will continue unabated through 2019.

Michael Orr of the Cromford Report reported that December’s new home sales (single-family, condo, townhouse) totaled 1,544 which is up 10% from December 2017. The median sales price of a new home in December was $349,990, up 6.6% from a year earlier. Nothing seems to suggest this trend will change.

About the Author
Michael Bodeen, Associate Broker

     I was born and raised in San Rafael, California, from the mid 50’s to the early 70’s. I had super parents who worked hard to provide 5 kids with a good Catholic education – despite my best attempts to overthrow the knuckle-cracking regime of Sister Mary Anselma. My dad worked as a self-employed butcher until his retirement at 65 and enjoyed many wonderful years until mom passed away in 1992.

     Dad passed away in the fall of 2006 having lived a great and full life into his early 90’s! In California, I attended college in Chico and Sacramento as a “Sosh” major, but like many of my contemporaries, I did not have a clue what I wanted to do when I grew up. Because of my age, I missed the Vietnam War and into my early 20’s I had many typical youthful indiscretions.

     Thankfully, that was a brief period of my life, and with greater thanks, not too much damage was sustained in those early and rebellious years. And by the way, those thanks are due to the answered prayers of faithful relatives who prayed for years that a wayward Michael would turn his life over to the Lord, and in January of 1982 that’s what happened.

     I lived in Sacramento, California in the mid 70’s, and later moved to Truckee, California, which is near Lake

Tahoe and Reno, Nevada. Truckee’s often labeled the “coldest spot in the nation.” Why did I move there?

My father-in-law was a real estate broker in Donner Lake, California, and despite his cantankerous disposition, he seemed very successful in his real estate endeavors. I joined him in sales in July of 1976.

    The Truckee and Lake Tahoe area was a wonderful place to raise a family, but a difficult and cold environment to live in, but we did so for 18 years. In 1994, my wife, Karen, and I visited Scottsdale at a friend’s request, and within 8 months, our family of 5 had relocated to “the valley” – or is it a desert? Whatever it is, it’s warm. At any rate, 24 years have gone by since we made the break from the late great state of confusion, uh, California, and it’s turned out to be a great move.

     As for hobbies, I enjoy family, friends and travel. My kids Robert, Kendra, and Jonathan are now 40,

34, and 31 respectively. I recently became “gramps” for the 4th time as well. It’s a nice time of life. Karen remains as lovely on the inside and outside as the day we were married. We continue to wonderfully grow together as the years advance. As an ordained Christian Chaplain, I volunteer Preaching at Florence Prison with Along Side Ministry. The ministry helps make the formerly incarcerated able to function, even thrive, on “the outside.”

     Should you choose to have me represent you in the sale or purchase of your home, you’ll be receiving my 40+ years of real estate knowledge, counsel, and experience (including negotiation experience).

    Beyond the transaction, I’m always available to you, should you ever need my real estate advice.