Since I had no dog in the Super Bowl fight yesterday, I was looking for an exciting game with a great finish. Very few Super Bowls have ever had two teams so equal, be it wins and losses, talented rosters, and even the point spread was razer thin. And the game delivered all that and more.
From a chamber of commerce perspective, it could not have been better for Arizona and the Valley. 75 degree temps, hundreds of thousands of people in town for the game, hundreds of thousands of folks seeing the WM Phoenix Open in person – and it was here in Arizona and in particular, the Valley.
Not that we need all this promotion to lure more people to the Valley – 75 degrees does a fine job of that by itself.
Aah, but this is a real estate newsletter, so let’s begin.
Mortgage rates took a hit last week gaining a half percent, (back to 6.5%) which puts a little damper on the upward swing that was occurring when rates hit just under 6%. According to The Cromford report, multiple outlets such as NAR, the Mortgage Banker’s Association, Freddie Mac, Fannie Mae and Core Logic are predicting rates to stabilize or trend downward this year. That will bode well for both buyers and sellers. All prognosticators caveat that inflation and jobs are what to keep an eye on.
This job thing in Arizona is unbelievable. Per Tina Tamboer, at the Cromford Report: “…Arizona showed an increase of 93,700 jobs for the state over the course of 2022. In Maricopa County, the unemployment rate dropped from 3.1% in January to 2.7% by the end of December…”
2.7% is virtually full employment. Over the past month we’ve been sharing our concern over the lack of homes to buy, even though right now, we have a larger supply of homes for sale than last year, that can all go away again in a seller’s market, which could return quickly if mortgage rates drop too low. Catherine Reagor, real estate writer for the Arizona Republic wrote this weekend that Arizona’s actual need for additional housing, numbers 270,000.
“…increasing demand with limited supply will crash the dream of homeownership for tens of thousands here in the Valley.”
2002-2004. This was a normal 3-year real estate market, averaging just over 4,500 foreclosures per year. Now note, 2008-2012, the great recession, and the terrible housing price we paid during those years, including a high of over 51,000 foreclosures in 2010. Fast forward to 2015 where the 4000+ average number returned, and then continued to drop each year to only 351 for all of 2022.
What does this say to you?
To me it says, yes, we have a real estate crash potential in Phoenix Metro, however not the sort of crash that a huge supply of homes on the market would cause, but one where increasing demand with limited supply will crash the dream of homeownership for tens of thousands here in the Valley.