Phoenix Real Estate Market Returning to Balance?

Balance is good, especially in local real estate markets. Sure, if you’re a homeowner, you’d like to see the scales tilt towards a seller’s market which we’ve been experiencing for several years now. And if you’re a buyer you want to see the market tip in your favor.

Well buyer’s, the scale “might” be tipping back your way – but at a cost! Higher prices and higher mortgage interest rates may be contributing to a recent market malaise. Sales are slowing and inventory is growing, albeit weakly. The local barometer that the Bodeen Team watches most closely is the Cromford Market Index (CMI), which is included in our e-mailed weekly Snapshot blog.

On the other hand, recent history shows us that it’s normal for the CMI to drop at this time of year. (see the CMI chart above) In fact 42 weeks into 2018, the CMI has been highest in the past 5 years. The acid test will commence with the new year sales Looking at the CMI. Keep in mind that a balanced local real estate market is a score of “100.” We are currently scaled at 149.

So what’s a buyer to do?

Well buyer, it remains the proverbial caught between a rock and a hard place. Rents keep rising. Prices are still rising. Mortgage rates as of this printing, continue rising, but remain historically low – way low! 4.85% to an older dude like me who experienced 17% mortgage rates (see chart) back in 1980, I recall well saying to my Truckee, California colleague Jim Orebaugh, “Jim, if rates ever get below 13% again, we’ll be rich!”

“Jim, if rates ever get below 13% again,
we’ll be rich!”

One man’s advice: Keep (or start) looking at homes. If you see one you like, make an offer on it. You may pay a little higher for a mortgage than a year ago, but you’ll be on the “other side” of home ownership enjoying the stabile monthly payment, probable continued appreciation, but most of all, a place you can call home! Then if or when rates drop, refinance to a lower rate. If rates keep going up, you’re protected if you have a fixed rate mortgage.