What We See for Phoenix Area Real Estate in 2020

By Buying, Mike's Articles, Phoenix Metro Real Estate News, Renting, Selling January 6, 2020

In the next two weeks we’ll be looking ahead to view the 2020 Phoenix Metro residential real estate market. This prophetic stuff is risky. The test of a genuine prophet in the Old Testament is simple. If any of the prophet’s prophecies are wrong, the prophet is to die. (Deut 18: 20-22) Therefore, I am claiming no such title for myself. I’m just an amateur hack that won’t dare predict how the next 10 minutes will turn out.

It’s interesting however, to look back at last year’s Phoenix Metro real estate predictions. All in all, we were close. Let’s take a look:

After all, the same people who laugh at fortune tellers take economists seriously.

Our 2019 Projection for Home Sales:  The same or up slightly.

2019 Comments: Honestly, it’s hard to see where new inventory (listings) will come from. Homeowners seem pretty set to hang out. Large rental holding companies who are managing tens of thousands of Phoenix metro single family homes, are happy to see rents continue to rise so there’s little need for them to liquidate, which is where the greatest source of new supply could come from. Result? The number of sales grew 3.5% over 2018.

2020 Projections for Home Sales: The Same Number of Sales Give or Take: Demand will remain hugely high, while listing supply will remain very low. It’s possible we could see a reduction in sales due to such low home inventory, and our expected rise in prices which could be the highest in 6-7 years. (See below) The key again will be the number of new listings coming on the market to satiate buyer demand.

Our 2019 Projection for Home Prices: Up!

2019 Comments: Home prices slacked off a little last month, but the continued pressure from valley newbies migrating from other states will increase even more. Red Fin States Phoenix is America’s #1 Relocation Destination. Quoting from their recent report: “Sizzling Phoenix is known for low humidity, which can make the searing heat almost bearable. Costs are low, too, helping to make the Phoenix metro area America’s No. 1 relocation destination.” Result? 8.8% Average Sales Price Increase. 6.6% Median Price Increase.

2020 Projections for Home Prices: Double Digit Price Increases. This will be the main story for 2020. Sadly, it will be the year many first time home buyers will not be able to afford a home anywhere near where they want to be, or perhaps at all. With an increasing influx of migrating wealth, we’re also anticipating a jump in the higher price ranges (Over $500,000) which will naturally increase the average sales price overall.

Our 2019 Projection for Mortgage Rates: Up!

2019 Comments: 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. Result? Current Rates are 3.5% – 3.75% for a 30 year fixed rate mortgage. Missed this one by a bunch.

2020 Projection for Mortgage Rates: Remain low! Few economists are expecting inflation to increase significantly which will be the determinant of where mortgage rates go. However, the same people who laugh at fortune tellers take economists seriously. (My friend Mike is responsible for reminding me of this excellent quote.) We thank the Cromford Report for the above Real Estate data.

Next Week we prognosticate on the New Home and Rental Markets.

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.