Lower inventories and skyrocketing sales prices mark a booming residential real estate market in Phoenix, Arizona. In June, the capital city confirmed the highest median sales prices ever reported. Although still a competitive and affordable option to other large cities in the west, the real estate market in Maricopa County continues to remain strong.
In addition, there’s been a significant rise in cash buyers and buyers with larger down payments. Coupled with historically low interest rates and less inventory, the Phoenix market is skyrocketing. But the pressing question remains; when will we see this level off, or, worse, will we see a bust?
Jenn Jenkins, local Phoenix native and residential realtor, shares expert insight into her hometown market, where it might be headed, and addresses the concern that the housing market is headed for a repeat of the 2008 crash.
Jenkins has a clear passion for Phoenix, and has built her business on a simple vision: “People come first. At the end of the day, it’s the relationships that matter. Not the transactions. When you take the time to listen, care, and do your best to create a positive experience for someone – you can change the world.”
Estate Monthly: What are some of the big issues that people in the Phoenix market are asking about these days?
Jenn Jenkins: Many people are asking whether or not the real estate market is heading for a crash. I understand why they feel this way as the emotions surrounding real estate right now are very similar to the market crash of 2008. However, we need to follow the data. The data in no way reflects what took place then.
Back in 2008, the market was built on loans that were worse than subpar. It was built on exaggeration and false promises. The market we are seeing today is built on a completely different foundation. In our market, about 1/4 of the home purchases are cash. The homes being mortgaged have higher down payments and low interest rates. And, the qualification process is extremely difficult. Plus, we have a supply issue, much like every area in the US.
Estate Monthly: If you were speaking with a first-time home buyer or seller, how would you describe the Phoenix market at this time?
Jenn Jenkins: Right now, Maricopa county is in a seller’s market… meaning, the market favors the seller. We are seeing that things are starting to shift a little but that in no way means we are anywhere near a balanced market yet. I think we saw buyers start to sit out as fatigue was settling in. There is only so much rejection that one person can handle and there for a while, there was a lot of it going around.
For a first time home buyer/seller, I think it is very important that they understand what it takes to be a consumer in this market. Not everyone is ready to be a homeowner so understanding that a perfect home is unachievable; that there are costs associated with being a homeowner, is key.
As a seller, I think it is super important that they understand the highest offer is not always the best. It’s great to see they are willing to offer you x amount, but it is only great if they can perform.
Estate Monthly: It’s been a seller’s market for the past while, and that looks to be easing up. When might you predict a return to “normal” levels?
Jenn Jenkins: I have been in real estate for 12 years and I have seen a normal market for only 5 months out of that time. I have no idea when normal will return. And what does normal look like? We are still a ways away from a balanced market, that is pretty apparent.
Estate Monthly: How else do you think the Phoenix real estate market will change over the next few months?
Jenn Jenkins: Over the next few months, I don’t see a lot of changes in the market. Inventory will start to trickle up and then I think we will see more buyers enter the market as they feel there is an increase in their chances to secure a home. Interest rates for the time being are not going to make any major moves, up or down, so that will also keep demand at pace.
Estate Monthly: If you were speaking with a first time home buyer, what are the top three things you’d recommend they do soon, before entering the market?
Tip 1. Sit and talk with a professional to understand the market. This is key!
Tip 2. Get pre-qualified with a lender. Knowing your budget, the amount of money needed to purchase a home, and what it is going to take to purchase said home is a must.
Tip 3. Sit down and have a “coming to Jesus” meeting with yourself… Are you truly ready to be a homeowner? Can you handle not only the payments, but can you handle everything that it takes to be a homeowner? Maintenance, repairs, etc. Not everyone is cut out to be a homeowner and that is okay.
Estate Monthly: Some people are seeing high home prices and thinking of selling their home, but are worried the process will take too long, and they’ll miss the boat on this hot market. What would you say to them?
Jenn Jenkins: First and foremost, you cannot time the market. If your goal is to time it, good luck. I have always said you know it’s the right time to sell when it works for your situation. If the home is priced appropriately and is in a sale-able condition, it will sell on the open market. And, even if it is not, there are options we can assist you with. Not everything has to be perfect and model ready. We have resources to help most sellers in any situation. So, when it’s time, we can help make it happen.
This article is opinion and not a substitute for professional advice. Disclaimer