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Updated RecentlyHomeSmart Housing forecast: Partly sunny, good chance of stability
Saturday, January 10, 2015
West Valley resales started briskly in the first quarter of 2014, flattened for the second and third quarters, and are upticking in the last quarter, mostly for the 55-plus communities, said Karen Ochs, an associate broker with Coldwell Banker Residential Brokerage in Sun City.
"Homes are on the market for 90 days or more and prices are flat," she said.
The Dodd Frank bill has made obtaining financing more difficult than before, requiring, in brief, a homebuyer to have a creditable credit score, dependable proof of income and a solid down payment to purchase a home """" in contrast to the credit free-for-all that sparked the Great Recession half a decade ago, she said, adding that the market is still recovering.
Floyd Scott, president of Century 21 Arizona Foothills, which has two of its seven Valley offices on the west side, offered a bright outlook based on low interest rates.
"The West Valley is shaping up for a very good year as the resale inventory continues to decline," he said.
The $150,000 to $225,000 market is hot as jobs continue to expand, and retired and second-home buyers are back in the market, he said.
"The only negative might be the Canadian buyer, as oil prices and currency valuations might slow them down this year," Scott said. He also based this bright outlook on low interest rates.
David Friedman, branch manager and associate broker for the West Valley office of Russ Lyon Sotheby's International Realty in Peoria, said, "I expect a strong 2015 where buyers and sellers will get back to being on more equal footing." The time it takes a new listing to sell is now almost 90 days, from the low 60s only a couple of years ago, he said, citing the Arizona Regional Multiple Listing Service.
"While this may seem like a negative to sellers, it is historically much closer to a healthy market for the Valley of the Sun," he said.
At the same time, prices have increased, with the average November sales price of $251,000 compared with 2012 at $205,000. The lower number of new listings in 2014 supports these two trends as well.
Follow the difference in listed prices and actual prices, Friedman said. In Glendale, at the end of 2013, he said only a $6 per-square-foot difference existed between asking and sales prices: Sellers were properly reading the buyers. Balance.
In the second quarter of 2014, Glendale seller confidence exceeded the market. Asking prices were at $143 per square foot; sales prices were only $103 """" a $40 per-square-foot difference.
"Luckily for them, Glendale sellers are now looking more realistic, at $120 asked against $106 per square foot sold," he said.
The new-home market is also improving and should continue upward in 2015, barring the traumatic, said Jennifer Moore, an agent with West USA Realty in Peoria. Her business partner is agent Theresa Jensen.
"With 20 builders and more than 37 new subdivisions in progress, and more expected to open in 2015 just within the 85383 zip code in Peoria alone, the housing industry in 2015 for the West Valley should prove to be extremely successful," Moore said. "And these new homes will undoubtedly increase the value of the surrounding resale communities." Still, uncertainty lurks around home construction, often a barometer of the overall health of the market.
Brian Gilgosch, branch manager and associate broker for the Surprise office of HomeSmart, said forecasters' estimates for new-home building in 2015 range from flat, miniscule increases over 2014 to robust growth. " He sees many good indicators: an increase of the median prices of new West Valley homes to the $280,000-$290,000 range, up from around $230,000 for the past two years and an increase in median sales prices of existing homes of nearly 8 percent.
Realtor.com has tabbed the Phoenix area as one of its top 10 hottest markets for 2015.
The West Valley, in particular, should benefit by the upsurge, with the location of new-home permits shifting from the Southeast Valley to the West Valley, which has six of every 10 of the Valley's vacant building lots.
"Many of the upcoming lots are a result of developers/builders purchasing in-fill lots, finishing subdivisions that were partially built out but left unfinished as the economic downturn set in," Gilgosch said.
The larger master-planned communities also are showing renewed strength, he said.
But: Job creation is expected to continue at the same slow pace next year, with fewer workers than normal being added in construction, a traditional economic driver. Foreclosures are down, but 19 percent of metro Phoenix homeowners are still underwater on their existing loans, biting into the move-up market. And many Millennials have lost their homebuying urge as they delay that largest investment either from general caution, a desire to stay mobile or massive student loans.
Gilgosch is upbeat, though.
"While there are so many factors involved in the predicting housing trends, the general feeling by those who do studies and keep track of such statistical data seems to point to a level to slightly increasing market for home-purchasing in the upcoming year." Clear skies, but carry an umbrella.
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