I read an article on Yahoo! Finance titled, “4 Major Housing Recovery Myths Debunked” earlier this week and it reminded me of how many people I’ve talked to this year who are also skeptical of the housing recovery we’re seeing here in the Phoenix/Scottsdale area. So, in the same way Brendon DeSimone addressed four myths related to the US housing market for Yahoo! Finance, I’m going to address those same four myths as they relate to the Phoenix housing market in this article.
1. The housing recovery isn’t real – we’re just inflating another bubble. If we were in the midst of another bubble, we would be seeing a number of similarities between the housing boom of 2005 – 2007 and today’s housing market, other than just rising sales prices. On the contrary, however, mortgage interest rates are still far lower today, more people are buying Phoenix area homes with cash now than they were before the housing market crash, the average sales price per square foot paid this year is still almost 40% below the average sales price per square foot paid at the peak in 2006, and the number of pending foreclosures is falling to record-lows. In fact, according to Mike Orr of The Cromford Report, “We now have roughly the same number of pending foreclosures as in the summer of 2002. Since the population has grown by some 23% since that date, it is fair to say we now have below-normal numbers for pending foreclosures in Maricopa County.”
2. When more inventory finally comes online, it will crash the market. The number of houses for sale in the Phoenix area today is almost one third of the number of houses that were for sale at the peak in 2007. Despite being the fifth largest metro area in the nation, we actually have one of the lowest inventories in the nation. It would take a lot more than a surge of even 10,000 listings to alter the course of this market. You can find every home currently for sale in the Greater Phoenix Area here.
3. When you see the home you love, you better jump on it. I agree with what DeSimone said in the article above: “rushing to buy a home will just give you buyer’s remorse.” However, if you do plenty of research first, get pre-qualified for a mortgage loan, know what homeowners insurance is going to cost you, drive through the neighborhoods you’re considering, and choose an experienced real estate agent, you’ll have the confidence you need to make a competitive offer on a home that fits your budget and your lifestyle. How do you make a competitive offer? Read: 17 Ways to Get Your Offer to Buy a House Accepted in a Seller’s Market
4. The housing market is like the stock market. Although sales prices have risen significantly over the last two years, real estate markets simply cannot rise or fall as quickly as stock markets can. That’s why trying to time a real estate market as such is often difficult, at best. So, unless you are a professional investor who renovates homes for a living, I recommend you take DeSimone’s advice: “You have to be patient and be ready to commit for for the long haul.”
Source: The Cromford Report