What’s going on with the Phoenix real estate market?
April 23rd, 2008 categories: Market Trends
That questions is loaded as is every answer to it! The only real answer is, is that it’s at best an educated guess, but there are some things that make things clearer. We’ll get to those later.
Take a look at the chart or homes sold in Phoenix for the last 3 years. Note that in the last 2 years, 2006 and 2007, sales of homes dropped or stayed pretty flat from January to February except in 2008 the sales from January to February increased followed by an increase in March. What does it mean?
It means that April will be a critical month for determining the what trend the current Phoenix market is following and where we may be in the real estate cycle. My take on it is that we are at or near the bottom especially if you take into consideration the price per square foot. It looks and feels, in the gut, like were at the bottom.
Now the best part, and this one comes from the most elemental part of real estate, that being construction costs. Construction cost are going up, particularly material costs, so if you can find a $120,000 newer home with 1850 square feet in a city like Surprise which is in the path of growth despite being a the most unlikely place to live, you should consider grabbing it, as it’s probably below replacement cost.
Recently cost of materials has increased a lot, I’ve been told. Metals have almost doubled but other materials like wood, plaster, concrete have gone up as well.
In fact there are shortages for some of these. What does it mean? It’s simple economics that when the market regains just some of its confident, just a milliliter, the demand along with high building costs will drive prices up, and it that does not do it then inflation may.
In other words there are a lot of deals out there. There are unwanted properties. Banks don’t want properties and many owners don’t want them either. This means that you should want them.
Just a note. Both graphs are from AZREIA, the Arizona Real Estate Investors Association. Call me to find out more about it.
[…] numbers indicate a similar conclusion and April resale numbers look very good indeed.The bottom is good. It means stability if nothing […]