Here is a chart for the entire US home building. Arizona has a special problem because of the population increase, their chart is below. We are only at the average annual units completed now. We still have had a decade of underbuilding. |
As of Sept 18th 2024Hi there, I hope you had a great summer, I want to keep all my clients up to date on this AZ market and everyone is wondering why home prices are still sooooo high. These charts will give you a clear picture of the reasons behind it. The basic principle of supply and demand still dictates home prices. If you have 10 apples and 15 people want them, the prices of apples will increase. The same goes for homes. The government may not fully grasp this concept if they aim to make living affordable, they concentrate on small things like allowing you to build a casita in your backyard or giving first-time home incentives. That small stuff doesn’t work. In Arizona, we don’t have enough homes for everyone, we are short 270,000 homes. The solution? Build more homes, that’s the only way. Here are some common myths:Short-term rentals will flood the market and bring prices down—nope.Increased interest rates will lower home prices—nope. Well, it’s slowing the market down currently but the fed just lowered rates by half a point.The market will crash—unlikely.The election will affect prices—Historically, it does not.Foreclosures are rising—not really.Think about what could bring home prices down in Arizona?If home prices rose during interest rate hikes the last few years, that’s kind of scary of what would happen if interest rates lowered all of a sudden. Yes, we had a summer lull with increased inventory and low buyer demand, which happens every year around this time.Prices may remain weak through the fall and into Christmas but won’t crash. Prices could be stagnant for a while, and interest rates might stay high for a long time. The charts show that unless the population decreases, and home building increases, I don’t see how Arizona gets out of this mess.So, should you buy a home? I know you might say, why don’t I just rent instead of owning a home because the payments are similar. It’s not the worst idea in the world to rent right now but you’ll always be in the rat race of renting. If you know you’ll be living in Arizona for longer than 3-5 years, there are a lot of upsides to owning a home, like paying your principal down and stability. Also, right now the competition is nill, if you see a home you like, do the math, figure out your finances, and see if it makes sense, sellers are getting tired right about now. Fall and late summer are typically the best time to buy a home. Jay Bru480-466-4917jay@jaybrugroup.com |
Maricopa County – The housing industry changed after the 2008 recession. This chart shows the total number of residential units that were built in Maricopa County each year since 2000. In the early 2000s, an average of around 40,000 per year were built, with a peak of 48,000 in 2005. After the recession, the number units built dropped to 6,600 in 2011 and has been increasing since then, reaching just over 31,000 units in 2022. From 2000-2010, there were 389,400 units built. The total number of units built dropped by about 35% in the past 12 years from 2011-2022, with only 254,300 units built. |
Residential vacancy rate has decreased by more than half since 2010. This chart shows the overall vacancy rate in gray while the blue bar shows the resident vacancy rate, excluding seasonal units. Resident vacancy rate has dropped from 12% in 2010 to only 5% in 2021 |
This chart focuses on the number of apartment units built per year. There is a similar pattern to overall units built (above), but still slightly different for apartments. After a low of 230 units in 2011, the number of apartment completions increased and recovered to about 7,000 each year since 2015. The amount of apartments being built in the past two decades stayed fairly constant, 63,100 from 2000 to 2010, and 60,800 from 2011-2021. In 2022, there was a significant increase to 10,150 apartment completions. With the reduction in total completions over the last decade, the share of apartment units built has increased by 10 percentage points since 2000.This |
This chart pretty much says it all about Arizona. From 2000 to 2010, Arizona’s population increased by 1,241,038 (24.02%), according to Census Bureau’s Population Estimates Program. For the same period, the rate of growth for the United States was 9.63%. From 2010 to 2020, Arizona’s population increased by 772,601 (12.06%), according to Census Bureau’s Population Estimates Program. For the same period, the rate of growth for the United States was 7.17%. |
The AZ real estate market update: -Affordability is impacted by the high cost of living.-The market is slow, and sellers and buyers are not motivated.-There are unusually low contract numbers.-Prices are flat in general, depending on the metric, city, and price point.-Demand is not strong but seems poised to increase.-Housing shortage remains a significant issue.-Rent prices are high but leveling out.Rates are on the way down some would say.
-It’s actually tough to sell a house right now, it has to be priced perfectly and in good shape. If you look at the pendings in your neighborhood, I’ll bet you it’s the neighbor that’s giving it away as all the other neighbors would say.If you’re considering buying or selling, let’s chat. I’ll help you with the numbers, closing costs, and everything else you need to know.Contact me at 480-466-4917 or just reply to this email!Wishing you a super successful day! |
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