Beth Jo Zeitzer 2014-06-03 03:15:23
By the Numbers: Trends in Phoenix Residential Real Estate From March to April, the Phoenix metro area continued its slow shift into a buyer’s market due to an increase in supply and competition for sellers, while demand has remained stable. Our market entered a near-balanced state at the end of October 2013, which generally would project stabilization. If our buyer’s market continues, we may see sale prices begin to decline by the end of spring. The source of that data, Cromford Market Index, measures the relationship between supply and demand over time, and indicates shifts between seller’s and buyer’s markets. A measurement between 90-110 indicates equal advantage for both buyer and seller, over 110 indicates seller advantage, and below 90 indicates buyer advantage. Current market conditions indicate that momentum is still shifting toward a buyer’s advantage, albeit slowly, continuing a trend that began in October. On a national basis, the 2014 National Association of Realtors Home Buyer and Seller Generational Trends study indicates that young home buyers remain optimistic and see their homes as good investments, while older buyers are more likely to trade down to smaller properties to match changing lifestyles. Lawrence Yun, NAR chief economist, said the millennial generation, which is under the age of 34, is now entering the peak period in which people typically buy a first home. “Given that millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underlying demand. Moreover, their aspiration and the long-term investment aspect to owning a home remain solid among young people,” he said. “However, the challenges of tight credit, limited inventory, eroding affordability and high debt loads have limited the capacity of young people to own.” OTHER INTERESTING DATA POINTS FROM THE STUDY: • Fourteen percent of all home purchases were by a multi-generational household, consisting of adult siblings, adult children, parents and/or grandparents. • Twenty-two percent of older boomers (59 to 67 years old) and 18 percent of the silent generation (68 to 88 years old) purchased a home for a multi-generational household. The biggest reasons behind these purchases were cost savings, caretaking and quality time. Twenty-four percent of the households were purchased because adult children moved home to save money. Twenty percent of those surveyed cited caretaking duties and 11 percent combined households to spend more time with aging parents. • Twenty-six percent of younger boomers (49 to 58 years old) own more than one home, including investment properties and vacation homes. • Twenty-four percent of the silent generation was more likely to buy in a small town. The majority wanted to be closer to family and friends. Twenty-six percent were also more likely to purchase in senior-related housing. We’re seeing lenders starting to loosen up and approve buyers with less-than-perfect credit scores, which could boost demand, especially among the millennials and Generation X. In the wake of excessively risky loans that contributed to the real estate crash in 2008, lenders had swung to the far side of the conservative spectrum from 2008-13; today, they can afford to take on some added risk as the economy gradually improves. Of course, that additional risk may come with higher interest rates attached. While higher rates are negative in many respects, the silver lining is that it could actually boost demand and improve sales if more people will get approved for loans. Beth Jo Zeitzer is the owner and designated broker of R.O.I. Properties, a full-service real estate brokerage firm focused on working with business owners, investors and property owners, regarding the management, marketing and sale of commercial and residential properties, including office, industrial, retail, multifamily, hospitality and land assets. Beth Jo is an attorney by training, and former corporate counsel for Del Webb Corporation. She can be reached at (602) 319-1326 or firstname.lastname@example.org.
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