As you may know, inventory levels are razor thin.
There are about 388,000 single family homes listed for sale out of about 84 million in the U.S. That’s historically low, not even a tenth of a percent (.0046%). In 2015 listed home inventory was almost three times what it is today and has been declining ever since. There was a precipitous drop over the past year.
In Maricopa County, about 3000 are listed out of 1.4 million (.0021%). In PV there are only 146 active listings out of about 6,500 homes (.02%).
Aggressive buyer demand is “spurring” the lack of inventory. Unbelievably low mortgage rates are feeding this trend and rates have been steadily declining since 1982…In 2020 rates finally dipped under 3%.
*Shockingly low rates + drastically low inventory = Skyrocketing Home Prices
The national median price of sold homes jumped a significant 13% in 2020 according to Realtor.com (Phoenix Metro appreciated 17%). To put this in perspective, nationally we had a 7.21% increase in 2019, and a 3.14% increase in 2018.
It’s impossible to predict what mortgage rates and home prices will do in the future just like it’s impossible to predict the stock market. That being said, rates have recently risen slightly, and if that continues, Buyers may not think the higher percentage is better than what they would have paid in previous years. Instead, buyers may think it’s awful compared to the 2.7% rate we had just a couple months ago. This will cause a lot of buyers to tap out, not because they can’t afford homes, but because rates will be perceived as too high.
If rates go up significantly, mortgage payments will too. If we continue to see upward pressure on home prices, buyers will face the dual challenge of higher home prices and higher interest rates, which means much higher mortgage payments may “price them out” of the market altogether.
You’ve heard the terms “bear market” and “bull market.” A bear attacks downward with its claws (declining economy), while a bull thrusts upward with its horns (booming economy). We’re currently in one of the BEST bull markets ever in real estate.
Will 2021 be the year that the bear bucks the bull? Rates will tell.
If you have real estate questions or just want to better understand where you stand with your own home’s value, please don’t hesitate to reach out to our experienced and informed team, or visit www.TeamLehmanAZ.com and get your price.
Wishing you continued health and safety,
-Lacey and Drew Lehman
Team Lehman AZ