Moving Up is More Affordable Now Than Almost Any Other Time in 40 Years

Moving Up is More Affordable Now Than Almost Any Other Time in 40 Years

If you are considering selling your current home, to either move up to a larger home or into a home in an area that better suits your current family needs, great news was just revealed.

Last week, Trulia posted a blog, Not Your Father’s Housing Market, which examined home affordability over the last 40+ years (1975-2016). Their research revealed that:

“Nationally, homes are just about the most affordable they’ve been in the last 40 years… the median household could afford a home 1.5 times more expensive than the median home price. In 1980, the median household could only afford about 3/4 of the median home price.

Despite relatively stagnant incomes, affordability has grown due to the sharp drop in mortgage rates over the last 30 years – from a high of over 16% in the 1980s to under 4% by 2016.

Of the nation’s 100 largest metros, only Miami became unaffordable between 1990 and 2016. Meanwhile, 22 metros have flipped from being unaffordable to becoming affordable in that same time frame.”

Here is a graph showing the Affordability Index compared to the 40-year average:

The graph shows that housing affordability is better now than at any other time in the last forty years, except during the housing crash last decade. 

(Remember that during the crash you could purchase distressed properties – foreclosures and short sales – at 20-50% discounts.)

There is no doubt that with home prices and mortgage rates on the rise, the affordability index will continue to fall. That is why if you are thinking of moving up, you probably shouldn’t wait.

Bottom Line

If you have held off on moving up to your family’s dream home because you were hoping to time the market, that time has come.

Construction to begin on $125M health campus in Scottsdale

Article originally posted on Phoenix Business Journal on October 8, 2017

Construction is expected to begin this fall on a 43-acre, mixed-use campus at Loop 101 and 90th Street in Scottsdale.

Phase I of the project will include luxury assisted living, skilled nursing, medical office, retail, hotel and parking — and cost about $125 million to develop.

Smith Development/C.D. Smith Construction will provide construction services, while Plunkett Raysich Architects will provide design services. Both companies are based in Milwaukee, Wisconsin.

Los Angeles-based CBRE Group Inc. (NYSE:CBG) has been retained for leasing of the Sierra Bloom Wellness Campus.

The first phase will encompass about 300,000 square feet and will include:

• 71,000-square-foot, 120-bed behavioral health hospital

• 125,000-square-foot, 118-unit luxury assisted living and memory care community

• 120-room hotel

• 90,000-square-foot multi-specialty office building

• 50,000-square-foot skilled nursing facility

• 2,500-square-foot national quick service restaurant

• 6,000-square-foot national convenience store

“There is tremendous demand in Scottsdale for a high-end health and wellness destination and our first phase beginning in the fall will lift this project off the ground after many years of anticipation,” said Joshua Teague, Senior Vice President with Chicago-based Healthcare Development Partners, who leads the project along with Phoenix-based venture partner Pima Centre. “Merging best-in-class operators from multiple cross-sections of the continuum of care is the essence of Sierra Bloom, and we’re pleased to be bringing the vision to fruition.”

Vince Femiano and Kate Morris with CBRE’s Phoenix office will lease the balance of healthcare space on the Sierra Bloom campus while Zachary Pace with Phoenix Commercial Advisors has been retained for the retail leasing portion of the campus.

The property is owned by Salt River Pima Maricopa Indian Community and is under a long-term ground lease to Pima Centre LC, a joint venture between Healthcare Development Partnrs and Grosvenor Holdings in Phoenix, said Femiano.

Why Are So Few Homes For Sale?

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There is no doubt that the largest challenge in today’s housing market is a lack of housing inventory for sale. This challenge has been defined as an “overwhelming lack of supply,” and even a “straight up inventory crisis.”

First American just released the results of a survey which sheds light on the reasons for the current lack of supply.

The survey asked title agents and real estate professionals to identify what they believe are the top reasons for this lack of inventory in their markets. Here are the results of the survey:

• 47% – existing homeowners are worried that they will not be able to find a home to buy
• 26.5% – first-time buyer demand is absorbing a large share of available homes
• 11.3% – existing homeowners’ mortgage rates are lower than the current rates
• 10.6% – insufficient or negative equity in the home
• 4.6% – foreign buyer demand is absorbing a large share of available homes

As the survey revealed, there is a shortage of current homeowners willing to put their homes on the market for one of three reasons (see numbers 1, 3 and 4 above).

Is this an opportunity for some homeowners?

The report on the survey explains:

“The crowd has spoken, and it seems in many markets home buyers and sellers alike are ‘imprisoned’ by the lack of housing inventory.”

That leaves a tremendous opportunity for every homeowner not facing these concerns. If you can put your home on the market today, you are subject to far less competition than at any time in recent history. That will result in your home selling quickly and for the highest possible price.

Bottom Line

While many homeowners are feeling imprisoned for multiple reasons, those who are not handcuffed by these concerns have a once in a lifetime opportunity to sell their houses at a peak selling time.

58% of Homeowners See A Drop In Home Values Coming

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According to the recently released Modern Homebuyer Survey from ValueInsured, 58 percent of homeowners think there will be a “housing bubble and price correction” within the next 2 years.

After what transpired just ten years ago, we can understand the concern Americans have about the current increase in home prices. However, this market has very little in common with what happened last decade.

The two major causes of the housing crash were:

1. A vast oversupply of housing inventory caused by home builders building at a pace that far exceeded historical norms.
2. Lending standards that were so relaxed that unqualified buyers could easily obtain financing thus enabling them to purchase a home.

Today, housing inventory is at a 20-year low with new construction starts well below historic norms and financing a home is anything but simple in the current mortgage environment. The elements that precipitated the housing crash a decade ago do not exist in today’s real estate market.

The current increase in home prices is the result of a standard economic equation: when demand is high and supply is low, prices rise.

If you are one of the 58% of homeowners who are concerned about home values depreciating over the next two years and are hesitant to move up to the home of your dreams, take comfort in the latest Home Price Expectation Survey.

Once a quarter, a nationwide panel of over one hundred economists, real estate experts and investment & market strategists are surveyed and asked to project home values over the next five years. The experts predicted that houses would continue to appreciate through the balance of this year and in 2018, 2019, 2020 and 2021. They do expect lower levels of appreciation during these years than we have experienced over the last five years but do not call for a decrease in values (depreciation) in any of the years mentioned.

Bottom Line

If you currently own a home and are thinking of moving-up to the home your family dreams about, don’t let the fear of another housing bubble get in the way as this housing market in no way resembles the market of a decade ago.

Urban Living in Phoenix is on Sale!

Contour on Campbell Ave. is on sale for a limited time! This is urban living at it's finest. Walk, bike or Uber to a large number of restaurants and shops. Call me to schedule a showing today! 

623-225-9482

Lack of Homes for Sale Slowing Down the Housing Market

The housing crisis is finally in the rear-view mirror as the real estate market moves down the road to a complete recovery. Home values are up. Home sales are up. Distressed sales (foreclosures and short sales) have fallen dramatically. It seems that 2017 will be the year that the housing market races forward again.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory. While buyer demand looks like it will remain strong throughout the winter, supply is not keeping up.

Here are the thoughts of a few industry experts on the subject:

National Association of Realtors

“Total housing inventory at the end of December dropped 10.8%...which is the lowest level since NAR began tracking the supply of all housing types in 1999. Inventory has fallen year-over-year for 19 straight months and is at a 3.6-month supply at the current sales pace.” 

Jonathan Smoke, Chief Economist for Realtor.com

“More than two-thirds of the markets are seeing less inventory now compared to a year ago.” 

Lawrence Yun, Chief Economist at NAR:

“The dismal number of listings in the affordable price range is squeezing prospective first-time buyers the most. As a result, young households are missing out on the wealth gains most homeowners have accrued from the 41% cumulative rise in existing home prices since 2011.” 

Sam Khater, Deputy Chief Economist at CoreLogic

“The lack of affordable supply is really driving up home prices.” 

Peter Muoio, Chief Economist at Auction.com

“Tight housing inventory remains a constraining factor limiting stronger sales growth…

We expect further price growth to entice more homeowners to list their homes, particularly as existing homeowners have greater equity.”

Bottom Line 

If you are thinking of selling, now may be the time. Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price.

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