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April Market Update

By LINDSAY FRICKS

Throwback Thursday – Is this 2008 all over again?

I bought my first home in 2006 at the age of 22. At the time, home prices were skyrocketing and new construction communities were popping up everywhere. It was so competitive that there was a lottery for the opportunity to build a home. I was ecstatic when our number was pulled and eager to put our $5000 in earnest money down, pick our lot and floor plan. In my extreme naivety I really had no idea what I was getting into and didn’t put a ton of thought into it.

Lindsay Fricks

Between the time we started the new build process and when we actually moved into the house things in the economy and housing market were starting to tip. Over the course of about 18 months after we moved into our home, the market started to shutter and then completely collapsed. Construction in our community halted…in our neighborhood alone there were over 100 unfinished homes and not a buyer to be found. Eventually every home became a short-sale and then eventually a foreclosure. 

In a lot of ways this FEELS eerily like 2008, doesn’t it? There is a looming cloud of fear, panic and anxiety. Our economy hasn’t shuttered or even collapsed, it has just stopped altogether. The stock market volatility is causing everyone whiplash. The mortgage industry is experiencing challenges. Unemployment has spiked overnight. The government just passed a major stimulus and is talking about key industry bailouts. I think it sends a shiver down most people’s spine when they think back to that time. 

BUT, this isn’t 2008 and here is why. We are without question in a recession which is defined by an economic slow down. However, a recession, in most cases, doesn’t automatically mean a housing crisis. As you can see from this chart of recent recessions, only two of them had a decline in housing prices. I think we can all agree that a 2-5% decrease in housing prices isn’t dramatic, but we all remember what it felt like when it was -20%.

Lindsay Fricks

It’s important that we recognize the reasons for that large scale housing price decline was caused by false demand stemming from unethical lending practices. Investors, who were just your average income earner, were buying a large volume of houses with little, if anything, in downpayment. Lenders weren’t requiring income or employment verification. So as soon as the unemployment started to rise, these people had no skin in the game and no income to pay their mortgage fees. This was a recipe for disaster from the very beginning!

Flash forward to 2020, and if you’ve gotten a mortgage in the past 10 years you know this isn’t the case. You practically have to donate a kidney in order to get fully approved by most lenders. Now, lenders call the day before closing for a last check on employment status. There are no sub-prime lending rates available. When purchasing an income producing property (ie not your primary residence) you are required to put a much larger down payment. Times have changed from a lending perspective without question. 

However, COVID-19 is something new altogether. There’s no modeling that can predict what will happen for sure, but we can make some educated guesses based on data as it’s rolling in. During the month of March we saw a dip in key leading indicators such as showings, which is a good predictor of future closings. Although March was very strong in closings, the amount of homes under contract has started to decline slightly which is another leading indicator of what’s to come. Supply has been so tight and demand so strong coming into this situation that prices are holding strong, for now. 

Here’s what I am certain of as we navigate these uncharted waters, our community and collective energy hasn’t been this cohesive in a long time. I hate to be cliche, but we really are in this together and I feel the spirit of our nation rallying in a way I haven’t seen since 9/11… We are powerful beyond measure. Like you, my heart aches for those, who like myself, have or will see an impact on their income. My heart is breaking for those who have or will experience the wrath of this nasty virus. 

I am here because I have a deep desire to serve you, my community. I offer up my real estate knowledge for the most part on this platform, but I also have many other skills and abilities that I’m willing and able to support you with. Here are some other things that I can offer you during this time: a virtual shoulder to cry on, a toilet paper delivery (yes, we scored a whole costco pack this week), social media education, general business and marketing planning, feedback on your ideas or just a friend to listen and tell you how loved and cared for you are. 

Stay well my friends!

Lindsay Fricks, Helping you, your family and friends Live & Love in AZ!

 

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Median Home Price

$325,000

Annual Appreciation Rate

+7%

Estimated Population

450k

Median Age

34

East
Valley

why you want to live here

The two largest and most popular cities in the East Valley are Gilbert and Chandler. Once known for agriculture, the area has now been transformed into some of the most well known suburbs. Both cities have experienced tremendous growth in population and along with it now has all the amenities of larger cities. The suburbs are highly focused around families and have lots of parks, recreation and many family events year-round.

Median Home Price

$261,096

Annual Appreciation Rate

+8%

Estimated Population

1.6M

Median Age

33

Central
Phoenix

why you want to live here

Phoenix is the heart of The Valley of the Sun and capital of Arizona. Known for warm temperatures year-round and sprawling urban space surrounded by desert mountains. Phoenix is the 6th largest city in the US and home to nearly 1.6 million people. Phoenix has just about something to offer everyone: numerous golf course, professional sports teams, hiking trails, concerts, festivals and much more. With an affordable cost of living there’s a place for everyone with the Phoenix metro.

Median Home Price

$308,750

Annual Appreciation Rate

+8%

Estimated Population

174k

Median Age

28.5

Tempe

why you want to live here

Tempe is a city just east of Phoenix, in Arizona. Its striking Tempe Center for the Arts hosts concerts, dance and comedy shows. Nearby, Tempe Town Lake is dotted with kayaks, pedal boats and paddleboards. Tempe Beach Park hosts outdoor festivals. Rising above the city, Hayden Butte is a mountain dotted with centuries-old rock art. Sporting events and concerts are held at Wells Fargo Arena.

Median Home Price

$725,000

Annual Appreciation Rate

8%

Estimated Population

36,241

Median Age

39

Scottsdale

why you want to live here

Scottsdale has long had a reputation as one of the most affluent cities in the West most well known for high end golf, spas, resorts, restaurants and shopping. There are over 27 golf courses located within the Scottsdale boundaries. The Southern part of Scottsdale is home to the historic Old Town area. The southwestern charm, numerous restaurants, bars and shopping as well as exciting nightlight make Old Town a hot spot for both young and old. Central Scottsdale is home to many popular golf communities such as McCormick Ranch, Gainey Ranch and Kierland Commons.  North Scottsdale is home to to two of the valleys largest annual events: the Barrett Jackson Auto Auction and the Waste Management Open PGA tournament. These events along with the 5 professional baseball spring training facilities bring millions of visitors into the area throughout the Spring months.

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