It’s been a turbulent summer for the Greater Phoenix housing market. It’s been a while since I’ve shared this chart, but I thought this is a great visual for explaining where we are at in the market cycle. Prices in the housing market are based largely off of the simple economics of supply and demand. When there is more demand (red line) for homes than the supply (blue line) of homes available for sale, like the last 7 years, prices increase at or above the historical appreciation rate of 3-4% per year. The further those lines are apart, the faster prices go up. As you can see right now, the lines are racing towards each other and when they meet it’s what’s called a balanced market. In a balanced market prices go up near the rate of inflation which as of last month’s measure is about 9%. However, if these lines cross homes will appreciate slower or even at a negative rate.
Each submarket within the Greater Phoenix market has a unique supply and demand ecosystem so even though we are looking at this on a macro level it’s important to know that your area may be better or worse. In general, the further out from the city center, in cities like Queen Creek, Buckeye and Maricopa, where the majority of new housing inventory is being created, will experience more volatile pricing swings. Conversely, cities like Paradise Valley, Scottsdale and Cave Creek, are less volatile and don’t see as steep of swings when the market adjusts.
So what should you do with this information? In my humble opinion, you shouldn’t do anything you don’t need to do. You don’t “lose” money in your home unless you sell for less than you paid for it, which the majority of homeowners aren’t even close to being in that position today. Just because your home value fluctuates over time (just like all investments) doesn’t mean you’ve lost money… you never had the money in the first place. Home prices fluctuate and perhaps if you had to sell today you wouldn’t get as much as you would have 6 months ago, but you haven’t “lost” anything so keep it in perspective and don’t panic.
If home values are causing you stress or if you’re just trying to figure out your next move, let’s chat. We specialize in helping maximize profits and limiting your risk in all market conditions. There are creative ways to make it work… if there’s a will, there’s a way and we will help you find it.
Lindsay Fricks, Team Lead
Lindsay Fricks Group at NORTH&CO.
“It’s never just a house”
480-269-1578
IG: @lindsay.fricks
