I have been a realtor for the past 10 years (I live and work in North Scottsdale Real Estate) and I am here to tell you why prices valley wide will, with out a doubt, rise 25% in the next year and upwards to 40% in 2 years. The worse part about this prediction is that if I am wrong it will be by only a few %. Last year, I made the prediction that prices would rise 20% – see video of the prediction and low and behold the AZ Republic posted and article this week stating the prices are up 20% year over year.
There are 4 main defining factor of why there is currently and will be such a drastic rise in prices and why the media, real estate guru websites and economists were so terribly wrong about there predictions:
The defining Factors are Lack of Supply, Increased and Increasing demand, No more foreclosures, Actual appreciation. I have been writing about this for the past 18 months but there are still a lot of nay sayers and media types, economists and real estate companies cheering for the opposite.
Lack of Supply – be careful reading blogs and watching videos who’s source are companies such as – Realty Trac , Core Logic and Zillow – they are all umbrella salesman. Why are they umbrella salesman, because they sell foreclosure data. If you ask them if there are more foreclosure coming they say there is a huge wave just like a umbrella saying its going to rain. It is hard to ignore CNN, CNBC, MSNBC but they use these companies as the main source of there real estate information for majority of there foreclosure data. Currently, Phoenix, Mesa, Scottsdale Homes for Sale Inventory is 13,436 (about 1.7 months of inventory) and has been on a steady decline since November of 2010 ( There was 39,000 on the market then). Everyone in the media has disregarded this fact until just recently. It will take us 18-24 months to rebuild supply if the trend reverses tomorrow.
Increased demand – The media has go so far as calling the current demand as fake or unsustainable because investors are buying with cash. Am I the only one that think when someone buys with cash, fixes up a property and sells it to a new first time homebuyer that there is not anything fake in either of those sales. There is no bank to foreclose on when a cash buyer buys. The other argument is that banks are not lending and therefore the demand is not sustainable. Well, this is partly true but first demand is high with out banks lending so why does this matter and second now that the worst is over bank s are begining to ledn adding to the current strong demand. It does mean that investor buying will heal the market snatching up all of the foreclosures and then banks will lend because the foreclosures are gone. Oddly enough, this is exactly what has happen in the Phoenix Scottsdale Real Estate Market.
The End of Foreclosures – Check out this Phoenix Scottsdale Foreclosure Chart – The umbrella Salesman have been predicting a Flood or Tidal Wave of Foreclosures for past 2 years yet Shadow inventory is off 70% and showing signs of being gone by years end. There are 1,084 short sales on the market in all of Phoenix, Mesa, Scottsdale Homes for sale, last year at this time there were 6,700 on the market, a 84% drop year over year. There are 1,075 Foreclosures on the market, last year at this time there were 5,282 an 80% drop! That is a lot of sunshine to put those umbrella salesman in their place.
Actual Appreciation – Prices are going to rise 20% just off the simple math, it is undeniable math that no more foreclosures means the average price is going to rise significantly. Then add on actual appreciation due to the fact that we have bidding wars and mulitple offers driving prices up. As well we have investors buying property fixing it up and selling it for more adding to appreciation of neighborhoods. The last time we had low supply and high demand we appreciated 22% that year.
The reality is this, just like 2005, buy whatever you can for all the house prices are going to rises. If you can buy at today’s prices you are getting a great deal on the house.
Phoenix Scottsdale homes for sale Prices will rise 25% year over yearn and 40% in next 2 years