Realtor.com: Phoenix will be No. 1 housing market in 2017
Drum roll please….
It’s about time.
The Valley’s steady growth in sales and price increases, tighter new home market and short supply of foreclosures make it one of the healthiest in the country.
Plus a wise housing analyst who tracks home sales and trends every day told me last year that 2017 would be the big year for the Phoenix-area housing market.
Realtor.com, a national real estate website, is predicting Valley home prices to climb 5.9 percent, and sales to jump by 7.2 percent next year.
That’s not the biggest projected price increase on its list of top 10 markets in 2017, but it’s the biggest sales increase.
It makes sense since one of the Valley’s top selling points for buyers is more affordable home prices, particularly in the West.
And that’s the intro for Los Angeles, which ranked No. 2 on the list with a predicted 6.9 percent rise in prices and 6 percent increase in sales. Two other cities in the West, Sacramento and Riverside made the top five for housing market gains. All are pricier to buy a home in than the Valley.
There’s also good news for Phoenix’s southern neighbor Tucson. The real estate group ranks it as the ninth best housing market in 2017 with an expected 6.1 percent jump in prices and 5.5 percent gain in sales.
The rankings for Arizona housing markets comes with a bit of tempering. Interest rates are on the rise, and that always works against home sales.
Realtor.com reports that its forecast for sales in 2017 is lower for all areas as a result of higher rates. Nationally, it is predicting home sales will tick up 1.9 percent. That compares to a 3 percent forecasted increase for 2016.
That local housing expert I mentioned earlier, Tom Ruff of The Information Market, gave me his gut check on the report.
After metro Phoenix’s boom and bust, it’s even more important to focus on the facts and ignore the hype. When realtor.com was telling us metro Phoenix was leading the U.S. for home price increases in 2006, that wasn’t something to cheer. The area’s 50 percent price run up then was sparked by a speculator-led buying spree and bad loans that turned into foreclosures and the crash.
Ruff said the realtor.com forecast isn’t much different from last year, though metro Phoenix didn’t top that one. And he said interest rates are rising because of anticipated wage and job growth.
Realtor.com is forecasting interest rates will climb to 4.5 percent next year. Many believe rates climbed from 3.5 percent to 4 percent during the past month was the result of election jitters from investors.
The economist behind the forecast doesn’t think the election will hurt or help the housing market, but said higher interest rates will bump out some potential homebuyers.
“We don’t expect the outcome of the election to have a direct impact on the health of the housing market or economy, said Jonathan Smoke, chief economist for realtor.com.
“With more than 95 percent of first-time home buyers dependent on financing their home purchase, the (interest rate) uptick we’ve already seen may price some first-timers out of the market,” he said.
Ruff points out the 30-year rate is still historically very low.
“I hope I was right last year, when I said 2017 would be the big one for metro Phoenix’s housing market,” he told me.
Many Valley homeowners, real estate agents and builders, also hope realtor.com and Ruff are right.
Ruff’s been right before. He called the peak for Valley prices in September 2006, and with his friend and fellow housing analyst Mike Orr called the bottom in 2011.
Realtor.com’s 2016 forecast for the top housing market wasn’t too far off the mark. Last year, it predicted the Providence, R.I./ Warwick, Mass.-area would be the top housing market. Home prices have climbed more than 12 percent in that metro area so far this year, more than double the national average price increase of 5.2 percent.
But Providence didn’t end up a No. 1: A few other areas, including Salt Lake City, have seen bigger home-price gains.
However, if we get a double-digit jump in 2017 in home prices, that will be worth more than drum roll, thank you.
Courtesy of AZCentral.com