The purpose of the forum to was to hear a variety of perspectives on our national and local Scottsdale and Phoenix Valley real estate markets and where everyone thinks we are headed.
The session started with an informative (and entertaining) presentation by Ted C. Jones, the Senior Vice President and Chief Economist for Stewart Title. His focus was the national real estate market and here are some key take-aways from his speech:
- Our economy will not be back on track again until we get get job creation back up to the levels we need.
- The last “normal” real estate market we saw was in 2002.
- Based on where we are today, we will feel a pinch in housing inventories in about 4-5 years. This is due to the fact that new home building has tapered off so dramatically over the last few years.
- Interest rates are going to change. If the United States ends up defaulting on its debt, we could feasibly see interest rates go up 3-4% within the next year or so.
- We are most likely looking at another three years of pain, but due to low housing prices and incredibly low interest rates, it is time to buy now. People will most likely look back 36 months from now and regret not taking advantage of the low prices and rates.
- There are several economic concerns the country faces in 2011 and beyond, including housing and credit, that have to be worked on.
Michael Orr, the founder and publisher of The Cromford Report, was the next speaker and he discussed the local Scottsdale and Phoenix Valley real estate market.
Here are a few key points from his presentation:
- The Phoenix area saw the start of real estate home price declines in July of 2006. From there, prices continued to decline. In April of 2009, we saw another steep decline in prices and since then prices have been bumping along sideways, remaining somewhat flat.
- We are seeing local housing supplies constricting and we are back to 2002 inventory levels.
- Demand is incredibly high right now. In June of 2011, we saw the highest number of home sales recorded.
- However, even though supply is down and demand is high, we are still not seeing a corresponding increase in home prices. However, at some point the law of supply and demand will kick in and we will see some modest price growth. Based on his research and today’s market, he is estimating Spring of 2012.
- The number of foreclosures are dropping quickly. We are now seeing the lowest numbers we have seen since September of 2007 and we should be back to a normal foreclosure pace by summer of 2012. He attributes this to the fact that Arizona has already taken its biggest lumps – a 55%-60% decrease in home values in most areas with other areas experiencing declines of 80%. And, in Arizona, the foreclosure process can only take 91 days, versus several years in other parts of the country.
- He feels Arizona has already been through the worst and, barring any new economic challenges, things will get better over the next 12 months.
There were also several expert panelists on hand from other facets of the industry like Commerical, Retail, Property Management and Rentals and Land. They each presented their unique perspecives reagrding their areas of expertise.
The session ended with the question – When do you think the Greater Phoenix real estate market we will be back to “normal”? Of the seven experts, four said 2013, two said 2014 and the final expert came in with 2015. So, everything seems to be pointing to a couple more years with some challenges, but recovery and normalcy are on their way.