This week in real estate we're going to talk about the affordability of in the Phoenix Metro area. With strong appreciation, are home prices overvalued?
First let's talk about Maricopa County some of the basic numbers moving as we expected based on seasonal trends which we talked month's video. If you missed that you can find that on YouTube at it would be the April market update. We are seeing that the numbers are higher than last year continuing the same trend that we've seen each time we do these videos.
For active listings we're seeing right now we have 13,309 listings that means that supply is down three point three percent this month and twelve point one percent from last year.
Closed listings are at 8,675 that means that demand is up 10.4 percent from last month and up 3.2 percent from last year.
Days of market is down to 57 days from 63 days last month and from 68 days last year. That means homes on average are selling 11 days quicker this year than they did last year.
Appreciation for the last twelve months is at 7.2 percent so it continues over 7%.
With prices continuing to going up, are we seeing that the homes our prices are becoming overvalued? How affordable are the homes for families? We're going to talk about that right now.
The National Association of Home Builders, along with Wells Fargo, track affordability using what they call the Home Opportunity Index. Using income and sold home prices it determines the affordability of homes in the Phoenix area which is the blue line and nationally which is the Green Line.
The index calculates the percentage of sold homes that a family who is earning the median income would be able to afford to purchase when the income is within the range of 60 to 75 percent ,which is the green area on the chart, homes are considered affordable. The more the index is below the green area the less affordable homes are. The more the index is above the green area the more affordable homes are considered to be.
Currently, based on home prices and the current median family income, homes are still affordable in the Greater Phoenix metro area.
A family earning the median income in Phoenix could afford 65 percent of the homes that were sold in the last 90 days. Phoenix prices are still very affordable and more so than most other cities.
In 2006 affordability was at a low. Families at the median income could have afforded only 26.6% of the home sold.
In 2011 affordability was at a high. Families at the median income could have afforded 86% of the home sold. However, the condition of homes that were sold during that time were generally not very good and many of them required significant repairs.
So what do we expect for the remainder of 2018? We do expect appreciation to continue to be very strong. Today's appreciation though is not sustainable long term so we know eventually that is going to have to something's going to have to give. We don't think this is going to be another bubble. Interest rates are starting to rise. They've been historically low as we've been talking about. As they rise, we will start to see appreciation come down and eventually it will level out and flatten. We'll get into a more balanced market. We don't expect that to happen probably until 2019 or maybe even after.
Right now, for 2018, it's a great time to buy or sell your home.
If you know anyone who's interested in the information I've shared today, please share this video.
You can also find other videos on YouTube as well as on the social other social media sites under @GiordanoSellsAZ
Are you ready to BUY or SELL in the Phoenix, Arizona area?
Contact US: Email: Gteam@GiordanoSellsAZ.com