Phoenix Seasonal Trends
Whether you're going to buy or sell a property, it is always good to have an understanding of seasonal trends in the local marketplace. Take a look at the graph below. It includes the last 3 years of single family home sales in the Greater Phoenix Metro area. We included the following cities: Phoenix, Scottsdale, Paradise Valley, Cave Creek, Carefree, Rio Verde, Fountain Hills, Avondale, Glendale, Goodyear, Sun City, Peoria, Mesa, Tempe, Surprise, Gilbert and Chandler. This graph indicates that monthly trends are almost exactly the same, whether we are in a buyer's, or a seller's market.
Just looking at this graph you can see that starting in February sales are going up and they keep rising (or are more or less steady) till June. Sales are going down during the hottest months (it's the vacation season) and then again pick up again in Fall. Winter, of course, is very slow but may be a good time to shop for a new home since there are less buyers competing for available homes. If you're aware of this natural trend, you can better see your options and market situation to better plan your timing.
Is the market as bad as they say on the news?
Everyone wants to know this, since buyers and sellers want to get the best value for their properties. The market situation in Arizona overall is one of the best in the nation. I know, we keep watching national and local TV where they emphasize on how bad the market is... the prices are down and properties take 3 times longer to sell than in 2005. In 2005? I wonder why 2005? Why not 2002 or even 2001 which were the most stable years in the last ten years. So, we took a look at the same cities of the Metro Phoenix area, as mentioned in the first paragraph of this page, and ran a report from 2001 till 2007.
As this graph shows, 2005 was one of the most significant years in the local market's history. Local economists confirm this fact. On the other had 2001, 2002 and 2006 are pretty closely comparing to each other. The straight red line represents a market trend in 2001. We can see that it is slightly declining, but it seems to represent the steadiest year. By looking at this graph we can identify a "normal" market with steady growth like 2001 and 2002 and "compare apples to apples" when speaking about the current market situation. There is no way America is going to go through another real estate rush like it did in 2003, 2004 and 2005 any time soon, but the market will stabilize and continue to appreciate at some point. This way, comparing current market conditions to the normal market graph, it will tell us where the real estate market is going and how strong it is.
But what about the appreciation?
Historical data on national housing values shows that over the past 30 years median prices on existing homes have increased over 6% per year, and home values almost double every 10 years. Remember, buying a home is a long term investment and you need to look at least 5 or 10 years forward from now. It is interesting to notice that media sources do not usually show us long term trends, they typically show one year or compare two. Take a look at the following graphs from Yahoo's Phoenix Real Estate section:
As you see the "1 Year Market Value Changes" graph looks quite dramatic, and if you calculate the given numbers it will show about 10% decline. If you look at 5 and 10 year changes, you will see that situation is not as bad as we here on the news. Of course, we don't know when the market will "hit the bottom" and turn around, but I would say - "this is a pretty promising trend". Also, notice how steady housing values were rising till 2005, and then went through the roof (within 2 years property values increased over 100%). The lesson to learn from this example is that the real estate market is always appreciating in the long run and that's how we should look at.