This is taken from the Marta Walsh group newsletter for October.
Quite a lot of analysis today. A lot is happening in the market right now.
Dodd-Frank Act – From January 10th 2014 the rules for mortgages become more stringent. The law will specifically address the amount of money people can borrow relative to their earnings and other existing commitments. One study found that up to 20% of todays mortgages would not meet the new guidelines ( AOL Real Estate). If you are planning to buy with financing keep that date in mind, loans must be closed before that date or the new rules will be in effect.
Mortgage rates had been rising but they dropped back a little this week. The uncertainty of the Government shutdown and the possibility of default eroded confidence a little. However, this still looks like a small window of opportunity to buy with rates in the lower 4’s.
Sellers your competition has arrived. In the July newsletter total inventory for sale in our market was 19,511. We had months of chronic lack of inventory. I made the prediction that we would see a a rise to over 25,000 by the end of the year. The increase was even faster than I predicted, we sit at 26,137 homes for sale today.
Mike Orr of ASU Business School is also tracking the increasing supply. He writes “Good news for buyers is that the overall months of supply for all areas and types is up to 4.3 months, the highest reading since March 2011. It is still below average however. The long term average since January 2001 is 5.4 and I would describe anywhere between 4.5 and 6.0 months as normal. Since we have already seen months of supply rise from 2.5 to 4.3 in just 3 months, it looks almost certain that we will be in the normal range within a couple of weeks. Sellers will then have no excess bargaining power as they have enjoyed for the past 2 years.”
My Prediction: I think we will continue to see more sellers entering the market than buyers for some time. Supply is going to rise. But I don’t think that will translate into lower prices. Sellers are holding firm at these price levels.
If you are a seller you will have much more competition. From 26,000 listing today we could easily climb towards 36,000. As this inventory continues to build expect the time it takes to sell to rise considerably. There is still a chance to list today and get a fast sale but into spring that is going to become much harder.
Buyers have a conundrum. The rising supply will give you many more homes to look at that might make it easier to find the home that is perfect for you. The issue with waiting is that interest rates may rise. On a standard loan a 1% rise in interest rates will means the total cost of buying the home will rise about 10%.
Around The Town
Scottsdale has lifted it’s ban on Ice-Cream trucks. (abc15) The first license to operate one has been awarded to a 16 year old high school student.
Polo is Scottsdale? Looking for something to do next weekend. You can go watch some of the worlds best Polo player in action at Westworld, Scottsdale. It’s the largest polo event in the US. (via Russ Lyon)
Brown’s Ranch trailhead now officially open. If you like hiking it’s the latest trailhead to open in the Sonoran Preserve area. (Google Maps)
Scottsdale names 89th best place to live in the US. I don’t know about you but I can’t think of 88 places I’d rather live 🙂 (Livability)