COVID and the Wild housing market

Watch out this is the WILD WILD WEST! Real estate prices have gone up dramatically in the last 5 months. Not only is there a shortage of listings, there is a lot of speculation. Californians are leaving and moving to business friendly areas and consumers are moving to get more for their money. Several western/ southern state are benefiting- if you want to call it that. Remember everything that goes up comes down again, and it falls FAST!  I am not saying we are actually at that stage, but there is speculation. The local move around boom also is because of  COVID, we have nice neighborhoods , great weather, and open spaces here in Tucson.

Arizona has had an 11.1 % increase in price appreciation-one of the top 5 states  in Bankrate’s index.  The second highest in the nation, but we still have a high unemployment rate. Job growth is improving; Californians keep coming looking for jobs and higher wages- Tucson lags in that regard.  The Housing Heat Index shows how local markets are faring in the coronavirus recession. To understand the housing economy -BANKRATE calculates the a rank, by analyzing six data points: annual home price appreciation, share of mortgages past due, unemployment , job growth, cost of living, and state by state tax burdens. These calculations are all part of the information leading to Arizona’s housing growth.

In this climate it is easy to overpay without realizing it, everything is high right now- only if FOR SURE you know you will stay for  7 years is it good to buy high. Many people bought in 2011-2013 only to see they really still had no appreciation- values are funny like that- they aren’t real until you get the money.  Mortgages are still hard to get, few subprime(if any) are processed. Due to better financial tracking, increase  in FICO scores, consequences of higher interest rates from poor loan qualities, and lenders who have to take back bad loans,  better lending practices for most buyers are the norm. Lenders and appraisers have very specific perimeters they must follow to complete the loan process.  The loan is channeled through 3rd parties without an interest in the monies being directed or dictated.  This allows the free market to complete a value without influence- except MARKET SELLING DEMANDS and rising prices which get reflected by comparable sales. When one sale price changes- so the others follow. That is the theory of supply and  demand. Even if your house is special, perfect ,the biggest, upgraded- price still is comparable in the neighborhood if prices decline- so does yours.  Don’t buy more than you can afford, don’t overbuild in your neighborhood, don’t think houses go up forever- its a 7 year housing cycle- the real bottom in Tucson was 2013- Think about that- where do we go from here?  COVID has scared everyone into thinking about buying something BIG and roomy- pushing the market, perhaps ahead of where it would normally be. One shining star in the housing market is the interest rates -record lows. Don’t let that fool you either. All things influence the housing market- it is very difficult to time a sale. If it seems really high is probably is!

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