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The Jim Lord Real Estate Group

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Jim’s Market Outlook….

The 20 years historical average for real estate appreciation in the greater Phoenix area is between 5-6%. This means, when you average the historical appreciation, taking in the highs and lows through a historically stable period, you will average 6%. Keep in mind, real estate is extremely regional, thus in some markets appreciation may average 5% while others will average 7% when broken down to specific regions within a city. For the purpose of this writing, I broke the average down over a 20 year period from three very different areas of Phoenix and averaged the appreciation.

In the greater Phoenix market, I have taken this data and worked backward to a point in time where we know prices were in relatively stable 20 year period. In addition to price, average number of sales should be considered as well. Taking into account that the 14 year average sales numbers in the Greater Phoenix market is 91,463 homes per year, is also vital when predicting a bubble with my logic being higher sale prices with exceptional activity would be a strong indicator of a bubble. Knowing these two vital statistics, we can assume that annual appreciation above an average 6% appreciation over any 20 year period combined with increased sales would indicate a possible bubble, much like we saw in 2006.

Average sale prices in the Greater Phoenix Area in 2001 were just shy of $174,000. Today that sale price is averaged at $316,500.00.  This shows a market average of 3.5% annual appreciation. Thus in examining the market today, it indicates no sign of over inflation and prices should continue to rise. The second indicator of a bubble would be excessive purchasing, however this also does not seem to be the case as annual purchases remain within the historical averages at 95,000 for 2017.

Knowing Phoenix is not in a bubble can provide some security for the long-term investment of real estate, there are some concerns for the shorter-term growth when looking at all market indicators. The biggest concern with regard to indicators would be the affordability index. Currently, Phoenix has an affordability index of 85, which generally means 85% of all buyers can purchase the median home in Arizona. However, affordability is affected by many factors, most significant of which is rising incomes with rising interest rates. If income levels rise by percentage to match increases in interest rates, the affordability index will remain high, however if incomes become stagnant and interest rates continue to rise, less people will be able to afford homes and the affordability index will fall.

For short term investment, the safest investments are currently at or below the median home prices in greater Phoenix area, around $300K as inventory of these assets remain extremely low and the affordability of these homes is not likely to be affected by a rise in interest rates.  However, with an expected growth in salary of 3% in 2018, interest rates would be forced to rise by a minimum of .5% to truly affect the affordability index. As this does not seem likely in the near future, I believe it a safe bet to anticipate continued increase of homes in all sectors of real estate throughout Q4 of 2018 and Q1 of 2019.

What our clients are saying  

James' team sold my home and did everything they promised. They even paid for my repairs and had the home cleaned!

 

~ F. Diaz

I went through 2 agents and several poor offers for over a year. I came home to find Jim's "Sold" sign on my gate and it caught my interest. I really appreciated the personal attention he gave me. He was true to his word and delivered everything he promised. I had more showings and open houses than ever. The pics were great and the video and internet marketing brought me a lot of interest. In the end, we had 3 parties ready to buy. Great experience.phxfilters

 

~ Tim P.

James Lord has helped with the purchase of my 2 homes and the sale of 3 homes. He is an outstanding agent and has made the process a very positive experience. He listens to his clients and goes above and beyond to find the home of your dreams. He is organized, efficient and a pleasure to work with. His professionalism has made me a repeat customer.

 

~ Cindy C.

James was the realtor for our first home purchase in 2005. It was a busy time in real estate and the home we wanted to purchase received seven bids including ours before the close of the first day. All seven buyers had to turn in their best offers and without James’s knowledge, process expertise and negotiation skills we would not been able to win the bid and purchase the home of our dreams. James has also assisted me and my wife with the sale of our rental properties one a short sale and the other a standard sale. James worked tirelessly on the short sale to bring several deals to the bank his efforts in representing me as his client were exceptional. The sale on the second property went flawlessly selling in less than 30 days for nearly the full price. We recently sold out home and once again we choose James to assist us this time to construct a new home from a large new home builder. His advice and guidance had been invaluable in the process.

 

~ Keith R.

Jim helped me sell through a tough time. I had recently lost both of my parents, he helped me through the probate process, recommending an attorney who helped me keep the assets my parents left for me. I appreciate everything you did and thank you!

 

~ Edward T.

Jim helped me purchase an investment property. The process could not have gone better and I can't say enough about Jim and his team!

 

~ William B.

I was going through a divorce and it started to get out of hand. Jim helped not only me but made dealing with my wife easier than I had expected. We received a fair offer, closed quickly and Jim made the process very smooth. He made a rough time easy.

 

~ Mike R.

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