What will the future hold for the Phoenix housing market? As of February there was a surge in Real Estate Sales. January numbers were not impressive but things changed in February. Michael Orr discovered a more than 30 percent jump in pending sales across the Valley at the end of February.
The big question now is, who are the buyers?
Housing expert Mike Orr meticulously tracks and tallies real estate sales data for Arizona State University’s W.P. Carey School of Business. He called January’s home-sales activity “the lull before the storm.”
Housing market watchers are hopeful that Millennials and the boomerang buyers who lost houses to foreclosure during the crash are behind the boost to sales. Both groups of buyers could drive home prices and real estate sales up for several years.
A deeper look into Orr’s January housing analysis gives us some hints on what types of home buyers are showing more interest in Phoenix.
— Condominium sales climbed 6 percent in January from a year ago as single-family home sales fell 7 percent. This signals more younger buyers and likely empty nesters are in the market.
— Home sales priced between $200,000 and $500,000 were almost flat from last year, but that’s good news. During the last half of 2014, sales in this key segment of the market were steadily falling. This trend could mean more families and first-timers are buying.
— A bigger share of buyers paid cash for Phoenix-area houses. About 28 percent of real estate home sales were cash deals in January, up from 25 percent in December. Investors, buying Valley homes to turn them into rentals, typically pay cash. But second-home buyers and people selling houses in more expensive California cities to buy in Arizona also are often cash buyers. Boomerang buyers who have saved money and can’t qualify for loans could also be part of this group.
— Investors, people from out of state and those wanting a second home, are also buying more Phoenix real estate homes.
Investor deals accounted for 18.3 percent of Valley home sales in January, up from 15 percent in December.
Out-of-state buyers accounted for 18.7 percent of all home sales, up from 17.4 percent in December. The number of California buyers grew from 3.7 percent to 4.5 percent during the past year.
Second-home buyers made up 14.7 percent of all sales in January, up from 13 percent a year ago.
Millennials and boomerang buyers can be found in all the groups buying more Valley real estate homes in January. When February and March home sales are tallied, we could see all types of buyers are behind the surge. That would be the best scenario for the housing market. A diverse group of buyers is the most likely finding. Keep watching.