You know in the movies and on TV when a drug addict falls off the wagon and goes on a bender, how he wakes up the next morning and is confronted by the physical evidence of his failure? I felt like that this morning. Except, instead of being surrounded by passed out hookers and drug needles, I had to face an empty Cheez-it box, the wrapper of a dark chocolate and caramel Dove bar and an empty wine box.
Diets are hard. Also? Garlic and Parmesan Cheez-its are like meth; one hit and suddenly you’re 5 days into a downward spiral filled with carbs and sugar and you don’t even know how you got to Wendy’s, much less how you managed to eat not one but two double patty bacon blue cheeseburgers and a large fries.
Not that this has anything to do with today’s post. I just felt the need to confess.
Let’s talk about “The Market”. Yes, The Real Estate Market, hence the air-quotes I was just making in your head while you were reading this. I know, I know, you don’t really care that much about The Market unless you’re buying or selling right this very second. Even then you’re not sure you care very much. I get it. It’s boring. I’ll try to keep it brief. And as your reward for sticking with it, I’ll end this post with a sexy photo.
As of today, Maricopa County has 14,664 residential properties actively listed for sale. To give you an idea of scale, when The Market had gotten super schlumpy* back in 2009 there were as many as 50,000-60,000 properties listed actively in Maricopa County. Conversely, when the market was moving like lightening and prices were jumping up $10K every month back in 2005 we had as few as 5,000 listed properties.
The inventory has been steadily dropping for awhile now, but it’s starting to reach scraping-the-bottom-of-the-barrel levels.
OK, you’re saying, so how does this affect me and why should I care?
Well if you’re a buyer, this means it’s going to be more difficult to find a house. It’s like when you go to Walmart to try to find something cute to wear. You may be able to find something that will work, but it’s not going to be easy and you’re going to have to do a lot of digging through gross stuff ‘designed’ by B-list celebs. When you do spot a shirt that’s actually pretty cute and not at all disgusting, you might get into a fight with a lady wearing a leopard-print tube top who thinks she saw it first (and if you do, you should just yank on the bottom of her top, grab the cute shirt and make a mad dash for the register while she’s covering her chestal region. All’s fair in love and Walmart). House buying in a more normal market is more like shopping for a cute outfit at Target. You’ve got a reasonable amount of options and time to try everything on and make sure it doesn’t fit weird.
If you’re a seller, I have good news and bad news about the current state of The Market. The good news is that with so few options, if you price your house correctly it should sell fairly quickly. The bad news is, I know you’re thinking this means you can bump of the price on your house, but it doesn’t, really. Yet. As of right now, we haven’t experienced any real spikes (or even gradual increases) in pricing yet. But that said, a decrease in supply is generally an indicator of an upcoming increase in prices. We just may be finally getting back to a market where our real estate increases in value, rather than holding people hostage to houses they’ve grown out of or that aren’t in areas they want to live. That would be peachy, right?
And what if I’m not currently buying or selling, you ask? How does this low supply situation make any difference to me at all? Well, here’s the thing: Arizona real estate may always be volatile. Hopefully we won’t have an exact repeat of the insane roller coaster ride prices took from 2004-2009, but we may have that kind of activity again on a smaller scale. If supply gets low enough and people get desperate enough to obtain property, competition will drive prices up. Will you be one of the people who didn’t learn anything from the last time and who jumps into buying up investment property at inflated prices? Will you get caught up in the frenzy and help to push everything up further? Will you be party to the cycle so many of us (ME) didn’t see coming and that had a drastic effect on our bank accounts? Or will you be able to step back and understand the bigger picture and use this information to make smart real estate choices not because it’s what everyone is doing, but because it’s right for you? I’m just doing my part to keep us all in the latter category.
OK, I lied and I didn’t keep it short. But I totally have a sexy picture for you:
Who doesn’t find a young father with a hot new haircut reading to his adorable son before bed totally sexy? No one. You’re welcome.
*Schlumpy is a technical real estate term that means slow, shitty and depressing.