I’m getting all sorts of requests for information about the ever changing real estate market in Scottsdale and the Greater Phoenix Metro Area.

It is easy to find statistics and opinions everywhere.  In general, here are the issues and forecasts as presented by some reliable economists (see below).  Although the real estate market in Scottsdale and Phoenix is sluggish, the long term forecast for Phoenix area is good.  In the meantime, the recovery is still at bay, for possibly 3 to 5 years. 

Today’s Local Market Facts

• Existing inventory of resale homes about 25,000 too many
• Excess builders inventory
• Foreclosures growing
• Median sales price for single family homes (Phoenix Metro) have declined 7.8% since the 4th quarter of 2006
• Lenders have much stricter requirements
• Many would be buyers need to sell a home first
• Economy is still stable  
• Economic Stimulus Package will make home loans more affordable

Predictions for 2008

• Prices will decline by another 10 – 15% ( this varies throughout the valley)
• More homes will sell towards the end of 2008
• Home building will decline

Indicators of a Recovery

• Inventory falls below a six month supply
• Most homes in foreclosure are resold
• Days on the market falls below 180 days
• Prices begin to climb

What Should You Do Now?

In a commentary dated February 14, 2008, NAR economist, Lawrence Yun references Warren Buffet’s investment philosophy that states “when everyone is greedy, be scared and when everyone is scared, be brave”.   Yun goes on to say: “Now, I am not an investment counselor and I do not encourage people to buy simply based on this logic. Rather, if people have the financial capacity and are looking for a home for the long haul, the fear factor should be put aside. Current situations in many local markets present a golden opportunity in attaining the American Dream with historically low interest rates.”  Personally, I think there is a great amount of truth in what he says.  I believe that the increased ceiling for Freddie Mac and Fannie Mae backed loans is good news for current homebuyers and that there are some great homes to buy in this market.

These observations are based on the following reliable economists comments. 

• Lawrence Yun, Chief Economist for NAR (National Association of Realtors)  is generally optimistic saying that “we will skirt a recession” due to job gains and housing affordability. Mr. Yun writes commentaries several times a week that you can check out here
• Dr. Jay Butler, a highly respected economist with Realty Studies at ASU gives very sound advice backed by local numbers.
• Elliot Pollack, a Phoenix economist,  spoke on the Phoenix Real Estate market at the Urban land Institute conference in January 2008.