By Frank May
People love to ask how real estate is going and I respond that it depends. If you are a first-time home buyer, it’s a tough market to find a home in. If you already own a home, it is great! Prices are continuing to increase and for most of you reading this, that is wonderful news because you are a homeowner and you have more equity than you did just a year ago. What homeowner doesn’t like that?
In the past five years, the average home sale’s price has increased $100,000 in the 85383-zip code. If you bought a $245,000 home and put 10% down (about $25,000), in five years you would have made $100,000 in equity. Compare that to putting $25,000 in a bank – I don’t think you would have made even close to that in five years! (But I’m no banker.)
The other question I hear is, “Is this like 2005?” If you owned a home during the time period of 2005-2008, you probably cringe when you think back to those years. People were buying homes they couldn’t afford, and prices were skyrocketing up in 2005 and into 2006. Lenders had a product called a No-Doc Loan which meant that if you had a great credit score, you could claim an income that was needed to buy a home and you didn’t need documentation (‘no-doc’) to prove it. Whoever thought that was a good idea was obviously not thinking things through to say the least. I think we remember what happened after that (and I’m sorry if I am bringing back those bad memories). This time around, lenders are qualifying buyers to make sure they can actually afford the house they are buying. In my opinion, this makes all the difference in the world. It reminds me of an SNL skit with Steve Martin called “Don’t Buy Stuff You Cannot Afford” (if you haven’t watched this, you really need to google it and laugh at the simplistic yet wise message it conveys). All that to say, this is not like 2005 and that is a very good thing.
A friend recently emailed me to make sure I saw Goldman Sachs is predicting the unemployment rate will continue to fall and gave a possible number of 3.25% by the end of this year. That would be the lowest rate since 1953! Not many of us remember 1953 and if you do then “good on you” and I’d love to hear what you do remember about that time (and I’m serious – call me! I’ll buy you a coffee and ask you a lot of questions!)
When people have jobs, they go out to dinner, shop, pay their bills and buy homes. This is what business owners big and small love to hear. This is what helps not only the Upper West Side but all of Maricopa and all of the U.S.
So, continue to work hard, buy stuff you can afford, enjoy the unique and wonderful area you live in and send a lot of pictures of you wearing shorts in March to your friends and family in all of those cold parts of the country so they know how wonderful it is to live in Peoria, Arizona.
Frank May grew up in the valley, graduating from Northwest Christian School and NAU. He is a real estate agent with Keller Williams Realty and has been helping both buyers and sellers for 18 years. Frank May is a Dave Ramsey Endorsed Local Provider.