A Short History of the Real Estate Market Since 2003
By Joseph Callaway, Those Callaways
Okay, let’s keep it short: In 2003, inventory of homes in Maricopa County began dropping from its normal level of 30,000 – 40,000 homes. Driven by loose money, the market heated up. By 2004, inventory went down to 15,000 and by the end of the year, it went below 10,000 homes for sale. By 2005, there were less than 5,000 homes for sale and prices began to rise. By the end of 2005, over 10,000 homes were sold and the average Phoenix home was selling for $350,000. In 2006, the market had peaked and leveled off at historic highs. Then came talk of a “soft landing” as concerns were revealed about the loose money mortgage markets. Finally, in August of 2007, no-qualification-stated-income money loans were cancelled. That September, more than 2,000 escrows had cancelled due to lack of funding. Monthly sales, which had been running 6,000 to 8,000 per month, plunged to less than 3,000 and these were mostly cash. At the beginning of 2008, foreclosures began to rise as the banks became owners. Prices plunged as banks competed to sell first. When banks owned 80% of the inventory, it became a race to the bottom and that same Phoenix home had dropped by almost half to only $200,000. Just as the 2005 peak was artificially inflated, the 2008 deflation was unrealistically low. 2009 brought fear and prices continued to slip. By 2011, prices hit bottom with the average Phoenix home selling for only $105,000 and inventory swelled to more than 50,000 homes. Investors began buying thousands of homes to fix and rent. Most of those homes are still owned by institutional funds. Then came the long, slow climb. Inventory came down and stabilized at about 20,000 homes (still low compared to pre-2003 levels) and prices began to grow. With each year of price increases, owners who were underwater (owed more than their house was worth) began to have equity. Today, we rarely see a seller who owes too much. Lenders haven’t made a loose loan since 2007. Demand remains strong and inventory is once again dropping, causing prices to rise further. The difference this time is that the market is driven by a strong economy and more people are moving to Arizona. That’s it – as short as I could make it.
What does this mean to you? Your home value has gone up and, for most folks, surprisingly so. Now is an excellent time to make a change. Whether you are looking to upsize, downsize or buy that first home, today is the day.
Joseph Callaway is co-owner of Those Callaways Real Estate. Inventors of the Magic Zip Code, they have sold more than 6,000 homes since 1996! Those Callaways are an independent real estate brokerage with 23 years of experience buying and selling homes in the Magic 85254 ZIP Code.