Thursday, December 16, 2010

2011 Real EState Phoenix AZ Forecast

Well, it's been an interesting year here at Ground Zero in Real Estate! The normal seasonal patterns have fallen by the wayside, and people are buying, or not buying, in my opionion, due to outside forces. They lost a job. Got one. Got scared. May lose a job. Heard prices are going up. Going down. What about interest rates? Wow.....buyers and sellers don't know who to believe.

One report came out about a week ago that we should give some attention to. Jay Butler, who heads up the Real Estate Institute at ASU, issued his forecast for the future of Real Estate in the Valley. And I say we should pay attention because Jay Butler has no axe to grind, so to speak. He is not a Realtor. Does not owwn a brokerage. Not with a bank. Not even with a trade group. Just ASU....and he says.......

By 2014, Real Estate in Phoenix should jump in value by 60% from todays levels. Really?

Well, let's look at the numbers. Home now are selling at 2000 prices. In other words, if you bought a home in 2000 and sold it today, you would most likely break even. So, that's 10 YEARS at 0.0% appreciation. Now, go to 2014, and you have to account for 4 MORE years, for a total of 14 years appreciation. Historically, real estate has appreciated 3-3.5%. Do the math over 14 years, and guess what....right about at 60%.

So, what sounds outlandish at first is just a return to the norm. And historically, markets return to normal. Which they almost always do, without fail.

Will the economy support a return to normal. Well, we are seeing signs here. Unemployment is down, at least a bit. Phoenix is projected to be #2 in the nation next year for job growth. Almost 20% of employers plan to hire. New commercial construction is up. Values of infill land in abandoned subdivisions have doubled this year. The number of new home communities opening has increased substantially.
In a nutshell, there IS reason to believe.....

Jay Butler may just be right.