Tucson’s housing projections are the strongest for the USA overall, said Jonathan Smoke, chief Economist for Realtor.com in his address to Tucson Realtors March 28, 2016. Enthusiastic and confident would best describe the economist's talk. Coming off of a strong 2015 housing market here are some more Local real estate market facts and projections for 2016 from his address.
Distressed sales are down 19% in 2015 & down another 8% year to date. But, Inventory is public enemy #1.
Demand continues to exceed supply, which means days on market are 10 days less than in January 2016 which pushes rents up. This pushes home prices UP too!
Long Term projections are that NOW is the time to buy a home. Why?
Rents, interest rates, & home prices will all go up. Therefore it is cheaper to buy now vs. renting.
As well the early bird catches the worm. Most buyers are gearing to buy in the summer. Because of the expected buyer competition home prices will be pushed up. The hottest Tucson zip codes are in outlying areas where homes are approx. 15 years and newer, contemporary in style with garages. These homes are hot potatoes selling in the $150,000-$165,000 range. It is projected that the spring and summer of 2016 will be the STRONGEST housing market since 2006!
Even better news! Did you know that Arizona has lower home mortgage rates than in other parts of the nation? Yes our rates are some of the lowest in the USA and actually went down in February 2016 holding at approx. 3.25% for an FHA 30 year fixed rate. 5% interest is the national norm.
There is a persistent query among pundits about what it takes to make people move?
The number 1 reason people move is:
#1 Fatigue of current home.
Other top reasons why people move:
#2 low interest rates
#3 favorable home prices
#4 Increase in income
**Note this is a Millennial #1 reason to buy a home
#5 Change of family situation
#8 Live closer to family/friends
#9 Increasing Rent
#10 Change of job/location
#11 Safer neighborhood
Millennials are the largest demographic group in our country and they WANT to buy homes. The top age range of this group is 26-35 and typically the age where most people buy homes. However home ownership rate in this sector is low at only 45%.
Why aren’t more Millennials buying homes?
Student debt is causing financing hardships for young people. Mortgage requirements have tightened up requiring lenders to include student debt in qualifying calculations and the minimum FICO score has risen to a minimum 695 in some areas. However, check with your local lender as they are working on getting creative.
As well FHA has lowered their funding fee from 2015 and down payment assistance programs have returned. A little known secret are under used fix up loans such as the FHA 203K & Fannie Mae’s HomeStyle Renovation loan. These loans allow buyers to roll into their home loan repair costs & retrofit upgrades making older homes more appealing to young buyers. So don't pass up that not so perfect home or older home.
The best fact about young buyers is they are more interested in LOCATION not necessarily size of home. Walk score and close proximity to transportation and other popular amenities are key!
What about Boomers? The oldest age range of this group are 65-70 years in age. Boomers are making retirement decisions, however some of those decisions may include their children or grandchildren. The Boomer & Millennial generations are tied to the hip and student debt truly affects everyone. But Boomers still rule when it comes to ability to purchase, and dominate the home buying market.
To summarize LOCAL Tucson real estate.
Home prices are up 3%
Job growth in Tucson is up
Tucson has become more attractive to Employers
Home sales will be up by 10% in 2016
Home values will go up 6% in 2016
To summarize NATIONAL real estate:
WEB traffic has hit a record in January 2016 at over 1 Billion home searches.
Predictions for 2016:
3% increase in home sales to 5.4 million homes sold in 2016
16% increase in New Construction single family homes to 580,000
12% increase in all housing starts to 1.23 million
(with Single family housing outpacing commercial or other types of construction)
4.22% will be the 30 year fixed rate at the end of 2016
93% of Home Buyers use a REALTOR to help them with their real estate transaction!
Information from Realtor.com chief economist
Guest speaker at the Tucson Association of Realtors