My final phrase then of 2024 heading into 2025 is that of optimism.
Whereas it’s felt a bit unpredictable at instances, 2024 has total been a very good 12 months for actual property and presumably simply what we would have liked. Yr up to now (via October), 1,441 properties have offered within the Flagstaff space, simply 58 properties greater than final 12 months. Mortgage charges are about 1% decrease than 12 months in the past and, on a median $400K mortgage quantity, that places month-to-month funds about $275 much less per 30 days for these coming into the market now. The median gross sales worth is barely a modest 4.21% increased than this time final 12 months, sitting at $594,000 vs. the $570,000 from 2023. The tempo of the market on common is pretty calm however shifting with a year-to-date median days on market of 61, solely 7 days greater than this time final 12 months. These numbers, to me, present a secure, paced, upward-trending market. Positively totally different from the breakneck speeds and sky rocketing costs of 2020-22.
Proper consistent with the Federal Reserve’s (FED) purpose with inflation, we’re seeing a normalized, sustainable tempo return, although it’s essential to grasp that issues won’t ever be the identical. The chart (Annual Inflation vs. Cumulative) actually helps seize this idea. Sure, the crimson bar reveals that the speed of inflation has drastically lowered. The pace at which items improve is pacing a lot nearer to historic regular, however the blue bar, the course of the price of items continues to be upward. Deflation, the precise discount of the price of items, is a wholly totally different occasion than what the Fed is at the moment working to perform. The identical with housing depreciation, the speed of change has curbed considerably however, except small pockets all through the nation, housing continues to extend in worth.
Millennial Wave
Regardless of 25- to 30-year excessive rates of interest masking the final 24 months, this relative stability to charges and “stubbornness” of the market, in keeping with the Fed, has stemmed from the low stock and excessive demand for housing. These aren’t new ideas for these paying any consideration to the housing market since 2020, and the impression of this imbalance will proceed to have an effect within the years to return.
The chart (U.S. Birthrate per Yr) helps illustrate that we’ve three years of a better inhabitants of median dwelling purchaser aged people coming to market alone. If we have been to zoom out, we are going to see that we haven’t confronted a house purchaser wave like this ever in our nation’s historical past. The subsequent factor even near this was greater than 50 years in the past with the infant boomers. Couple that with Arizona being within the high 12 quickest rising states and demand turns into very actual for our little city of Flagstaff the place we’ve calls for all throughout the board, from first-time dwelling consumers, transfer up consumers, summer season householders, short-term rental markets, long-term rental markets, and many others. To not be defeatist, however to assist us grasp actuality, the Fed has said that this scarcity of stock in opposition to the sturdy present and future demand is one thing that neither they, nor anybody, has very a lot management over right now.
The Huge Fee Thaw
The one actual issue retaining a lid on values regardless of increased demand and inhabitants progress has actually been rates of interest. Regardless of enchancment, we’re nicely off what most would take into account “regular ranges,” however the excellent news is that we’re heading the precise course and 2025 might imply a return to “regular” and that might begin with a possible 5% deal with on rates of interest as early as the primary or second quarter of 2025. Certain, a 5.99% isn’t the identical as a 5.5 or 5.125% however sub-6% is a headline certain to maneuver shoppers and markets alike.
The 2 charts right here present surveys of consumers and move-up consumers that assist illustrate that to most, a sub-6% rate of interest would be the large begin to the large fee thaw. It actually doesn’t damage that we anticipate a extra optimistic financial outlook and received’t have the looming weight of an election 12 months slowing demand both. If the Fed has any say in it, which they do, they’ll work to have a extra gradual fee discount all year long and keep away from any large dips and feeding frenzies, however that is all excellent news for these seeking to enter or make a change!
My final phrase then of 2024 heading into 2025 is that of optimism. I do know we are able to get hung up on issues exterior of our management, however we do nonetheless dwell in a city, state and nation of American goals. I consider in that dream of dwelling possession and I see exhausting working individuals make this occur month in and month out. Search consultants, make a plan, work like loopy to perform that plan and homeownership is really inside your grasp. FBN
By Chris Hallows
For extra data or to schedule an appointment go to ChrisHallows.Benchmark.us or name 928-707-8572. The Flagstaff location is 824 W Rte 66 Suite A-3.
Chris Hallows is the Department Supervisor & Sr. Mortgage Advisor of Benchmark Mortgage Flagstaff.
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