Drum roll please….
The top housing market in the U.S. in 2017 will be metro Phoenix, according to a new realtor.com forecast. It’s about time. The Valley’s steady growth in sales and priceincreases, tighter new home market and short supply of foreclosures make it one of the healthiest in the country. Plus wise housing analyst's who track home sales and trends every day state last year that 2017 would be the big year for the Phoenix-area housing market. Realtor.com, a national real estate website, is predicting Valley home prices to climb 5.9 percent, and sales to jump by 7.2 percent. That’s not the biggest projected price increase on its list of top 10 markets in 2017, but it’s the biggest sales increase.
It makes sense since one of the Valley’s top selling points for buyers is more affordable home prices, particularly in the West. And that’s the intro for Los Angeles, which ranked No. 2 on the list with a predicted 6.9 percent rise in prices and 6 percent increase in sales. Two other cities in the West, Sacramento and Riverside made the top five for housing market gains. All are pricier to buy a home in than the Valley. There's also good news for Phoenix’s southern neighbor Tucson. The real estate group ranks it as the ninth best housing market in 2017 with an expected 6.1 percent jump in prices and 5.5 percent gain in sales.
Rising interest rates
The rankings for Arizona housing markets comes with a bit of tempering. Interest rates are on the rise, and that always works against home sales. Realtor.com reports that its forecast for sales in 2017 is lower for all areas as a result of higher rates. Nationally, it is predicting home sales will tick up 1.9 percent. That compares to a 3 percent forecasted increase for 2016.
After metro Phoenix’s boom and bust, it’s even more important to focus on the facts and ignore the hype. When realtor.com was telling us metro Phoenix was leading the U.S. for home price increases in 2006, that wasn’t something to cheer. The area’s 50 percent price run up then was sparked by a speculator-led buying spree and bad loans that turned into foreclosures and the crash. The realtor.com forecast isn’t much different from last year, though metro Phoenix didn’t top that one. And the interest rates are rising because of anticipated wage and job growth. Realtor.com is forecasting interest rates will climb to 4.5 percent next year. Many believe rates climbed from 3.5 percent to 4 percent during the past month was the result of election jitters from investors.
Election shouldn't be a factor
Economist's behind this forecast don’t think the election will hurt or help the housing market, but higher interest rates will bump out some potential homebuyers. I don’t expect the outcome of the election to have a direct impact on the health of the housing market or economy. With more than 95 percent of first-time home buyers dependent on financing their home purchase, the (interest rate) uptick we’ve already seen may price some first-timers out of the market. The 30-year rate is still historically very low. I envision 2017 to be the big one for metro Phoenix’s housing market!
Many Valley homeowners, real estate agents and builders, also hope for the same. Realtor.com's 2016 forecast for the top housing market wasn't too far off the mark. Last year, it predicted the Providence, R.I./ Warwick, Mass.-area would be the top housing market. Home prices have climbed more than 12 percent in that metro area so far this year, more than double the national average price increase of 5.2 percent. But Providence didn't end up a No. 1: A few other areas, including Salt Lake City, have seen bigger home-price gains.
However, if we get a double-digit jump in 2017 in home prices, that will be worth more than drum roll, thank you.