How’s the Market?
I started out to write this review of last year, 2023, and after I looked at the stats – 722 homes sold in 85254 at an average price of $981,839 or $392.96/SF with an average market time of 57 days, I thought to throw in the highest price ($4,950,000) and the lowest price ($445,000) for a single family home. But 2023 seemed so boring, so unchanged from January to December, that I decided to answer the question everybody asks – How’s the market?
My standard response is “Are you buying or selling?”, which usually receives a smile or a chuckle. I’m always selling. Or sometimes I just say, “It’s great!”, keeping the mood positive. But here I want to give a more thought-out response. We Callaways began our real estate careers in 1996. At the time, the market was seven years into a recovery from the Savings and Loan debacle of the 80’s.
People would ask, “How’s the market?”, and we would say it was a balanced market – good for buyers and good for sellers.Each time a home sold they got a little more than the last one. Appreciation was five or six percent a year. This continued until 2003 when we noticed an uptick in prices driven by demand.A lot of people come to Arizona every year, and that is unlikely to change. We just keep spreading out. Can you believe they are building homes in the west 200’s Avenues and east past Apache Junction? Predictions are for another 100,000 a year for several decades to come.
So in 2003, 2004 and 2005, we experienced a surge that peaked in that summer and leveled off in 2006. Then, in September 2007 they stopped giving away free money, cancelled no documentation loans and 6,000 houses fell out of escrow. The next three months almost no homes sold except for cash, and in the beginning of 2008 the banks began foreclosing. Prices fell by half and equity became as scarce as unicorns. Inventory rose to 60,000 homes on the market (it’s 15,288 today), and one night at dinner with a close friend, who had been selling real estate in Arizona since the 70’s, he said, “We’ll never see 2005 prices again.”
But in 2009 we evolved from bank-owned homes to short sales, and by 2011 we began to go on listing appointments where the seller had a little equity. While thousands of homeowners suffered tragic losses, millions had lived through the downturn unscathed. They just stayed in their homes, paid their mortgages and the market came back healthier than ever before. Gone were the reckless lending practices and today we have more than a million new loans made with substantial down payments and strong credit. Almost everyone has equity, and some have a lot of it.
So why are some questioners so nervous about the market?They ask, “How’s the market?” as if we were in a bubble about to burst. Nothing could be further from the truth. While current monetary policy has brought us high inflation, homeownership gives us a hedge. So if normal appreciation is 5% and inflation is running at 7%, then 12% appreciation in home prices is normal. We are in a balanced market. Buyers can buy, and sellers can sell.
After 28 years of hearing the question – How’s the market? – I can still reply “Great!” People still get married, couples still divorce, folks move up in their careers, empty nesters downsize and some pass on leaving the children wealth to divvy up. So it’s good that 2023 was boring. This boring real estate market transforms the lives of young people as they transition to homeownership. It provides security when people retire. It makes some wealthy, and it makes most more comfortable. We love what we do. I have a daughter and a granddaughter in the business now and if you want to know “How’s the market?” – we’ll be happy to answer and help you with your real estate needs.
– Joseph Callaway