Hurricane Harvey and the Seasonal Slow Down in Home Sales

As we all work through and try to process the damage and devastation caused by Hurricane Harvey, it has not taken economists long to calculate and predict how other real estate markets will be affected. In a basic supply and demand model, material and labor are now in greater demand than ten days ago – supply stayed the same relatively while demand increased. Rebuilding homes, apartments, and other housing units in Texas will require a substantial amount of man-hours and supplies resulting in an increase of costs for new construction regardless of where it will be built. What is unclear is how dramatically it will affect existing housing prices.

As I mentioned last month, for the balance of this year, based on seasonal trends, we should see a decrease in the number of home sales as well as a slowdown on home appreciation. As a result, I predict that this year will still end up in the top three or four strongest years we have had in recent memory.

In the Metropolitan Phoenix Area, sales decreased 16.4% from June 2017 while increasing 2.9% compared with July 2016. New Inventory is down 13.1% from June, and has also decreased 1.4% from 12 months ago. Total inventory of homes for sale is down 2.3% from the month prior, while year-over-year reflects a decrease of 8.8%. Supply of inventory decreased from 2.35 to 2.30 months. The year-over-year median list price was up 3.4%. The average sales price increased 8.6% and the median sales price also rose by 7.6%. Pending foreclosures decreased 4.2% from June and were down 24.6% from one year ago. Average Days on Market increased by 10 days compared with the month prior.

Please give me a call if you are interested in purchasing another investment home. We currently have only one property advertised For Rent. I don’t expect that property to last long. At that point, our “No Vacancy” sign will turn on again. We need more inventory to rent. There are good values for sale currently (if you know where to look) which will translate into strong long term investment properties. Call me!

Now is a great time to own real estate in Phoenix!