Scottsdale Real Estate

The Scottsdale housing market has been anticipating a possible interest rate hike by the Federal Reserve Bank. Analysts say a small interest rate hike will have little effect on housing activity. In fact, there are other components that are more telling that could impact Scottsdale housing.

What to Look for in the Scottsdale Housing Market

Some industry insiders say the only potential threat that may exist as a result of a rate hike would be the effect it has on credit standards for buyers trying to qualify for a mortgage loan.

First time home buyers could potentially see loan qualifications tighten as those credit standards change. The tighter credit policies have typically been implemented to guard against a repeat of the housing crisis from less than a decade ago.

In the years preceding the last housing crisis, the Scottsdale housing market included borrowers that had bought beyond their abilities to repay. When the economy weakened and unemployment rose the market quickly saw how home values were artificially inflated.

There is concern among some analysts that three factors continue to plague the housing industry — despite activity and sales being the highest in the previous eight years.

1. The recent psychological shift among Millenials to become more urban, city dwellers instead of suburban homeowners.

2. The fear that Fannie Mae, Freddie Mac and the FHA are returning to their old ways with low down payment requirements that may lead to higher loan-to-value (LTV) ratios. Still, other real estate analysts say as the younger Millenials have children the trend seems to be changing as they seek better schools and other attractive features of suburban living.

3. The unemployment rate. Jobs are more of a Scottsdale housing market indicator that other factors. Housing is strong where there is lower unemployment. The rule of thumb is a high employment rate, the slower the housing market.

Lastly, the main reason there seems to be little fear that a rate hike may affect Scottsdale housing is in dollars and cents. A 1/4 point rate increase on a $250,000 mortgage only increases the monthly payment by roughly $35. Experts say it usually takes an increase of a full percentage point to make a noticeable affect on consumers.

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The Scottsdale housing outlook continues to remain positive. The Commerce Department released information confirming that the sales of newly built homes rose more than 5% in July. In addition, prices for new homes were up. Homebuilders cite two reasons for the recent higher traffic and sales activity:

1.) The much anticipated rate increase by the Federal Reserve

2) Lower new construction home prices to more closely match mortgage demand

Scottsdale Housing Market Could Cool Down

Despite this summer's success, some analysts warn that recent market volatility may be creating a slowdown in the Scottsdale housing market. Some homebuilders aren't quite as bullish on the remaining months of 2015.

The recent instability in the global economy — specifically China's stock market woes — has made the expected rise in the Federal Reserve's federal funds rate less likely. While on the surface that's a good thing, Scottsdale area housing experts fear the lack of movement in rates will result in a reduced sense of urgency in prospective homebuyers.

Home prices have remained relatively high, too, buoyed in part by the regained consumer confidence in the stock market after a shaky week following China's record market plummet. Despite expected rates remaining unchanged, homebuilders say consumer caution will trump interest rates.

Ironically, a rise in interest rates would potentially have given the Scottsdale housing market a boost. Historically, such an event signals an end to the "good old days" as homebuyers move to finally purchase before rates increase further.

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The Scottsdale housing market is doing better than expected. According to recently-released Commerce Department statistics, new home sales across the country enjoyed a 25% percent increase in July, 2015 compared to the same month a year ago.

Scottsdale Housing: A Seller's Market

It's a seller's market, evidenced by these characteristics:

  • Higher sales prices across the board for all single-family homes. In the classic definition of a seller’s market, home sellers have the upper hand in that there are more buyers in the market than sellers. Higher prices result result from the excess of housing demand versus housing supply.
  • Sellers are receiving multiple bids for their properties. Home sellers and real estate agents report some homes are receiving “dozens” of offers as prospective buyers jockey for position to buy before somebody else does.
  • Sellers are being offered added incentives by buyers to take their offer. Potential purchasers are offering enticements to home sellers in the hope they will accept their offer over others competing for the same home in the Scottsdale housing market. Reports of buyers offering round-trip vacations, timeshare weeks and other incentives aren't uncommon.

Another strong sign of the recovery is that roughly 1 in 5 homebuyers are paying in cash, down from a high of 40% in 2013. What this means to the Scottsdale housing market is that fewer investors are buying, leaving room in the market for serious homebuyers looking for primary residences.

Finally, industry experts say that the current uptick in the market seems to be fueled by buyers that can afford to buy homes, an indication that the Scottsdale housing market is enjoying a recovery that is real and tangible, not an artificial inflated boon as seen in other times.

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When you grow up immersed in a technological world, it’s only natural that you come to rely on and expect even more Scottsdale home technology. Prospective millennial home buyers — that segment of the population in the 25-35 age range — are becoming more interested in homes with smart technologies and the latest gadgets.

Experts predict that by 2020, smart home sales will account for over $200 billion in revenue. Millennials who own homes with smart home features was pegged at 29% in 2014 and that number is expected to increase to 66% in the next three years.

It is expected that women will likely increase the demand for smart home technology. In a recent survey more than 60% were very interested in smart homes. Women surveyed said Scottsdale home technology could save them time and increase the feeling of safety for them and their families. So far, the big cost of Scottsdale home technology seems to be the biggest drawback, yet millennials are confident that, as is the case with most emerging home features, the cost will become more affordable as features improve and the technology is more plentiful.

Scottsdale home technology feature demands include touchless bathroom and kitchen faucets

Examining Features of Scottsdale Home Technology

There are a number of features that millennials seem to agree they’d like to see in home technology:

1) Touchless kitchen and bathroom faucets. Because of the rise in popularity in public restrooms and other places, young homeowners expect the convenience of this advanced technology.

2) An open and airy floor plan. Probably in part to a growing trend in the office workplace, many millennials like the side open spaces of rooms that feature less walls and more inviting, open living.

3) Google Nest thermostats. Motivated by a desire to be more "green" and energy efficient, millennial homebuyers like fully programmable thermostats. This "set it and forget it" technology is popular because it can be implemented without hiring an electrical contractor and devices such as smartphones and tablets can be used to conveniently control their usage.

4) Multiple master suites. Young millennials like more than one master suite, and especially like to provide private bathrooms for their house guests or visiting family.

5) USB wall outlets. USB wall outlets are becoming more prevalent and more popular since young buyers rely so heavily on their digital devices requiring quick and convenient charging sources.

6) Quartz countertops. Because they require little maintenance and are easy to keep clean, quartz counter tops are more popular than ever. And, because they're cheaper than granite, millennials like their brand appeal and modern good looks.

7) Key-less, fingerprint activated door locks. Keys are fast becoming a thing of the past as automobiles, digital safes and smartphone and tablet technology is gravitating toward fingerprint recognition. Fewer keys to keep up with and less codes to remember are attractive features for millennials looking for more convenience provided by their Scottsdale home technology.

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Scottsdale housing industry experts say the future of housing for the remaining five months of the year revolves around one word — affordability. Affordable home prices and affordable rents will determine the Scottsdale housing market’s direction.

Scottsdale housing is expected to be lukewarm, at best, for the rest of 2015

Although home prices are still on the upswing, the pace is slower that it was during the first six months of 2014. However, mortgage interest rates are rising and the lack of Scottsdale housing inventory is likely to keep prices at a higher level than anticipated.

Scottsdale Housing Market to Remain Lukewarm

Despite renewed optimism in the Scottsdale housing market, the production of new homes has not grown substantially this year. In addition, there is little expectation that that will change between now and the end of the year. Homebuilders are being affected by tighter lending and credit requirements and a shortage of skilled construction and subcontractor labor. These and other factors are reasons that homebuilders aren’t building many spec houses anymore, concentrating on permanent construction projects for contract purchasers.

For the rest of the year, Scottsdale housing market analysts expect a slight rise in new construction, but it will likely be "too little, too late" to cure the inventory shortage.

On the rental side of the Scottsdale housing market, tenants probably won't experience much relief either. Demand for rental units are rising, as more people have entered the rental market as a result of the mortgage crisis of a few years ago. While multifamily housing starts has increased this year, supply has not met demand.

Rental occupancy levels are at record highs, putting landlords and rental management companies in the "catbird seat." And despite some migration from the rental market to the Scottsdale housing home buying arena, those crossing over represent the exception not the rule. It’s expected the remaining five months of 2015 will not see much of a change.

Occupancy is at a record high, and that gives landlords strong pricing power. Renters do not appear to be turning into buyers, at least not in sizable numbers, and the second half of this year will see no change in that. Higher than normal rent has made it more difficult for prospective homebuyers to save money for a down payment, pushing the length of time tenants will stay in the rental market longer.

One area to watch closely over the next few months is mortgage lending activity. As mortgage lenders grapple with new regulatory challenges it will likely cause them to be more cautious. Yet, as interest rates continue to rise, lenders will want and need more mortgage business. Experts look for independent mortgage lenders to gain a larger share of available business by being slightly more lenient, flexible and competitive in their credit policies and practices. Such activity will almost definitely impact the Scottsdale housing market… the question, of course, is how much.

Stay abreast of the latest in Scottsdale housing news, and all the news and events that affect the Scottsdale housing market by visiting our site often, and remember, we post tips daily to Twitter, and also on our Facebook Page. We'd love you to check us out there too.