Scottsdale real estate outlook

The Scottsdale real estate outlook includes an update on what millennials have been doing lately. In recent years, millennials have been largely thought of as a generation of renters. They’ve unfairly received this moniker because of a number of factors, none the least of which is that home prices throughout the U.S. have consistently grown faster than wages. However, an improved and lowered cost of living combined with better job growth and rising incomes has led and will lead to many millennials beginning to buy houses.

Four areas in the Scottsdale real estate outlook designed to attract millennials.

According to real estate market research findings, last year nearly half of the total number of homebuyers were first-timers – and the majority of those were younger Americans aged 18 to 35 – millennials, by definition. All indications are for 2017 the percentage of millennials entering the housing market will continue to increase.

During the third quarter of 2016, the U.S. Census Bureau reports that home ownership was at 63.5%, slightly higher than the second quarter in which the 62.9% home participation rate was the lowest in 51 years.

Let’s examine four areas in the Scottsdale real estate outlook designed to attract millennials as they enter the home-buying market.

More and better amenities.
Millennials have come to expect and appreciate added extras in the apartment complexes in which they were living. It’s natural for them to want to have some of the same perks in the home or neighborhood in which they are thinking of moving. Examples are having larger bandwidth capabilities for social media and streaming music and videos and equipping homes with programmable thermostats and built-in USB outlets.

More search technology.
Millennials have also relied heavily on available resources in this information age. Today’s prospective homeowner almost always begins his search online. As such, they will continue to expect to be able to perform a variety of services remotely – either via an app or some other process – allowing them to negotiate and sign documents without leaving their homes or jobs.

Greater full-service offerings.
Given the number of millennials entering the housing market, the traditional role of a real estate agent is starting to change. The information age has provided consumers with a wealth of information about homes for sale. The missing piece seems to be how to aggregate or compile that information. Many real estate firms have chosen to provide better full-service offerings by not only assisting in finding or selling a home, but in addition, putting the client in contact with contractors or others to make the moving process smooth and easy for all involved.

Say goodbye to the “hard sell.”
With the focus more on full-service, as mentioned above, one of the changes in the Scottsdale real estate outlook will likely be that real estate agents will be able to concentrate less on the actual sales process and more on building relationships with their clients. Some real estate firms actually have prospective clients – both buyers and sellers – meet with a customer service manager first before they’re assigned to an agent. The firms report that this first point of customer interaction enables the prospective buyer or seller to do their fact-finding from a completely impartial source – without feeling like they were being “sold” anything. It’s more of an information exchange designed to make their prospective clients feel at ease in the early stages of the process.

As the Scottsdale real estate outlook continues to evolve and more millennials and other prospective purchasers enter the home buying arena, more changes are likely to occur. New homes currently under construction will probably have more open areas where families can be together in the same room enjoying the same activity, but yet be able to stay connected to their friends and others via their smartphones or tablets. In addition, homes will likely be built with smart-car garages equipped with electrical outlets for hybrid automobiles. Energy-efficient homes will become the norm as builders will attempt to woo millennials interested in being more environmentally conscious and more focused on sustainable, clean energy solutions.

The challenges in the Scottsdale real estate outlook continue to be basic housing shortcomings we’ve heard and read much about in the last 18-24 months. The number of available affordable housing units for sale still continues to lag behind normal levels. With this low inventory comes the added pressures of existing homeowners who would have normally been ready to sell and move up into a bigger, better or newer home, who have decided not to sell – simply because there are fewer homes available for them to choose from, too. Added to that dilemma is the continued rise in home prices. Most experts expect home prices across the U.S. to increase between 4.50% to 5.5% during 2017. So, the homes that are available for purchase will likely be more expensive than ever – the limited supply will probably continue to fuel what will be a seller’s market.

In addition, interest rates – mortgage rates in particular – are expected to rise during 2017. We’ve seen a slight uptick in rates since the presidential election, as a result of the growth of the stock market. Analysts say interest rates will continue to rise throughout 2017, but longer-term mortgage rates will probably not exceed 4.5%. While those rates are higher than the near-record rates of the previous 12-18 months, comparatively speaking an interest rate of even 4.5% to 5% is still a very good, affordable way to borrow money for the purchase of a home.

Despite the challenges on the horizon of the Scottsdale real estate outlook, 2017 looks like it has the potential to be a good year. The coming spring selling season will be the first test. If that’s successful, it could set the stage for a continued optimistic feeling on which the rest of the year will be based.

See more articles pertaining to the Scottsdale real estate outlook in the section of articles on Scottsdale Real Estate just below Scottsdale Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there, too.

The Scottsdale real estate outlook these days is a combination of good and bad. The good is that home prices have been rising nationwide for 53 consecutive months – nearly 4 1/2 years! The increases have floated millions of borrowers previously underwater on their mortgages to the safe surface where they can finally catch their breath. In addition, during the first three quarters of 2016, U.S. homeowners were the recipients of more than $837 billion in total home equity.

Now, the bad. Despite such significant increases in home equity, the gains have not been able to fight the negative connotation of rising mortgage interest rates in the minds of consumers. While more young Americans in their home buying years are employed and more millennials have moved into a position to be able to buy for the first time, consumer sentiment for home buying is dropping. Let’s take a look at what’s caused this reaction and what sort of murky picture it may paint for housing in 2017 and beyond.

The Scottsdale real estate outlook includes the housing outlook for 2017.

Most real estate experts say the home sentiment concerns in the Scottsdale real estate outlook are twofold:  A shrinking number of consumers see the recent rise in mortgage rates to lessen, and even fewer say their overall household income is higher today than it was this time a year ago. This information was revealed in a recent survey conducted by Fannie Mae. A Fannie Mae economist explains: “Despite the post-election bump in general consumer attitudes, a rapid rise in mortgage rate expectations has tamped down home-purchase sentiment, at least in the near term. A spike in economic optimism in the immediate aftermath of an election is typical. Whether consumers will sustain this level of optimism into 2017 remains unclear.”

Ironically, the rise in interest rates recently affecting the Scottsdale real estate outlook is generally a reflection of optimism among consumers. Stock market investors pushed investments to record levels in response to the expectation that the new Republican administration will favor growth, business and employment. And, while such expectations would translate into greater income growth, better job security and new businesses – normally important catalysts for the housing market – thus far, indications are that housing sentiment is murky, at best.

The outlook may be fueled, in part, by what experts see as a wide economic chasm in the housing market. Although home values have gained and are continuing to do so, most of the increases have benefitted only those homes in the middle to upper end of the market. This has resulted in negative equity situations concentrating in the lower end of the market – at what is typically described as the bottom 20%.

According to Black Knight Financial Services, borrowers living in homes in the lower-tier of pricing are nine times more likely to be underwater than homeowners in the top 20% of the housing market. Being underwater is loosely defined as those homeowners who owe more on their mortgage than their home is worth. In addition, while several years ago negative equity was a diverse and widespread problem throughout the nation, today it’s evolved into more of a localized market problem. Economists say that at the end of 2010, there were approximately 30% of American homeowners underwater on their mortgages.

Many consumers, though buoyed by the gains in home equity over the past 12-18 months, find themselves unable to access it – another cause for concern in the Scottsdale real estate outlook. This comes as a result of higher interest rates, but also could be a direct result of their inability to qualify for a mortgage loan – regardless of the interest rate. Remember, a number of these consumers not only were underwater because of the housing crash, but struggled mightily to be able to make the house and other payments on time, creating slow credit history and positioning themselves in the minds of lenders as less than qualified. Whatever the reason, the share of equity currently held by borrowers that was available for access dropped from 73% in October 2016 to 33% in December 2016.

While interest rates have edged slightly downward in recent weeks, economists say they may very well move back upward as the new administration takes over, and as the new President's economic plans are made more known.

That raises the question that always plagues the housing industry and is often a part of the Scottsdale real estate outlook: What will the outlook for the spring “housing season” be? While the honest answer remains to be seen, the component parts are these:

1) Rising home prices will continue to be a win effect, although there has been some leveling off in some markets throughout the country.

2) Interest rates, though still somewhat volatile, are comparatively speaking lower than they have been in recent modern times – with the exception of the last 12-18 months when rates were at or near record-lows. Rates are still affordable, despite not being as low as they were this time last year.

3) Home inventory will continue to be a concern, as few homes have hit the market for sale – sellers who would ordinarily have decided to sell are holding off until they have a better selection from which to choose – after all, they need to move up and more out, too.

4) Consumer sentiment, though of concern now, can change fairly quickly. There are plenty of homebuyers in the marketplace that can and will be able to afford mortgages – despite the slightly higher rates – and though they may find themselves paying top dollar in what will likely be a seller’s market, there are deals to be found among sellers who may have priced themselves out of the market and are now needing to sell.

See more articles pertaining to the Scottsdale real estate outlook in the section of articles on Scottsdale Real Estate News just below Scottsdale Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there, too.