The 2019 AZ Market Forecast

Phil Sexton
Sibbach Team – Realty ONE Group


The Greater Phoenix real estate market has seen many changes in the last 7 years. Prices have gone up year-over-year. Sales volume has also improved year-over-year. The Sibbach team’s production has increased every year since 2011. But there is still a bit of caution in our enthusiasm. The recession is still so recent, there is hesitation in celebrating too much. Some agents are preparing for the next downturn. We are all looking over our shoulders wondering when the market will turn, how much it’ll turn, and how long the turn will last.

In mid-2005 inventory started to climb, then mid-2007 prices plummeted. This simple data point indicates that the next downturn is still at least 24 months away. Locally, we haven’t seen the inventory climb yet. According to the Cromford Report, there are currently 19,762 homes on the market compared to 21,507 a year ago. Our team heard recently that prices are beginning to flatten, which is a good thing because sustainable appreciation numbers are less scary.

Tom Ruff referenced a report in his ARMLS Stat column, “The Commentary,” addressed lender requirements and whether they are getting too loose. He published a chart from the Ellie Mae Origination Insight Report that showed monthly FICO, LTV, and DTI numbers for closed loans over the last 18 months. The chart showed virtually no change in any of those three stats over that timeframe. In fact, this past June had the highest average FICO score on the chart at 726. Also, a good sign, the downturn isn’t coming anytime soon from that direction.

These first two points don’t provide any justification for why people are looking over their shoulder. So why is the public opinion that a shift is near? This will be something we will look to our panel of local experts at the November 16th Arizona 2019 Market Forecast Seminar. It’s an in-depth discussion you won’t want to miss!

Several local residential and commercial real estate agents have spoken recently about holding cash for the next downturn. How does this compare to when the last downturn happened?

Research from Market Watch sources FDIC, among others, showing that average checking account balances in 2017 were 300% higher than in 2005. In general, people are preparing for the next downturn to take advantage of opportunities. They don’t want to get caught off-guard like they did 10 years ago.

Elliott Pollack, widely sought after as a speaker for policy, fiscal and economic impact, as well as real estate issues, is recognized for his expertise in both national and local real estate trends. The most optimistic statistic from his most recent findings was that Maricopa County was #1 in the country for net population growth in 2016 and 2017. People continue to move to the Valley. Because of this, new home permits increased this year 18% over last year as reported by the Phoenix Business Journal.

Pollack brought up another good point. When you look at the last 43 years of recession/recovery periods and compare it to this recovery, people are moving less. It’s a trend that began around the turn of the century. He reports that the mean age of first child and the median age at first marriage are both on a steady increase. Usually, these events are an indication of differing housing needs.

Consider generation differences in housing needs. The next real estate downturn may not be coming from the direction we are all watching. Being caught off guard occurs when we are too focused on the wrong thing.

The longevity of the current upswing is the real reason we’re becoming more suspicious each year. The upcoming Arizona 2019 Market Forecast Seminar will be filled with predictions and trends from local leaders about the months ahead. We will hear from the experts about what we should be paying attention to and the data that shapes those opinions. We owe it to our clients, our families, and our businesses to be better prepared for what is to come.