chart of annual 2020 price appreciation vs 2008

 

2020 Real Estate Is Soaring, But Not Like 2008

 

Unlike last 2019, the 2020 residential real estate market across Arizona and in Surprise Az kicked off 2020 with a bang! In their latest Monthly Mortgage Monitor, Black Knight proclaimed:

 

“The housing market is heating entering 2020 and recent rate declines could continue that trend, a sharp contrast to the strong cooling that was seen at this same time last year.”

 

Zillow revealed they’re also seeing a robust beginning to the year. Jeff Tucker, Zillow Economist, said:

 

"Our first look at 2020 data suggests that we could see the most competitive home shopping season in years, as buyers are already competing over…homes for sale.”

 

Home buying demand in Surprise Arizona is very strong. The latest Showing Index from ShowingTime reported a 20.2% year-over-year increase in purchaser traffic across the country, the sixth consecutive month of nationwide real estate growth, and the largest increase in the history of the index.

 

The even better real estate news is that buyers are not just looking. The latest Existing Home Sales Report from the National Association of Realtors (NAR) showed that closed sales increased 9.6% from a year ago.

 

Looking at the data and how fast homes for sale in Surprise AZ are selling, we are still moving into the spring season with lower inventory than last year. Take a look at homes for sale in Surprise Farms.

 

This increase in overall buyer activity has caused Zelman & Associates to increase their projection for home price appreciation in 2020 from 3.7% to 4.7%.

 

Are we headed for another housing crash like we had last decade?

 

Whenever home price appreciation begins to accelerate, the fear of the last 2006 housing boom and bust creeps into the minds of the American population. The pain felt during the last housing crash scarred us deeply, and understandably so. The crash led us into the Great Recession of 2008.

 

If we take a closer look at the data, however, we can see the current real estate price situation is nothing like it was in the last decade. As an example, let’s look at  home price appreciation for the six years prior to the last boom (2006) and compare it to the last six years see chart above

 

There’s a stark difference between these two periods of time. Normal appreciation is 3.6%, so while current appreciation is higher than the historic norm, it’s certainly not accelerating beyond control as it did leading up to the housing crash.

 

Today, the strength of the 2020 housing market is actually helping prevent a setback in the overall economy. In a recent post, Odeta Kushi, Deputy Chief Economist for First American explained:

 

“While the housing crisis is still fresh on the minds of many, and was the catalyst of the Great Recession, the U.S. housing market has weathered all other recessions since 1980. With the exception of the Great Recession, house price appreciation hardly skipped a beat and year-over-year existing-home sales growth barely declined in all the other previous recessions in the last 40 years…In 2020, we argue the housing market is more likely poised to help stave off recession than fall victim to it.”

 

Bottom Line

 

The 2020 year has started off very nicely for the residential housing market. If you’re thinking of buying or selling a home, now may be the time to get together to discuss your options.