Your question is one that we ALL are asking, but the truth is that no one can tell you for sure, except those that have special gifts & can actually see the future. Since I do not know anyone who can accurately predict the future (if you do please let me know), we have to defer to what history tells us, as we know for certain that history always repeats itself.
Unfortunately, we are in unchartered waters so history can only minimally guide us. Our current market is very different than that of any previous market. There are similiarities to the 1990's, etc. but nothing compares to what we have gone through in real estate over the past few years. Traditionally in real estate, the average annual appreciation rate is 4-5% here in the Queen Creek area. But, once again, nothing is traditional about our current market or state of the economy.
Prices are currently increasing a bit here as demand is high and inventory levels are low, but I don't think we will see any significant changes for many years to come. In Queen Creek, values are currently back to the year 2000 range. Those who purchased after the year 2000, or refinanced after the year 2000 and pulled out their equity, currently owe more than their home is worth. Not only do we have folks who can no longer afford their mortgages due to financial hardships and life changes and interest rate adjustments, but we also have folks who are wising up. They understand that it does not make financial sense to hold a property that is worth less than what is owed on it if they won't recoup their values for a long, long time (in some cases 15-20 years). If they foreclose, they will recover in 3-5 years based on the current lending guidelines. It's simple math. Thus, the strategic defaulters are coming out of the woodwork. Until the foreclosure crisis is over, we won't see 'traditional' behavior. The foreclosure crisis won't be over until the majority of folks who are underwater (and right now the stats say one out of every four homeowners is underwater) have walked away, short sold, modified their loans, etc. I would be amazed if this could all happen within the next three years.
I think it is a GREAT time to buy, however, I think next year will still be a great time to buy. Our current market is an absolute GIFT for homebuyers. Hello!?? We are back to prices from almost TEN years ago!!
Stil, I believe that real estate in 3-5 years will be stagnant compared to today's market. Lenders will still be very tight with their money, but they will have to loosen up a bit if they want to keep writing new loans. I see stated income loans coming back for A paper customers, for example. Interest rates will be much higher, however, especially due to inflation....so the sooner you buy, the better! Buying is not just about home prices, it is also about the long term cost of your purchase.
We will likely see a pretty high amount of inflation due to the trillions of dollars the Federal Government has printed in order to pay for the stimulus packages over the past year. Once the Fed concludes that we are headed back out of the recession, short term interest rates will be increased in order to try to limit the amount of Inflation. Mortgage lenders & the secondary market that buys mortgages will begin to demand a higher rate of return on their investments, thereby forcing mortgage rates to go higher and we will see both the cost of 1st trust deed loans and 2nd trust deed loans (lines of equity, etc.) increase rates. With inflation, (food & clothing start costing more, credit cards tied to the Fed rate increasing their interest rate, and the increase in mortgage interest rates) the cost to buy a home will increase because the monthly payment will increase dramatically.
This will further slow any significant price increases for real estate. This is why I feel that real estate values won't move up significantly, over the next 3-5 years, but I think the future is very bright for long term gains. I don't see an opportunity to make significant gains on your purchase, however, for 7-10 years, unless you are able to buy and get a smokin' deal, far below current market values. If you are looking to buy and hold a property, you should probably be in it for the long haul (10 years+). As an investor, this shouldn't be difficult to do, however, because buying at today's prices will allow your cash flow and overall ROI to be very profitable.
Jessica Sulliman & Randy Curnutt
Short Sale & Foreclosure Specialists
Ashby Realty Group, LLC
602-677-7977 Jessica Direct
602-677-1002 Randy Direct
Although no one has a "crystal ball" on this, the general trend is they will remain the same to increase slighty to possible moderately. It is unlikely to reach the 2005 to 2006 highs during this time frame.
Overall, house prices in the Phoenix metro have risen slightly since the Summer indicating that the bottom of the market has been reached. Queen Creek, although has lagged, there are recent and coming changes in the Queen Creek/ San Tan Valley area.
1. New Freeways
2, New retail along those freeways
3. New hospital
4. Further freeway work expected
5. Abundance of HOA communities that keep the Queen Creek area looking sharp
6. Phoenix Gateway Airport expansion
7. Already bargain prices in Queen Creek for very nice and well laid our developments with golf courses and open spaces close by
8. Queen Creek is open to vacation hopes from baby boomer retirees from other states and Canada with good prices and freeway access. The retirees are not tied in to the commute that younger working families have to deal with
9. Wild Horse Pass Resort development also a draw to many retirees
Of course much of this is contingent on other economic factors in the nation as a whole. But all things considered, I would say....you are on the way up!
If I can help you in any way, just send me an email .
Best regards and Happy Thanksgiving......Jeff
Jeff Masich, RealtorÂ®
Arizona Homes and Land
HomeSmart Real Estate
If someone could know for sure what prices would be in 3-5yrs I think we would have much more sales than we do now. Although historically real estate appreciates over time, there are drops as we have seen.
So for someone to say that in 3-5yrs you will see x% return is just not happening. Although we can show you what your current cap rate is based on your NOI when rented out.