Source: MSNBC

Here is more on deportation from the Phoenix market. In a previous post, I touched on how plans to deport millions of undocumented residents could impact the real estate market in Phoenix.

I told you that we are not likely to see any mass movement any time soon.

But there is one shift that could happen if there is deportation from the Phoenix market, and it has to do with jobs and interest rates, nationally. You’ll want to keep an eye on this.

First, know that the unemployment rate just hit the lowest in 9 years on December 2nd, 2016. That is good, over-all. It does not mean that everybody is fully-employed or that they improving wages. But, it is better than it has been.

But it means that the Federal Reserve Bank is watching out to make certain that the economy is not about to overheat. What happens with full employment? When there is full-employment, employees begin to demand higher wages and that puts up-ward pressure on inflation. So, the Fed raises interest rates to slow that growth, reduce wages and inflation.

So, as reported on the Marketplace Morning Report today, if a Trump presidency is able to deport millions of workers just at a time when the economy needs them, unemployment will reduce further, and the Fed will be pushed to increase interest rates even further to slow inflation.

That could affect the housing market, too.

I know, all of this is highly speculative. But my point is that you will want to watch what happens in this sector to see what could happen in the housing market in late 2017.

In good news, Phoenix is expected to be the top market in the country in 2017. I take this with a grain of salt, as you might guess.

“We don’t expect the outcome of the election to have a direct impact on the health of the housing market or economy as we close out 2016. However, the 40 basis points increase in rates in the days following the election has caused us to increase our interest rate prediction for next year,”   –Jonathan Smoke, chief economist for Realtor.com in Phoenix Biz Journal, Nov 30, 2016

We will be keeping an eye on the market and the political landscape. If you have questions about how this might affect you, give us a call at 602-456-9388.

The December 2016 Market Update is based on the latest numbers from November. Our friends at the Cromford Report provide us with the most reliable data to share with you.

“After the usual summer lull, pricing has regained a lot of upward momentum over the last 2 months. However that upward momentum is petering out now and increases in the rest of the year are likely to be modest. Nevertheless it still seems probable that will see the highest average price per square foot for 2016 posted during December.

For the monthly period ending November 15, we are currently recording a sales $/SF of $145.44 averaged for all areas and types across the ARMLS database. This is up 1.8% from the $142.84 we now measure for October 15.

On November 15 the pending listings for all areas & types shows an average list $/SF of $147.84, up 0.2% from the reading for October 15.

Our mid-point forecast in the December Market Update for the average monthly sales $/SF on November 15 is $145.81, which is 0.2% above the November 15 reading.

Currently we are seeing additional supply arriving for the West Valley, especially Surprise, while supply in parts of the Southeast Valley is becoming tighter, especially in Chandler. On its own this change is likely to cool average pricing a little because the future sales mix will slightly favor the cheaper homes in the West Valley which sell extremely quickly.”

What does this mean for you? Well, I think prices will continue to rise, generally, and specifically in the CenPho and historic neighborhoods. There are few new houses being built in this area and people still want to live more centrally.

While there is increased pressure on the Federal Reserve Bank to raise interest rates, especially with news that we just hit the lowest unemployment rate in 9 years on December 2nd, even a one-point increase in interest rates probably won’t slow that demand. We are already at historically-low levels. So, we would be at “historically low + 1%.”

So, if you are looking to sell, I would do that between January and June, before any possible negative outcomes from an aggressive Trump immigration policy might take hold. Plus, that is the busiest time of the year. Please see my post on that issue, here.

If you are looking purchase, I would do that sooner, rather than later. If prices are going up and interest rates are going up, you could get hit with a double-whammy.

Give us a call and we can help you build the best strategy, 602-456-9388.