Scorpion Control Phoenix

With the current appreciation of real estate within the last few years, you can’t go anywhere without someone talking about their latest real estate deal. With the sour taste of the internet stock bubble still fresh in everyone’s mouth, one can’t help but worry about a similar real estate bubble bursting in the near future. Looking at the facts is the only way to gauge whether or not real estate in the Phoenix-Scottsdale-Mesa Metro area will see a sharp decline.

Real Estate Price to Income Ratio – This ratio is often used to imply an impending real estate bubble forming, although this is not correct. While income has not risen to keep pace with the price of real estate in Maricopa County, a better figure to take into account is the mortgage debt servicing cost to income ratio. This number allows us to look at whether people can afford their mortgages on their property, since most people carry debt on their real estate. For the Phoenix Metro area, that number is currently 21% for the Phoenix Metro area, compared to an average of 30% for the top 20 US metro areas. This makes property in the Phoenix metro area surprising attractive, combined with a 3 year appreciation of 69%.

The “Catch Up” Effect – Much of the current appreciation we are seeing in the Phoenix metro area can be attributed to the lackluster performance during the 80s and 90s. During that period, home prices were relatively flat, so the current rise in prices can be seen as a “catch up” effect.

Future Job Growth in the Phoenix Metro Area – A decline in home prices is rare, and the median home price in the US has not declined since the great depression on the 1930s. Local markets have seen declines when accompanied by sharp declines in the local job market. The 3 year job growth outlook for the Phoenix Metro area is a strong 4.8%, compared to the national average of 2.4%, making a strong argument that home prices will not fall.

Mortgage Climate for the Phoenix Metro Area – 18% of the mortgages in the Phoenix metro area are above 90% of the real estate’s value, making the foreclosure risk in the area minimal. While a rising interest rate would cool the recent growth we’ve seen in home values, it would only bring the area in line with the national average mortgage debt servicing cost to income ratio.

After looking at the numbers, it’s clear that Phoenix AZ real estate bubble concerns are overstated. Job growth for the area looks good and foreclosure risk is minimal. While past returns cannot guarantee future growth, the future looks very promising for real estate investment in the Phoenix metro area. A cooling in appreciation may occur if interest rates rise sharply, but this would be far from the bubble burst the stock market saw. But even with the current rise in mortgage rates, the Phoenix area is still seeing appreciation in real estate.

For further information about real estate in Maricopa County, Arizona please visit http://www.maricoparealestate.net/