This Week in (Greater Phoenix) Real Estate 10/26/2020

In this 14 minute video, Amber Kovarik and I discuss the latest on housing, lending, and the economy. We go into detail on 2020 numbers, supply & demand, future projections in lending, forbearance, delinquencies, and some cool Arizona news!

Today’s Takeaways:

The AZ Market:

Supply: Inventory is 63% below normal. Active listings excluding UCB crept up slightly to about 8,400 but is still down 43% year over year.

Demand: Pending sales are up 24% year over year, incredible considering the low inventory. Our demand continues to rise quickly and is 31% above normal.

Sales & Prices: The median sales price is $330,000, up 18% year over year. The median sales price has increased by 12% since June.

Rentals: At 5.8%, Phoenix had the largest single family, rental appreciation in the country in August, year over year. Nationwide the increase was 2.1%. (Corelogic)

National Real Estate:

• Existing home sales surged 21% in September year over year, pushing us to a seasonally adjusted annual rate of 6.5 million sales, all while inventory is at record lows. (NAR)
  • Pre-pandemic 2020 projections were for about 5.8 million sales.
  • In 2019 there were 5.35 million sales.
• Rental growth is outpacing homeownership growth. Roughly 2/3 of households are owner-occupied while 1/3 are rentals. Lately, especially in the more expensive urban areas, rentals make up 50% of households. (Inman)
• Through the first 9 months of 2020 there were 400,000 fewer listings on the market than there were through the first 9 months of 2019. (KCM)
• Phoenix is the #2 metro area for in-migration from March through September. (Orbital Insight)
  • Nationwide people are moving to more favorable climates, with more favorable taxes, lower cost of living, and less social unrest. (Ivy Zelman)

• Population growth in Arizona, Utah, Idaho, Texas, and Nevada was 20% from 2010-2020.
• Population growth in Connecticut, Pennsylvania, New York, Illinois, and California was 3% from 2010-2020.

Wall Street:

• More and more real estate companies are going public via IPO or SPAC.
• On August 18 the S&P 500 closed higher than the previous all-time high on February 19, thus ending the shortest bear market in history. (Jeremy Kisner, Surevest)

Arizona Facts:

• Arizona has the 3^rd lowest percentage of persons born in state at 39.9%. We are behind Nevada at 27.2% and Florida at 35.8%. Louisiana has the highest at 77.6%. (Elliot Eisenberg)
• The Greater Phoenix Economic Council (GPEC) was named top economic development organization in the country for cities with populations of 500,000 or more. (Rose Law)

Delinquencies:

• Over 6 million households (renters and owners) were either late or missed their full or partial payment in September. (MBA, RIHA)
  • 8.5% or 2.82 million renters missed their payment.
  • 7.1% or 3.37 million owners missed their payment.
• Early-stage delinquencies, less than 90 days, have dropped down to pre-pandemic levels. (Black Knight)
• Seriously delinquent, 90+ days, mortgages dropped by 43,000 in September. The first sizeable drop since the onset of COVID 19. (Black Knight)

Forbearance:

• FHFA and FHA extended pandemic forbearance plan options to single family owners with FHA loans through 12/31/2020. It was initially set to expire 10/30/2020. FHA forbearance plans are 6 months with an option to extend for an additional 6 months.

• Mortgages in forbearance dropped from 6.32% to 5.92% to roughly 3 million loans, down from the previous week’s 3.2 million loans. (MBA)
• This removes another 200,000 from forbearance programs. One reason given for the 400,000 over the past two weeks coming off is that borrowers do not know they can stay on or further negotiate their plans. If borrowers do not make any phone calls or connect with their lenders or servicers they are automatically being removed from their forbearance plan. This is a big deal.

Lending:

• According to the Mortgage Bankers Association (MBA), purchase mortgage originations for 2021 are expected to increase by 8.5% from 2020. They expect 2021 will hit an all-time record of $1.54 trillion, just for purchase!
• Once we are at 5% unemployment interest rates will be on the rise again. At the end of 2021 rates are expected to be around 3.5%.
• With the slow rate increases refinances are expected to decrease from $1.8 trillion in total volume in 2020 to $950 billion in 2021 and $500 billion in 2022.

Please share this with your colleagues and clients.

Copyright 2020 by Sarah Perkins