In this 8 minute video, I cover 4 topics impacting greater Phoenix real estate this week.
One – the Market:
Be mindful of the headlines. Demand remains way above normal but it has fallen slightly below its peak in November. This is causing all kinds of headlines claiming the sky is falling. While our demand is the highest it has been in 9 years, inventory is at the lowest, maybe ever, at least in the past 20 years. Inventory is down 20% just since last month and 51% from a year ago. There are about 6300 available listings. That is it. We could literally use 20,000 more listings in our market, like tomorrow. Nationwide there are fewer than 450,000 single-family residences available.
Also, remember, the market is cyclical, it is normal for activity to slow at the holidays. The best kind of housing market is a stable housing market. For us to move towards more cyclical norms is a good thing.
Existing home sales have declined slightly from November. However, there are still about 25% more pending sales than there were at this time last year.
For new homes, over the past 10 years the average decrease in activity from mid-November to mid-December is 25% and for the same time period, new home sales are up 20% year over year.
The strength of the market is driven by low inventory, high buyer demand, and super-low mortgage rates. This strength is expected to continue into 2021 with, hopefully, an increase in listings.
Two – Population/Migration:
The biggest challenge, that we know of today, is the quickly rising prices, we are up 17% year over year. Increasing supply will slow the price appreciation which will help keep today’s buyers engaged. Over the past 10 years, nationwide, builders have underbuilt for the demand, and it is coming to a head now.
Combine the low inventory with population growth and supply diminishes even faster. The full census numbers come out in March but the preliminary numbers for 2020 are in and Arizona’s population growth is just over 105,000. 2020 actually had slightly fewer people move here than in 2018 and 2019. Over the past 10 years, about 890,000 people moved to Arizona, of which about 80% or 712,000 moved to greater Phoenix.
Further data shows that the mass exodus from big cities has not been what was initially expected. Fewer than 1% of the population left the biggest cities in the country. If you take the homeowners that moved this year in the 50 biggest cities in the country, about 84% stayed in the same city.
Three – Stimulus Bill:
Yesterday, the president signed the $900 billion relief bill into law. There will be a stimulus check, expanded unemployment programs extended through 4/19/2021, additional $300 in weekly benefits extended through 3/14/2021, additional funding for PPP, and an extension to the eviction moratorium through 1/31/2021.
The biggest news for our industry is the $25 billion in rental assistance which allows landlords to apply for funds to cover rents in arrears, utilities, and other housing costs. This is great for landlords as the majority of landlords are mom & pop investors.
Forbearance timelines are not addressed in this stimulus bill. Although last week, FHA announced a 2-month extension on both the foreclosure moratorium and forbearance initiation. This means struggling borrowers who have FHA loans can get started on their initial forbearance plan through 2/28/2021.
Only FHA has extended these, any other struggling borrower who needs to get started on a forbearance plan must call their servicer by the end of the day Thursday.
Four – News:
- Last week, another commission based class action lawsuit was filed. This one did not name NAR but did name the local MLS and industry giants like Realogy, Keller Williams, and RE/MAX.
- Luxury builder, Camelot Homes will now allow you to take a house for a test drive so to speak, they just announced their “Stay and Play” experience for a new community in Desert Mountain in north Scottsdale.
- 2021 is expected to be another big year for mergers and acquisitions also, we should expect more IPOs and SPACs for businesses going public.
Happy New Year!!!
Sarah Perkins is an award winning account executive and has been in title sales since 2004. As the Director of Industry Research & Senior Account Executive, Sarah’s role is to bring real estate transactions to Navi Title. Sarah supports her clients by helping them navigate the ever-changing real estate space through thorough research and understanding of current trends impacting today’s home buyers and sellers.