In this 10 minute video, Amber Kovarik and I discuss the latest in lending and real estate. We cover inventory, demographics, population growth, interest rates, and appraisals.
One – Inventory:
As always, be mindful of the headlines. Yes, we did just have 3 months in a row with decreasing numbers going into escrow. There are two reasons. One, seasonality, it is good to have some semblance of seasonality coming into our market. It is a sign of normalization and normal is stable and stable is good for housing.
The other reason is the low inventory. I know, it is like beating a dead horse. There are very, very few listings on the market. There are like 6100 properties for sale in greater Phoenix and, as of last week, there were only 437,000 single-family residences on the market in the whole country! Dr. Lawrence Yun has said several times the decline in listings under contract is due to lack of inventory.
Despite the month-over-month decline, nationwide, through November existing home sales are up nearly 26%!
Two – Housing Demographics:
There is a lot of fear about a bubble. There is a lot of data and there are many moving parts, particularly with eviction and foreclosure moratoriums, it is hard to know what will happen next. There are some economists that say that due to housing demographics and timing, COVID actually slowed down the housing market. What I mean by the demographics is that right now the biggest group of millennials are aged 26-32 which is the time when many are getting married, having kids, and settling down. This is the time when most people buy houses. We are also talking about the largest generation and most well-educated generation. Unemployment has hit people the hardest with a high school education or less. Given that this population is the most well educated in history, it is the largest home-buying generation. This extremely large buyer pool is expected to drive a significant amount of real estate transactions from 2020 through the end of 2024. We just need more inventory!
Three – Census:
The preliminary census numbers are showing that AZ has had about 1 million people move here from 2010-2020. This could entitle us to another seat in Congress. California had its first-ever drop in population. The counties that drive the largest relocation to AZ is LA County and San Diego County.
The full census numbers should be out in March.
Four – Interest Rates:
Rates have been insulated by the Fed buying mortgage-backed securities. The Georgia Senate race could impact rates in that if a new party becomes the controlling party in the Senate, the markets usually move which could push rates. The market likes stability when things change markets shift. This could create volatility.
Increased rates will put pressure on affordability. The current low rates are helping with affordability during a time of double-digit appreciation.
Five – Appraisals:
Appraisals are still coming in low from time to time. It seems to happen more often when the listing agent does not communicate with the appraiser, prepping them with the comps and other information supporting the price. There are some methods that are working when dealing with a low appraisal. Amber has appraisal gap strategies that are helping buyers win offers.
Sarah has been with Lawyers Title of Arizona since 2004. As an award-winning sales executive, Sarah’s role is to bring transactions to Lawyers Title. To do this, she focuses on supporting her clients and helping them navigate the ever-changing real estate space through thorough research and understanding of current trends impacting today’s home buyers and sellers.