Despite our fear of change, humans are quite resilient and are far more flexible than we realize. Quite often, change is good. Demand is declining and seasonality is beginning to emerge in the market. I am hearing stories about an FHA buyer who finally had a contract accepted and a seller who agreed to a few concessions. This is good news for our exhausted buyers; they need some wins too. This is how the machine is supposed to work.
Now, this is a headline that says it all, “Who’s Lying About The Housing Market? The housing market is heating and cooling at the same time, depending on the data in question. Who’s telling the truth? Actually, maybe everyone…” Author, Matthew Graham explains that prices are appreciating faster than they have in 15 years, homes are selling in minutes, and bidding wars are commonplace all while demand is actually falling. Demand was THAT high and remains above normal.
Forbearance numbers improved again for the 5th week in a row. It is very difficult to make predictions in this current environment. Policy is changing regularly. We do know one thing that is helping all homeowners, struggling or not, it is the sky-high appreciation. Nationwide it is nearly 16% and here locally it is 19%. This gives homeowners options, whether or not they are struggling to make payments.
There is a lot of talk about the market shifting. It is and this is a good thing. Don’t be nervous when you hear other agents are talking about fewer showings and fewer offers. Going from 30 offers to 5 offers is still great for the seller. Demand is dropping faster than supply. Supply has leveled over the past few weeks, it is still 78% below normal while demand is 11% above normal. As long as demand is higher than supply, prices will go up. The 19-20% appreciation rate we are seeing is not healthy and as people are priced out of the market due to sky-high appreciation, demand will continue to slow. Prices will still go up, just at a slower rate.
Real estate disruption is all about creating efficiency. As we lead busier and busier lives, fast and efficient is appealing, right? In theory, buying and selling a property with Amazon-like ease sounds great. In reality, our human condition drives us to desire human input, not just in reading interesting articles but in being able to talk to someone about specifics.
There is a lot of talk about what will happen next. While we do not have a crystal ball and the real estate market is unpredictable, there are a few assumptions we can make based on the numbers. There are tons of headlines and YouTube videos all about how the market will crash in 2021. The problem with many of these predictions is that they exclude very important data. Today I saw a YouTube video with many thousands of views and used lots of numbers to illustrate his point. Throughout the entire video he never made mention of buyer demand or homeowner equity. Remember, the foundation for all economics is the relationship between supply AND demand.
The percent of homes with price reductions is currently at record lows at 16.1%. Enough contracts are coming in over-asking which means very few sellers are reducing their asking price. For Realtors working with sellers and potential sellers, the next 3-4 weeks is likely going to be the absolute peak. The rest of the year will continue to have strong buyer demand and increasing prices, but the absolute peak of the demand frenzy is likely happening right now. So now is the time for sellers to get the biggest premium.
In this 10 minute video, Lydia Wietsma and I discuss the latest in forbearance, declining sales, inventory levels, buyer confidence, and a surprising move for landlords.
In this 12 minute video, Amber Kovarik and I discuss the latest in housing, lending, and proposed policy.
Once again, today is all about the AZ market. Recently, Lawyers Title hosted a presentation with Tina Tamboer with the Cromford Report. She always shares pertinent and timely information. Below I have combined a lot of her information from her presentation, along with additional information from my research.