the AZ market

Category: National Real Estate

  • This Week in Phoenix Real Estate (video) 2/22/2021

    In this 11 minute video, Amber Kovarik and I discuss the latest in real estate, lending, and the economy. There are some major emerging trends that were predicted for 2021 and they are all happening now; only 6 weeks into the year. Rates have moved up slightly, and Amber talks about why.

    2021 Megatrends:

    Mike DelPrete said at a recent Inman presentation “The industry is moving very slowly, but it’s never moved this fast.” And he is right! At the national level, there is a lot of activity right now. We are seeing leadership changes, Josh Team announced today that he is leaving his position as the president of Keller Williams and is leaving the company entirely. Last week Redfin announced its $608 million acquisition of RentPath and Zillow made some serious waves with its recent announcement of its $500 million acquisition of ShowingTime.

    During the same presentation DelPrete discussed the 5 megatrends to watch for in 2021. Given that we are hardly 2 months into the year and his megatrends are pretty apparent.

    1. Portals are moving closer to the transaction. Zillow and Showingtime. Zillow Homes the brokerage that launched in Phoenix and other markets on January 1 are two examples.
    2. Agents as employees. Homie, Redfin, Zillow, Rex Homes all have employee agents. It is all about control.
    3. New models are here to stay, iBuyers, despite not yet being profitable are not going away. When Opendoor went public in late December they came into $1 billion cash to use to get profitable.
    4. The battle for adjacent services; while the most lucrative are title and lending; these also include moving concierge services, renovation, and inspection services. Homie has done a very good job of selling its adjacent services and quickly became a profitable startup.
    5. Asymmetric disruption: likely to be the biggest trend of the year, big outside companies entering the real estate space, funded by venture capital, meaning they do not need to make money. For example Zillow can stand to lose $600 million without losing its foothold on the industry.

    DelPrete went on to say, “That sets the trend, that’s what you’re competing against, a company that doesn’t have to make money.”

    Good Time to Buy? Yes!

    With fewer than 4400 active listings on the market, the seller’s market is intense. BUT it is still a great time to buy. Rates are still low but have started to move up slowly.

    Even with the rate increases; rates remain near all-time lows and it is a great time to buy. It is important to proactively educate your clients. They need to know what it takes to get an offer accepted in today’s environment. Buyers with loans can still have the winning offer over cash buyers when the offer is structured properly.

    Why Are Rates Going Up?

    Amber Kovarik shared, “As the markets attempt to predict when the Fed will begin to taper their stimulus, they are watching the key economic metrics of the employment rate and the inflation rate. The simple math of increasing daily vaccinations will mathematically push down the daily counts of new infections, possibly at an accelerating decline.  As this happens, businesses will re-open, jobs will come back, consumer spending will go up, vaccinated people will begin to travel and inflation rates will go up. These forces will be further supported by the largest series of economic stimulus package spending in the history of the U.S. economy. 

    As the economy recovers this will naturally push bond prices down (which causes interest rates to rise) through normal forces of supply and demand. When the inflation rate picks up, this will create further pressure to push interest rates up. The large stimulus package soon to be approved by Congress will further push down the demand and the price for bonds, and will add an increased pressure to push inflation rates higher. All of these forces combined create significant and very powerful market forces to push interest rates higher.

    Then on top of these very powerful forces above, when the Fed decides to taper their daily mortgage-backed security purchases, this will add an additional and very powerful pressure pushing down bond prices (causing higher interest rates) on top of the above normal market forces. When the Fed began buying mortgage-backed securities, this had a huge impact on prices. The reverse will happen when they exit. Nobody knows when the Fed will officially taper their purchases, but the markets know that it will happen, it is just a matter of when.”

    This chart shows the past 6 months of interest rates. The all-time low was reached on 1/4/21.

  • Greater Phoenix Real Estate Update 2/19/2021

    Low-interest rates keep housing demand high while available supply continues to dwindle. Today’s market is tough on buyers yet it is still a great time to buy; so we must continue to encourage them. And we must do the same for the sellers as well.

    Stories of 75 offers in one weekend or a fixer selling as-is for $50,000 over asking come almost daily. Real estate is not for the faint of heart nor is it boring.

    Real Estate News:

    Inventory:

    Inventory is low. Everywhere. With fewer than 2,500 active single-family homes on the market in Maricopa County, we are 77% below the average listing count over the past 4 years. This makes everyone sensitive to small changes in inventory levels.

    When big companies, like Opendoor, manipulate their own inventory levels it is important to take notice. For example, from November 10 to December 10 Opendoor did not list a single property anywhere in the country. They continued purchasing properties though. An easy assumption is that they were stock piling houses to release to the market after they went public on December 21 and to give their investors a strong Q1 2021 due to all of the closings pushed into the new year. They created a stock pile of artificial inventory.

    It was only for a short period, listings are withheld in 23 markets for 4 weeks, yet it shows how much power one company has to dictate the market. What if they hold them all for a year? What if they hold them to inflate the market? What if the other iBuyers do the same, like when Zillow and Opendoor both simultaneously decreased buyer agent commissions to 2.25% from 3% last summer?

    Opendoor is a publicly traded company. Wall Street is motivated by money. And now Opendoor has shown the ability to and willingness to, withhold listings in the tightest housing market in history. Are they still selling convenience to the consumer or doing what is best for their bottom line?

    National Real Estate:

    Typically about 25% of active listings take at least one price reduction before selling. Today that number has dropped to only 18.7%.

    Current active inventory of single family homes on the market stands at just 344,415 this week. That’s down another couple percent from last week.

    The AZ Market:

    • The median sales price is up 18% year over year.
    • Available inventory is down 61% year over year.
    • Monthly mortgage payments for the median house is roughly $150-$250 cheaper than rents for the same property.
    • 37% of closings so far in February closed for more than asking.
    • At this point in 2021, luxury sales of properties from $1M-$3M are up 102% year over year and sales over $3M are up a whopping 140% year over year.
    • Join us next Friday as Tina Tamboer does a deep dive into the AZ market. Click here for details and registration.

    Winning Phoenix:

    Greater Phoenix is highly desirable and still considered affordable. An estimated 83,000 new residents moved here in 2020 and with it, they brought bigger budgets. Local buyers’ budgets averaged $509,000 while new buyers coming from out of state had an average budget of $627,000; 23% higher!

    In a recent Zillow survey, Phoenix ranks second in 2021’s hottest market. The Sunbelt is leading the housing pack.

    Phoenix ranks #7 in the Milken Institute Best-Performing Cities Index. According to the ranking, in 2020 San Francisco ranked #1 and this year it did not even make the list. To quote directly from the index:

    “For years, Phoenix has been topping lists of the most rapidly expanding cities in the country — jobs grew 17.6 percent between 2014 and 2019 while wages increased by 34.2 percent in the same period. 

    Although home values are responding to the economic boom and spiking accordingly, the city continues to attract a healthy balance of economic power players and people looking for a more affordable place to make a start in life.

    ‘The metro continues to grow at unprecedented rates, including top-tier one-year job (sixth) and wage growth (15th),” reads the report. “Phoenix also improved five ranks in high-tech GDP concentration (47th), while its seven high-tech industries land it at 37th, highlighting a deepening high-tech economy.’”

    Milken Institute Best-Performing Cities Index.

    New Construction:

    Continues to be plagued by high materials costs, especially for lumber which increased over 150% last summer, then dropped and increased again, due to supply chain shortages, massive fires, labor shortages, closed mills, COVID, and larger homes under construction.

    “While the market remains solid, median home prices are increasing due to higher building material costs, most notably softwood lumber, and a shift to larger homes.”

    Robert Dietz, chief economist for the National Association of Home Builders

    Forbearance:

    The latest forbearance numbers show improvement. The total number of loans in a forbearance program is around 5.29% or about 2.6 million, a decrease of about 100,000 in the last 2 weeks.

    The foreclosure, forbearance, and eviction moratorium have all been extended through June 30, 2021.

    Forbearance Exits from June 1, 2020 – February 7, 2021:

    • 43.6% of forbearance exits are paid up and current.
    • The number to watch remains at 13.8% of forbearance exits are doing so without a loss mitigation plan in place.
    • This means that if all 2.6 million borrowers exited their forbearance plan today, about 348,000 would leave with no plan in place.

    For more details see my recent AZ Forbearance Update from Wednesday.

    Delinquencies:

    In Q4 2020 the mortgage delinquency rate, which includes those in forbearance who are behind, was 6.73%, a 0.92% decrease from Q3 2020 but still nearly 3% above this time last year. This nearly 1% quarterly drop is the biggest decrease since the Mortgage Bankers Association started tracking this data in 1979.

    The 30-day lates reached their lowest since tracking began in 1979, while both 60 and 90 days lates also decreased. 90+ day lates remain the largest delinquent group at just above 5% of all mortgages.

    Total mortgage delinquencies across the three loan types – conventional, FHA, and VA – and across the major stages of delinquency – 30-day, 60-day, and 90-day – declined from last year’s third quarter.

    MBA Delinquencies

    3D Printed House:

    The nation’s first 3D printed house hit the market in Riverhead, New York with an asking price of $299,999. It is 1,500 square feet and made out of concrete.

    Final Thoughts:

    Supply and demand are the foundation of economics. Real estate is no different. In order for something to change either demand will subside or supply will increase. When that happens it doesn’t mean that our market will crash or values will go down, it means that appreciation will slow to a rate more favorable to buyers and sellers will have to negotiate.

    Only then can we get out of what Mark Fleming with First American so gracefully explained, “This is what we call the homeowner prisoner’s dilemma. There’s nothing to buy because nobody is selling, but nobody is selling because there’s nothing to buy.”

    Please share this with your colleagues and clients.

    Copyright 2021 by Sarah Perkins

  • AZ Forbearance Update 2/17/2021

    AZ Forbearance Update 2/17/2021

    In this 16 minute video, Lydia Wiestma and I discuss the latest in forbearance, delinquencies, extensions, and inventory.

    We do these videos to share the real information with real estate professionals and consumers about what is going on in this sector of real estate. There is a lot of fear behind forbearance and the moratoriums, and bad advice being given. While there is no reason to panic, it is important to be informed.

    CFPB & Servicers:

    As we discussed recently, the CFPB is breathing down the necks of the loan servicers and they know in order not to be fined, they have to follow all of the rules by the book. That is a good thing for struggling borrowers. The days of the lax info on forbearance from the servicers are numbered. The one piece of advice I would give any borrower when they call their servicer, get everything discussed in writing. Track and document EVERYTHING.

    Forbearance Numbers:

    The latest forbearance numbers show improvement. The total number of loans in a forbearance program is around 5.29% or about 2.6 million, a decrease of about 100,000 in the last 2 weeks.

    Mike Fratantoni with the Mortgage Bankers Association said, “2.6 million homeowners remain in forbearance plans. MBA expects the rollout of the vaccines to boost economic growth through the course of the year, leading to a stronger job market and a greater ability for more struggling homeowners to get back on their feet. We do believe that additional support is needed until they have regained their jobs and incomes.”

    Forbearance by Stage:

    • The initial stage decreased to 16.07%
    • Extensions increased to 81.42%
    • Re-entries decreased to 2.52%

    Forbearance Exits from June 1, 2020 – February 7, 2021:

    • 43.6% of forbearance exits are paid up and current.
    • The number to watch remains at 13.8% of forbearance exits are doing so without a loss mitigation plan in place.
    • This means that if all 2.6 million borrowers exited their forbearance plan today, about 348,000 would leave with no plan in place.

    Delinquencies:

    In Q4 2020 the mortgage delinquency rate, which includes those in forbearance who are behind, was 6.73%, a 0.92% decrease from Q3 2020 but still nearly 3% above this time last year. This nearly 1% quarterly drop is the biggest decrease since the Mortgage Bankers Association started tracking this data in 1979.

    The 30 day lates reached their lowest since tracking began in 1979, while both 60 and 90 days lates also decreased. 90+ day lates remain the largest delinquent group at just above 5% of all mortgages.

    Total mortgage delinquencies across the three loan types – conventional, FHA, and VA – and across the major stages of delinquency – 30-day, 60-day, and 90-day – declined from last year’s third quarter.

    MBA Delinquencies

    Timeline Changes:

    The foreclosure, forbearance, and eviction moratorium have all been extended through June 30, 2021

    • Extend the foreclosure moratorium for homeowners through June 30, 2021
    • Extend the mortgage payment forbearance enrollment window until June 30, 2021, for borrowers who wish to request forbearance
    • Provide up to six months of additional mortgage payment forbearance, in three-month increments, for borrowers who entered forbearance on or before June 30, 2020.

    Final Thoughts:

    The longer they push the can down the road, the less equity these homeowners will have to work with. The one saving grace for them is the huge amount of appreciation we are currently experiencing. With inventory levels where they are today, many expect prices to continue to increase at rapid levels.

  • Greater Phoenix Real Estate Update 2/12/2021

    I was recently interviewed for an Inman article that came out earlier this week. I was one of 5 contributors discussing the challenges of differentiation for traditional brokerages. Click here for the article.

    Real estate is dominating many headlines; from the low-interest rates, low inventory, high demand, big news at Zillow, another commission lawsuit, national policy changes, to CFPB leadership changes there is a lot going on!

    National Real Estate:

    “Pending home sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale. There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings.”

    Dr. Lawrence Yun, Chief Economist for NAR
    • According to Ivy Zelman of Zelman and Associates the size of the market will depend on the number of listings coming to market, not the size of the inventory. The job is to bring more listings to market, not to focus on the size of the inventory, which is tough to do.
    • Inventory is in crisis, there are only 354,900 active single-family residences on the market nationwide. 50,000 new listings went straight under contract, only listed as active for hours, and therefore never make it into active inventory counts. We have less than half of the inventory we had a year ago and it was crazy low then. No real end in sight right now. Prices continue moving up again this week.

    The AZ Market:

    Elliott Pollack’s Monday Morning Quarterback covered our market in great detail, this is what he wrote:

    “Locally, all eyes are on the housing market. Month after month, numbers being reported in the resale market are reminiscent of the housing bubble in 2005. There is a record low number of listings. According to The Cromford Report, as of February 1st, only 5,180 homes were for sale, a 56.7% decline from last February and a 14.5% decline from just last month. This equates to a 15-day supply of homes. In a normal market, you would expect about a two-and-a-half-month supply. The squeeze becomes much worse when you remove the luxury segment of the market. There is only a 10.4-day supply for homes under $500,000 and only an 8.5-day supply for homes under $350,000. 

    This means that it is very difficult to find a home to buy and that prices are increasing rapidly. Indeed, the median resale home price at the end of January was 20% higher than just one year ago ($342,000 vs. $285,000). And rapid price appreciation will continue in 2021 until more supply is made available. 

    This should all bode well for the new home market, which has seen a much more sustainable rate of price appreciation. According to Information Market, over the last 12 months, median new home prices have increased 4.5%. This has caused the gap in pricing between new homes and resale homes to shrink dramatically and will help the sales volume increase among new home subdivisions. In January 2020, there was a 22% premium comparing new home prices to resale home prices. Now, there is only an 11% premium. 

    As a result of both lack of supply and the rapid price appreciation of existing homes, people have been drawn to the new home market. And homebuilders have been responding. According to RL Brown, new home permits increased over 21% in 2020 to nearly 29,000 permits. We expect permits to surpass the 30,000-permit mark this year, which will break a 13-year streak of less than 30,000 permits.

    And that has been the difference between what is happening now and what occurred between 2005 and 2007. We are severely undersupplied in both existing homes and new homes. We are not building excess inventory and we have completely absorbed all of the excess that was previously built. This is not a bubble that will come crashing down. But, though we are currently still one of the most affordable major markets out there, a rapid decline in affordability could cause its own issues. Overall, however, the new home market should continue to do extraordinarily well for the foreseeable future.”

    Zillow:

    Headlines can be very misleading, like “Zillow Homes makes $27 million in profit in Q4 2020 and making an average of nearly $23,000 per home the iBuyer sold.” That is only true when they do not include all of the costs of running a business, paying employees, marketing, technology, and even paying interest on loans. When all costs are considered, both Zillow Homes and Opendoor lost $300 million in 2020. Zillow’s actual return on it’s iBuyer properties is negative $72,000 PER HOUSE. Opendoor’s figures show an $11,000 per home gain in 2020. The $105 million paid in interest was omitted when running those numbers.

    Despite the claims of transparency, many numbers are hidden and the whole story is not provided. Unfortunately for the rest of us in the industry, these companies manage to lose money each year yet keep their investors/shareholders happy. Wall Street plays by different rules. Mike DelPrete explains further here.

    There is one headline that is getting a lot of attention right now. “Zillow buys ShowingTime for $500 million.” Brad Inman wrote an article about why we shouldn’t worry about Zillow trying to take all of ShowingTime’s data. He is right, Zillow has more than enough data with 2.2 billion visitors to the site in Q4 2020 alone. While ShowingTime provides market stats for nearly 1 million Realtors, Zillow provided data for 9.6 billion users in 2020.

    Based on history though, Zillow may have other plans for ShowingTime.

    Nearly three years ago Mike DelPrete wrote about Zillow’s move as an advertising company, far from the real estate transaction, towards the transaction and encompassing more of the transaction.

    Source: Zillow’s Strategic Shift

    While Errol Samuelson, chief industry development officer for Zillow noted that “ShowingTime will remain an open platform available to all industry participants.” He also said Zillow is not in the leads business but in the “transaction generation” business. That was what the acquisition of ShowingTime is all about.

    Given Zillow’s huge push with Zillow Homes, its agent-employee brokerage which went active on January 1, does he mean iBuyer transaction generation? Further statements also mention increasing transactions for Premier Agents and also generating more transactions in general.

    I am less concerned about data, Zillow has plenty, but this does give Zillow even more control. Six years ago Zillow said it would not open a brokerage; it may indeed keep ShowingTime available for everyone, for now. Rich Barton is smart and Zillow knows how to make money; they are willing to take risks. I expect to see more acquisitions in the near future.

    IDX and Zillow:

    • Zillow is now an MLS and NAR member, therefore, has an IDX feed to all listings. This increases the accuracy of Zillow’s Zestimate and listing information. You can no longer write off Zillow info as bad data, it isn’t anymore.
    • Since it is using an IDX feed there is no way to opt not to syndicate your listings to Zillow. If you do not want your listings on Zillow, you must opt-out of IDX as a whole so the listings will not appear on personal websites or any other listing platform.

    Commission Lawsuit #4:

    • A fourth class-action lawsuit claiming that the MLS commission sharing practices violate antitrust laws was filed at the end of January, although this one claims that the price-fixing burdens the buyer who comes in with the funds versus the seller who pays out of the proceeds.
    • The bottom line is that the plaintiffs in all four suits want to have homebuyers pay their Realtor directly, rather than have listing agents share the commissions with the buyer agents.
    • Many people fear that this would completely upend the real estate industry. But think about companies like Rex Homes that are already doing this; Rex charges a 2% commission total: 1% goes to Rex and 1% to the listing agent and they are not members of NAR or the MLS. We have closed transactions with them; the buyer’s agent has a buyer broker agreement and the buyer has paid their agent’s commission.

    Lending:

    Final Thoughts:

    These past few years, especially 2020, taught us that real estate can pivot much more quickly than we ever had to in the past. We are up for the challenges of the changing times.

    Please share this with your colleagues and clients.

    Copyright 2021 by Sarah Perkins

  • Greater Phoenix Real Estate Update 1/29/2021

    The frequency in which I am asked, “Is real estate headed for a crash?” is increasing, by a lot. Given the enormity of uncertainty we have lived with for nearly a year, the question isn’t surprising. Things are going well in real estate and with the limited good news, it is easy to wonder when the other shoe will drop.

    Research professor, Dr. Brene Brown, calls this foreboding joy and defines it as “we are terrified that joy (or a strong housing market) will be taken away from us so we push it away. We beat the pain to the punch. As a result, we don’t fully experience joy and all that it has to offer. We limit our joy.” The pain of the 2008 market crash is still very raw for real estate professionals and consumers alike.

    The headlines and talking heads do not help our human tendencies towards negativity bias and confirmation bias. Consumer sentiment drives our decisions which are then reflected in everything we buy from toothpaste to houses.

    National Real Estate:

    Supply:

    • Inventory dropped to the lowest level since NAR began tracking in 1982.
    • Demand continues to outpace supply. We are now down to about 380,000 single family active listings nationwide, a drop of about 9,000 listings. Despite the drop in active listings, about 48,000 new listings hit the market last week, down from a year ago, but up from a week ago. This shows how quickly things are selling.
    • The current market data is somewhat distorted because so many listings are going from coming soon status, which is not trackable, to pending status completely skipping active status altogether. This means there are actually more listings than the data shows. This is true on the national and local levels.

    2020 Sales:

    • It is official, 2020 had 5.54 million existing home sales, exceeding 2019 by 5.9%!  That is more sales than we have had since 2006.
    • If we had more inventory, economists believe we could have had upwards of 7 million sales.
    • December’s resale closings were up 0.7% from November and up 22.2% from December 2019.
    • Median sales price increased by about 13% in 2020.
    • December marked the 106th straight month of annual price increases.

    “Home sales rose in December, and for 2020 as a whole, we saw sales perform at their highest levels since 2006, despite the pandemic. What’s even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market.”

    Dr. Lawrence Yun, NAR Chief Economist

    Prices:

    • Patrick Kearns of Inman wrote, “The inventory and affordability challenges have led to disproportionate growth in higher-priced tiers, according to Joel Kan, the associate vice president of economics and industry forecasting at the Mortgage Bankers Association. December average loan sizes were the highest ever recorded in the company’s weekly market survey.”
    • The appreciation is putting pressure on affordability, significantly impacting first time home buyers, who make up one-third of all sales.
    • Listing price increases used to be unusual but look at this. Often a sign of fix and flippers; increases usually have a normal seasonal cycle. Demand increases then prices increase. It is usually only a few percentage points but now we are at a much higher level.
    • February and March sales prices will be way up due to today’s increased listing prices.
    • Also illustrates how sensitive the market is to interest rates.

    New Construction:

    Builder confidence did drop slightly in January to 83, its highest point in 14 years. Anything above 50 means favorable market conditions. Builders are faced with increased lumber costs, labor shortages, upward price pressures, and COVID. In the face of so many obstacles, the fact that confidence is so high is incredible.

    The AZ Market:

    In Greater Phoenix there are fewer than 3,200 single family active listings and only 4,500 total active listings. That is down about 300 from last week and down 42% year over year.

    Listings are down while pending sales are up 13% year over year and closings are up 28% year over year. This translates to inventory being 76% below normal while demand is 28% above normal. A true supply and demand imbalance benefitting home sellers over homebuyers.

    Elliott Pollack wrote, “Greater Phoenix saw increases for permits and new home sales while resales held their own with small contraction according to RL Brown. For the year, new home sales were up 21.3%, permits 13%, and resales were down 0.2%. Looking at the December data, median sales price for resales and new home sales increased 18.4% and 2.0%, respectively. Again the lack of resale supply continued to push prices higher in the metro.”

    CBRE’s US Development Opportunity Index evaluates the top 50 largest cities by population based on four metrics: 1. Construction costs, 2. Fundamental strength of existing supply, 3. Prior cycle performance, and 4. Property forecast. Phoenix ranked second for office and multifamily development opportunities, third for industrial, and 15th for retail.

    Ivy Zelman of Zelman & Associates, discussed the Great American Shuffle when she said, “From 2010 to 2020, the top ten states have grown substantially faster than the United States as a whole and, frankly, builders have been a big beneficiary of this because there is actually space and ability to develop land in these markets.”

    Arizona saw an 18% increase in household growth from 2010-2020.

    Delinquencies, Forbearance, and Foreclosures:

    The forbearance numbers remain relatively flat with about 2.7 million borrowers in a plan. About 44% of borrowers who exited their forbearance plan are either caught up or never missed a payment. 13.4% of borrowers exiting their forbearance plan do so without a loss mitigation plan in place. For more details, check out my post from Wednesday here.

    Keep in mind not everyone who is delinquent on their payments are in forbearance. According to Black Knight, after seven straight months of declines, at the end of December, there were about 3.4 million loans in delinquency or 6.08%, the lowest level since April. Loans that are seriously delinquent declined from 2.19 million to 2.15 million.

    The biggest unknown we are facing is the impact of the eviction and foreclosure moratoriums. They are set to expire on March 31st. The proposed $1.9 trillion stimulus includes extending both through September 30th.  While it provides relief to those who need it now; it also kicks the can down the road and doesn’t provide a real solution.

    Lending:

    • It is completely normal to have weekly ups and downs when tracking mortgage applications, the year over year data is what shows overall trends. One week to the next is too volatile.
    • Despite the headlines demand remains strong. Purchase loan applications are up 16% year over year.
    • Refinance applications are up 83% year over year.

    “Although mortgage rates are projected to increase, they will continue to hover near record lows at around 3 percent. Moreover, expect economic conditions to improve with additional stimulus forthcoming and vaccine distribution already underway.”

    Dr. Lawrence Yun, NAR Chief Economist

    Final Thoughts:

    Ivy Zelman also discussed the biggest challenge facing today’s market, the low inventory. There are not enough homes available to satisfy the demand in the market. Based on history, the imbalance protects the housing market from dips during tough economic times.

    After the 5.3% increase in sales from 2019 to 2020; Zillow predicts that 2021 will see an increase of 21.1% in sales over 2020. Zillow predicts 6.82 million existing home sales in 2021, roughly the same number of sales as 2005.

    Based on today’s data; there is no indication of a crash or even a fender bender.

    “When I think about the 2020 housing market, the big take-home is not the V-shape recovery in many of the housing metrics or even the hotter-than-expected price growth. The big take-home is that 2020, despite the COVID crisis, began a period in our country (the years 2020-2024) when we have both the best housing demographics ever combined with mortgage rates low enough to keep housing stable for years to come.”

    Logan Mohtashami, Lead Economic Analyst for HousingWire

    Please share this with your colleagues and clients.

    Copyright 2021 by Sarah Perkins

  • AZ Forbearance Update 1/27/2021

    In this 15 minute video, Lydia Wietsma and I discuss the latest in forbearance, delinquencies, and sneaky foreclosures.

    We do these videos to share the information with real estate professionals and struggling borrowers. People have options. There is no need to panic sell.

    Forbearance Numbers:

    Our forbearance numbers have been consistent over the past few months. There is a lot of movement, many are coming in and many are exiting their plans. We are still at about 2.7 million active forbearance plans. Week over week, we had a slight increase from 5.37% to 5.38% of all loans are in a forbearance plan.

    Forbearance by Stage:

    • initial stage increased to 18.17%
    • extensions decreased to 79.31%
    • re-entries increased to 2.52%

    Forbearance Exits from June 1, 2020 – January 17, 2021:

    44.4% of borrowers are current upon exiting their plan.

    The important number for us to watch remains the 13.4% of borrowers leaving their forbearance plan while still behind on their payments and with no loss mitigation plan. This is the group that needs help.

    This means that if all 2.7 million borrowers exited their forbearance plan today, about 362,000 would leave with no plan in place.

    Delinquencies:

    Keep in mind not everyone who is delinquent on their payments are in forbearance. There are about 3.55 million loans in delinquency.

    When the foreclosure moratoriums actually expire we will see a bunch of new foreclosures only because of the 13-month backlog on foreclosures, which will work itself out very quickly.

    Courtesy of Black Knight’s First Look Mortgage Data for December 2020

    Broker Price Opinions:

    Currently, the moratorium expiration is March 31st which means the prep work has already started. Lydia’s servicing company is preparing for some significant movement in the coming months. One of their major clients recently ordered upwards of 30,000 broker price opinions (BPO) on properties that are all in forbearance.

    There remains a lot of confusion around forbearance. Borrowers and the loan servicers themselves do not always know the full story. Borrowers are assuming they can refinance immediately after completing their forbearance plan, this is only the case when the borrower has made 3 consecutive, timely payments. Borrowers cannot miss payments and expect to refinance right away.

    Sneaky Foreclosures:

    Due to COVID no longer posting on house, posting on auction.com. Be sure to look there.

    While we are on the foreclosure topic, we wanted to share the scary thing we learned about last week.  And they are sneaky foreclosures.

    During the crash 10 years ago when homeowners negotiated loan modifications or filed Chapter 7 bankruptcy that allowed them to stay in their house and removed the monetary value of their second lien but did not remove the lien itself.

    Those second liens that “went away” are now toxic loans. 60% of foreclosures out there right now are notes being purchased from the banks, that are selling for pennies on the dollar. Random people are buying the notes and then moving forward with foreclosure on the seconds. That borrowers thought were charged off. The lien buyers add interest on non-payments for the past 10 years.

    Bottom Line:

    Borrowers today have options. Now is not the time to panic sell.

  • This Week in Phoenix Real Estate (video) 1/25/2021

    In this 9 minute video, Amber Kovarik and I discuss the latest in real estate, lending, and the economy. The biggest topics continue to revolve around shrinking inventory, sly-rocketing prices, and low-interest rates. Here is the latest:

    One – Inventory:

    Nationwide and locally our low levels of inventory continue to be a challenge. Nationwide we have fewer than 390,000 single-family properties available. Here locally we have less than 5400 active listings. According to the Cromford Report, we are 73% below where we should be for inventory to support our population. Demand remains over 28% above normal.

    “This is what we call the homeowner prisoner’s dilemma. There’s nothing to buy because nobody is selling, but nobody is selling because there’s nothing to buy.”

    Mark Fleming, First American

    Two – Appreciation:

    The classic supply and demand imbalance continues to push prices up quickly. Nationwide we had appreciation of 13% in 2020 and nearly 17% here in greater Phoenix. Nationwide, the seller’s market actually started in 2012 and here in Phoenix it started in 2014, the crash hit Phoenix extra hard. The 6 years leading up to 2020 our markets appreciated 8%-10% in each 2018 and 2019. The market intensity had been growing leading up to 2020.

    Three – Affordability & Policy:

    The main underlying theme for housing in 2021 is affordability. The speed of today’s appreciation combined with the years of significant appreciation make things really tough on our current buyers. Expect more policy and programs coming out of DC addressing this issue. The latest proposed stimulus includes eviction, foreclosure, and forbearance extensions through September 30, 2021 which above and beyond the recent executive orders extended those programs through the end of March. The proposed stimulus includes another $30 billion for rental assistance to help landlords.

    Four – Zillow News:

    Zillow is officially a brokerage with agent-employees who will represent Zillow for its acquisitions and sales through its iBuyer program, Zillow Homes. This changes a few things for consumers. The Zestimate will now be far more accurate as Zillow now as a direct IDX feed connected to the MLS versus negotiated feeds set up with brokers, companies, and MLS’s. Buyer agents will now be called “personal guides” and will be showcased separately from the listing agent for each listing on the site. Also, Zillow is no longer offering free rental listings. In order to post rental listings the agent either pays $9.99 a week or their brokerage has a contract through a Feed Connection Program.

    Five – The Economy:

    Many economists are bracing for a rough winter. Consumer sentiment may take a hit. There are struggles with continued lockdowns leading to continued layoffs and high unemployment. But as the vaccine continues its rollout and the economy reopens these economists expect a strong recovery in Q2 or Q3 of this year. Businesses will open back up, people will go back to work, people will spend money on entertainment again. Since it was not an economic event that stopped the machine, they expect it to start right back up again and go straight back into a bullish economy.

    Six – Lending:

    Borrowers continue to struggle when writing offers when they need down payment assistance or ask for closing costs. Nearly no one with closing cost requests are getting them. Finding other options outside of down payment assistance programs is best for getting offers accepted.

    At the beginning of the year rates went up after the Georgia election and rose more several days in a row before retreating again. Rates are now 1/8 point lower than they were last week.

    The Federal Reserve meets Wednesday. They are expected to vote to continue buying mortgage-backed securities at a rate of $40 billion a month. Their goal is to keep rates low to continue the buyer demand.

    For details and registration for Amber’s upcoming class, visit https://www.eventbrite.com/e/winning-offers-through-finance-tickets-137997092017

  • Greater Phoenix Real Estate Update 1/22/2021

    Earlier this week I did a podcast with HousingWire where we discussed the spike in title company mergers and acquisitions. Click here to check out this 18-minute podcast.

    Are we going to run out of houses to sell? Are we going to have a foreclosure crisis? What about all of the looming evictions? V shape, K shape, policy, stimulus, unemployment, vaccines, why can’t my buyer find a house?

    Between the emotional exhaustion and pandemic fatigue making sense of today’s real estate market is difficult at best. Add in some misleading headlines and it is no wonder why we have stressed out home buyers and sellers.

    Let’s start with what we know.

    National Real Estate:

    “The shortage of homes for sale has been an ongoing issue for the last couple of years, but in December the combination of the holiday inventory slowdown and the pandemic buying trend caused it to dip to its lowest level in history. Looking forward, we could see new lows in the next couple of months as buyers remain relatively active, but a surge of new COVID cases may slow the number of sellers entering the market.”

    Danielle Hale Chief Economist for Realtor.com

    Danielle Hale was right, as of Monday, total single-family homes available in the US dropped down to 388,678. That means that only 0.05% of all single-family homes in the country are available. With NAR’s 1.4M members, there are 3.5 Realtors for every house for sale.

    • Elliot Eisenberg shared, “While housing permits are running at 1.64 million/year, their best level since 9/06, the improvement is uneven. In the Northeast, permits are at 200,000/year and have been flat for decades. In the Midwest, permits are also at 200,000/year and have bounced between 200,000/year and 400,000/year since 1960. Out West, permits are 400,000/year, their midpoint since 1960. Only in the South, where permits are at 870,000/year, are they relatively high.”
    • ATTOM Data Solutions recently released its 2020 Grocery Store Wars and found:
      • The average home value near Trader Joe’s is $644,558
      • The average home value near Whole Foods is $532,224
      • The average home value near ALDI is $250,850

    The AZ Market:

    “This is what we call the homeowner prisoner’s dilemma. There’s nothing to buy because nobody is selling, but nobody is selling because there’s nothing to buy.”

    Mark Fleming
    • Phoenix had the highest year over year rental increase in the country at 9.9% for November 2020. (Corelogic)
    • As of yesterday, there are fewer than 5,000 active listings in Maricopa and Pinal Counties.
    • There are roughly 5 buyers for every listing available in greater Phoenix.
    • The chart below compares new listings in the first 20 days of January 2019, 2020, and 2021 for the southeast valley cities of Tempe, Mesa, Chandler, Gilbert, Queen Creek, and Apache Junction. Yikes!

    12 of Amazon’s 20 facilities in AZ opened in 2020. The company employs 20,000 full and part time Arizonans.  Three more facilities are planned to open in 2021. (AZ Big Media)

    “Growth and expansion is based on demand. Amazon’s business continues to grow exponentially, and with it, Greater Phoenix is a beneficiary. Greater Phoenix is the perfect location for distribution because of our infrastructure, talent pool, low business costs and advantageous operating environment. Businesses in Greater Phoenix can serve more than 33 million consumers in a single days truck haul, our shipping costs to California are up to 75 percent cheaper than other Mountain West markets and we have the third largest labor pool in the western U.S.”

    Chris Camacho, president and CEO of GPEC

    Commercial Real Estate:

    • With 292,000 new units, 2020 nearly kept up with previous years’ new market-rate apartments nationwide. Phoenix was a top performer with 17,215 apartment starts in 2020. (AZ Big Media)
    • JLL, one of the largest commercial real estate services companies, added a single-family investment advisory arm. Not only do they think that buying single-family properties to hold is a good investment, they created an entire branch to advise on it.
    • Peter Linneman of Linneman & Associates said, “If you have a long hold horizon, I just think you’re in a golden age for multifamily. The spread is so outlandishly attractive. A lot of money’s going to be flowing to the sector that I just think we’re going to look back and say, ‘This is the third golden era of longer-term-hold multifamily.”
    • 12,200 retail stores closed in 2020 which utilized about 159 million square feet or 1.4% of retail space. (Elliot Eisenberg)

    Policy:

    • One of the 17 executive orders signed by President Biden on Wednesday includes an extension of the eviction and foreclosure moratoriums through, at least, March 31, 2021.
    • Part of the proposed $1.9 trillion stimulus plan, called the American Rescue Plan, will extend the eviction and foreclosure moratorium through September 30, 2021. It will also include another $30 billion for rental assistance.
    • The National Multifamily Housing Council and National Apartment Association stated that while they support the rental assistance (for landlords) offered in the stimulus packages they fear it is not sufficient enough to address the outstanding debt. (Bisnow)

    Lending:

    In March, the Federal Reserve started purchasing bonds to stabilize interest rates. The Fed has committed to continuing the purchase rate as long as necessary, at an average of $120 billion a month, $80B in Treasuries and $40B in mortgage backed securities. Fed holdings now exceed $7 trillion.

    Interest rates run about 1.7% above the 10-year bond yields. Based on this, rates were not properly priced for the last 5 months of 2020. Logan Mohtashami, a senior economic analyst with HousingWire, expects the 10-year yield to reach around 1.33%-1.60% this year which would mean rates will likely rise to about 3.375%-3.625%.

    Forbearance and Foreclosures:

    • The total number of mortgages in an active forbearance plan decreased to 5.37% or 2.7 million loans. For a deeper dive into the numbers, click here for my most recent AZ Forbearance Update.
    • Due to the ongoing foreclosure moratoriums, the foreclosure levels are at historic lows.
    • During normal economic times, nationwide we average about 69,000 foreclosures a month. (KCM)

    Real Estate News:

    • Now that Zillow is officially a brokerage (only representing its iBuyer acquisitions and sales), it has shifted to IDX feeds allowing for greater accuracy but also changes in how listings are shown. Buyer agents are now “personal guides” and the listing agent is noted separately.
    • Zillow is no longer offering free rental listings. They now require contracts between Brokers, Realtors, and Zillow through its Feed Connection Program or for $9.99 weekly through Zillow Rental Manager. (Inman)
    • Compass, one of the nation’s fastest growing brokerages, filed paperwork with the SEC to go public via initial public offering (IPO) rather than merging with a special purpose acquisition company (SPAC) as many other real estate companies did in 2020.

    Final Thoughts:

    December’s 140,000 increase in unemployment claims, the first increase since April, was entirely lockdown based hitting leisure, hospitality, and private education the hardest. CA alone lost 600,000 jobs while other markets saw job growth. Real estate added 4,800 jobs in December and construction added 51,000 jobs. (US Department of Labor)

    More workers in construction will lead to more building, which will lead to more inventory, which will lead to more purchases and a more stable housing market. And the best type of housing market is a stable one.

    Elliott Pollack said, “Ignore the news about the poor economy over the next couple of quarters. It is unavoidable but also temporary. Focus on the period that will follow. Virtually all of the economic indicators will return or exceed February 2020 levels very quickly once vaccinations are available for enough Americans.”

    That light at the end of the tunnel is getting a little brighter.

    Please share this with your colleagues and clients.

    Copyright 2021 by Sarah Perkins

  • AZ Forbearance Update 1/20/2021

    In this 9 minute video, Lydia Wietsma and I discuss the latest developments in forbearance trends and how the latest proposed stimulus impacts struggling borrowers.

    We do these videos to share the information with real estate professionals and struggling borrowers. People have options. There is no need to panic sell.

    Forbearance Numbers:

    Total loans in forbearance decreased from 5.46% to 5.37% which is a nice decrease after several weeks of staying relatively flat. It keeps us around 2.7 million borrowers in a forbearance plan.

    Forbearance Plans by Stage:

    • Initial entries decreased slightly to 17.27%.
    • Re-entries increased slightly to 2.28%.
    • Extensions increased to 80.45%.

    Cumulative forbearance exits from 6/1/2020-1/10/2021:

    • 45% of borrowers are current upon plan exit.
    • 13.5% of borrowers exited with no loss mitigation plan in place, which is up from 13.2% from the previous week.

    Reminder, forbearance needs to be paid back so exit strategies are a must.

    New Housing Policies:

    President Biden’s proposed $1.9 trillion stimulus plan includes extending the national eviction and foreclosure moratorium through September 30, 2021.

    Forbearance is a solution and foreclosure moratoriums are a Band-Aid and do not fix the problem and the goal is to keep homeowners in their homes.

  • Greater Phoenix Real Estate Update 1/15/2021

    Today is all about the AZ market. Yesterday, 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.

    Employment:

    The national unemployment claims through December increased slightly. Not enough to change it from 6.7%. Last week’s preliminary numbers show another increase in initial claims.

    The people with the lowest levels of education and the lowest income earners are struggling the most. Unemployment is impacting landlords and renters more than homeowners.

    Private sector earnings increased most dramatically in Q2 2020. More and more jobs in AZ have higher wages. Incomes are increasing.

    2018-2019 had earnings decreases.

    Forbearance:

    • Lately, we are seeing weak numbers and small decreases.
    • We will likely see this come to a head in March and April. All plans are in 3-6 months long with a maximum of 12 months.
    • There is a lot of misinformation and a lack of info on the borrower’s side. Some may get NOTs. Servicers have unclear guidelines and tracking could be better.
    • Even in the best markets properties still foreclose. On average, prior to 2020, there were about 69,000 foreclosures nationwide a month.
    • There will be an increase (not huge) in foreclosures because of the backlog due to the moratoriums.
    • As soon as the NOTs are recorded Realtors and investors will after those properties. People will want to buy the houses and the sellers will be able to have a normal sale.
    • This is on hold until the moratoriums are lifted.

    Click here to watch my 10 minute forbearance update video from Wednesday.

    Corporate Profits:

    The end of 2020 was surprising, for Q3 2020 corporate profits were way up. They bounced back and set a record which is what drove the demand for luxury real estate.  The strong stock market drove confidence up.

    Increasing corporate profits is a significant indicator for luxury real estate. Q3 2020 had huge corporate profits with an increase of 27.5% over Q2 2020. Nationwide luxury real estate is booming and Arizona is no exception. In October, the largest residential sale in the state closed at just over $24 million in Silverleaf in Scottsdale.

    Stock market is on the rise, again. Wall Street does not like uncertainty. It improves after elections, regardless of who is elected, because it likes to know who is in the White House and Congress. Political uncertainty is poison for the stock market.

    Why do we have a housing shortage?

    This is a housing shortage for real. This is not like 2005-2008. We are waiting for the census for the newest numbers, not yet for the county but soon. Expects all numbers by May 2021.

    In 2019 we were already in trouble. We under built the past 10 years. We had a glut of housing in 2008 and it has all been absorbed. Since then we have been behind. Overbuilt for 10 years and then underbuilt for 10 years. All housing types; rental, condos, townhouses, single family.

    From 2010 through 2019 our population increased by 18% while housing units increased by 9%.

    AZ ranked #3 for population growth from June 2019-June 2020. Behind Texas and Florida. CA lost people for the first time in over 100 years.

    23% of inbound migration to Arizona is from California.

    We have diversity of labor force and job growth. More jobs are coming because we have the lots of highly skilled workers. It is pushing out the people who cannot afford the housing prices. Work force housing is really being impacted.

    Moving Company Data:

    Moving companies United Van Lines, Atlas, and National share their client data trends. United provides a deeper dive into the data, but all are worth checking out.

    Since moving trend data is older, another way to gauge where people are moving from is based on home searches. Redfin shares the search trends for its users.

    The Cromford Market Index:

    Available on the main page of the Cromford Report: http://cromfordreport.com/ (without a subscription)

    • 100 is balanced and prices rise at the rate of inflation, below 100 is a buyer’s market, above 100 is a seller’s market, prices drop below 90, prices rise at 110.
    • On 2/5/2020 we were at 215.1
    • On 3/20/2020 we were at 241
    • On 5/15/2020 we were at 145.2
    • Yesterday we were at 461.4.
    • Prior to this run, the previous peak was 312.9 in the spring of 2005.
    • CMI is the predictor, it moves first and then appreciation follows.

    We are 30% above normal for demand. Supply is about 72% below normal. Our supply was stable for most of the year, just at a very low rate. In December inventory started dropping. Demand also started dropping in December. Supply dropped faster than demand and it is still in favor of sellers. Demand is down 4% but supply is down 5.6%

    On 1/1/21 we were at 432 and now we are in the 461.4, super-fast increase. We cannot even discuss prices going flat, let alone down until CMI starts dropping. This indicator needs to drop in order to even lead to a price decrease. It will still take us a year to get to a balanced, aka normal, market for prices to go flat. At this rate, if demand dropped now, prices would not decrease until at least 2022.

    Affordability:

    What could possibly slow this down? Affordability challenges.

    At the end of 2018 we dropped below the affordability range and we had an immediate decline in demand. We almost hit balance in 2018. Then in 2019 we got back into the normal affordability range.

    Normal is 60-75 in Q3 2020 we were at 61.9. For Q4 2020 Tina expects that we will drop below normal affordability. Makes it more expensive for buyers.

    The low-interest rates have kept the median monthly payment down. Since 2018 the monthly PITI has increased by $23 while the median sales price is up $68,000 to $328,000. The PITI for the median home is $1,574 with an interest rate of 2.67%. In 2018 median the median home was $259,995 and with a 4.87% interest rate, the PITI was $1,551 a month.

    Emotions:

    Supply is dropping and demand is still high. Until the demand and supply come closer to each other the prices will keep going up. The numbers simply do not support the theory that prices will go down.

    People are emotional about what they think will happen. But the numbers do not support it.

    Not a good idea to sell and rent for a year. Rents are increasing faster than sales prices. In 2005 with decreasing rental rates, it made sense. In 2020 rents increased $254 a month or 16%.

    It is not great to buy in a buyer’s market and then watch their value decline. It is best to buy at the end of the buyer’s market. The beginning of a buyer’s market has the highest prices.

    It is always good to buy at the beginning of a seller’s market and sell at the end of a seller’s market.

    Are we in a peak market? No, will prices appreciate from here? Yes. The numbers all point to yes.

    We are not at the peak.

    To truly time the market, buyers needed to purchase real estate in 2015. That was the beginning of our seller’s market.

    Inventory:

    • We are 52% below where we were at this time in 2020.
    • The first week of January is always the lowest supply week.
    • January 2021 was the lowest first week in January in at least 20 years. Historically low. Shockingly low.
    • Seasonally adjusted, we should have 21,000-25,000 the second week of January. Not 5,000!
    • About 10% of all listings in MLS are outside of greater Phoenix. We are way, way, way low.
    • We had 10% more listings in Q4 2020 than in Q4 2019.
    • We had 12.5% more listings in December 2020 than in December 2019 but have 31% greater demand.
    • In 2020, about 100,000 homes were listed, 38 than in 2019.
    • New listings are 36% below January 2020. There were only 2,088 new listings in the first 11 days of the year.

    New Builds & Developments:

    • Single-family permits are up 24.1% through November 2020.
    • Builders are struggling to maintain a healthy labor force
    • Lumber prices increased by 161% due to fires in the west and a beetle infestation in the east.
    • Multi-family permits are by 21.6% through November 2020. 90% is for rentals only about 10% is for sale.
    • Multi-family sales increased by 0% from 2019 to 2020.
    • In the past 8 months resale take off in sales past new home sales. New home sales are recorded once it closes and people move in, usually are negotiated 8-10 months prior.
    • New single-family median sales price increased by 6.1% in 2020.
    • New single-family sales volume increased by 15%.

    Builders are building in many areas throughout the valley around job expansion. Tons in Florence and Casa Grande. The Town of Maricopa is getting a hospital. Be sure to check out the Land Use Explorer http://geo.azmag.gov/maps/landuse/ on the Maricopa County Association of Governments website, https://www.azmag.gov/Programs/Maps-and-Data. The Land Use Explorer shows expansion, what is approved, proposed and pending.

    Demand:

    • Listings under contract are up 20.1% year over year. Tina expects to see a spike in under contract listings through May.
    • A lot of listings are selling before they actually hit the MLS. Coming soon never gets counted towards supply because it goes straight into under contract.
    • 33% of all closings in December were for over asking.
    • So far in January, we are at 35% over asking.
    • The median over amount is $5,500.
    • Very few concessions paid. Only 10% of closings had any seller concessions. Huge drop, 60% decrease a year ago.
    • Year over year appreciation for resale homes is 21.6%.

    2020 Records:

    • Q4 2020 the best Q4 ever. We had 27,804 sales, up 25% from 2019.
    • Sales only 4% more than in 2019 due to the slow spring.
    • Listed 111,000 listings.
    • Sold about 101,000 listings.
    • 90% of everything that was listed sold.
    • Luxury crushed it in 2020, pushed all averages up.
    • The heavy top end is pushing prices up.
    • In 2020 we hit #2 for MLS sales, beat 2019 by 4%. 2005 remains #1 for units sold.
    • In 2020 we #1 for dollar volume. Beat 2019 by 19.5% and blew away 2005.

    Contract Ratio:

    • Contract ratio is 171 right now.
    • For every 100 listings active there are 171 in escrow
    • January is always the lowest for contract ratio and December is always the second-lowest, until 2020 and now December and January are the top months for this year.

    Final Thoughts:

    New listings are under contract in a matter of days.  We are not at the peak, prices will rise probably all the way through 2021. You have time, markets move slowly. Things change over the course of years.

    Prices in 2021 will continue to rise most likely throughout the year. May slow down as demand wanes with rising prices.

    To sign up for a Cromford Report subscription visit http://cromfordreport.com/join-armls.html