the AZ market

Category: Weekly Market Update

  • Greater Phoenix Real Estate Update 2/26/2021

    While real estate remains local; the big business behind it is anything but. 2021 has seen many mergers and acquisitions and we expect to see many, many more this year. The journey towards the undefined end-to-end platform continues on, gaining speed in the form of millions and billions of dollars.

    What is end to end? Is it buying a house with a click of a button? Is it bundling real estate, title, and mortgage services from one company? Is it the Zestimate value as the offer amount? Real estate isn’t a grassroots industry anymore.

    The New Zestimate:

    Zillow’s Zestimate is 15 years old and provides a valuation for about 100 million properties nationwide. In recent years Zillow has put a lot of effort into increasing the accuracy of the Zestimate. It uses tax records, machine learning, and artificial intelligence that pulls data from photos. Despite all of that Realtors could easily explain the Zestimate inaccuracy. That was until January 1, 2021. That was when Zillow Homes, the brokerage joined NAR and the local MLS’s. Now armed with an IDX feed, the accuracy improved overnight.

    Yesterday Zillow announced the follow up from a recent promise; the Zillow Zestimate (in 20 markets and on homes that quality) is now a live offer from Zillow Homes; the iBuyer. The company claims only a 1.9% error rate.

    Jeremy Wacksman, Zillow’s Chief Operations Officer said, “There’s a set of houses where we’re getting really confident because there’s a lot of houses like it, or we have a lot of data about your house. Ultimately the offer that Zillow Offers makes is intended to be the actual, precise market value of your house once you tell us more about and we come to see it.”

    The Zestimate live offer is available for qualifying homes that fall within Zillow’s “buy box” which is basically, an average-sized home, around the median price, that only needs light renovations.

    Despite the specific buy box, this impacts how all homeowners will now view the Zestimate. It now seems like an initial offer and not an opinion. For example, a CMA can say a house is worth $350,000 but Zillow just said they’d write a check for $340,000. This is all about perception; not the reality that a property has to qualify. Because now, seller’s see a clear bottom price. Why would they ever accept an offer less than the Zestimate? Yes, in today’s market, getting above the Zestimate, even above the appraised value, is not difficult. However, this too shall pass; nothing lasts forever, especially not in real estate.

    If you do not already, I highly encourage you to check out the Zestimate before going on another listing appointment. Sellers do their homework and they know that number when you arrive, so you should too.

    This impacts FSBOs. They will no longer need help pricing the property. This impacts flippers and do-it-yourself iBuyers, who often purchase for less than the major iBuyers. This impacts the major iBuyers. Redfin has a valuation option already. Opendoor will build one. Could it impact how you build a CMA or how an appraiser appraises? Likely.

    The Zestimate live offer feature is available to qualifying homes in Phoenix and Tucson, AZ; Charlotte and Raleigh, NC; Miami, Jacksonville, Orlando and Tampa, FL; Portland, OR; Denver, Colorado Springs and Fort Collins, CO; Nashville, TN; San Diego, Los Angeles, Riverside and Sacramento, CA; Dallas, Houston and San Antonio, TX; Las Vegas, NV; Atlanta, GA; and Minneapolis, MN.

    Real Estate News:

    • Notarize is offering free notarizations to update old documents, like CC&Rs, to remove racist language in an effort to fight systemic racism in real estate. Learn more here and here.
    • Redfin is getting into the rental market through its $608 million acquisition of RentPath, owner of Rent.com and ApartementGuide.com. The FTC recently rejected CoStar’s attempt to acquire RentPath.
    • On Monday, Josh Team, President of Keller Williams announced he is leaving the company. Hours later, Marc King, a 20 year KW veteran, was announced as Team’s successor.
    • From February 8 – February 14, Manhattan luxury real estate had its best week in 5 years with 38 sales over $4 million for a total volume of $351.6 million.
    • First time home buyers made up 33% of home sales in January, up from 31% in December.

    New Construction:

    • 2020 new construction sales outpaced 2019 by 18.7%.
    • January sales increased 4.3% month over month and 19.3% year over year.

    “New home sales activity started 2021 at a strong pace, with purchase mortgage applications for newly constructed homes jumping nearly 19 percent compared to last January. These results are consistent with the still-increasing pace of single-family housing starts and permitting activity reported over the last several months. The low supply of existing homes on the market, and changing household preferences toward newer, larger homes, continue to spur buyer demand.”  

    Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting

    The AZ Market:

    Housing Policy:

    There are two major features of the latest proposed stimulus bill that impact housing. The $15,000 first time home buyer tax credit, while a definite benefit for buyers, will move demand higher eroding some of that benefit. Logan Mohtashami said, “The best economic sector in the world with rates this low doesn’t need government assistance.”

    The second, likely to have a greater impact, is the repeal of 1031 exchanges for investors making over $400,000 a year. This 100 year old tax law allows investors to exchange property and defer capital gains taxes. Surveys from NAR and Ernst & Young reveal a potential economic slowing, GDP reduction, damages small businesses, and 96% of Realtors surveyed said it would decrease both sales quantity and value.

    National Real Estate:

    “Sales easily could have been even 20% higher if there had been more inventory and more choices. Home sales continue to ascend in the first month of the year, as buyers quickly snatched up virtually every new listing coming on the market.”

    -Dr. Lawrence Yun, Chief Economist for NAR

    • Although we cannot see it or feel it; on a national level, weekly new listings are increasing. They are still being absorbed as quickly as they are listed, leaving us with a total of 336,924 active single-family listings nationwide.
    • Another way to look at the market is the rate of price increases on flipped properties. In some markets, it is upwards of 20%. Nationwide the average is 7.4%, double the average.

    Final Thoughts:

    Housing is 17% of the GDP; a massive number. The industry is changing. Yesterday, Rob Hahn wrote, “The big picture remains the same: certainty, speed, convenience. Consumers want them. We as an industry have to provide them to the best of our abilities. They want to be able to count on us like one, two, three. Provide that, and we should be able to count on them like four, three, two. Zillow has taken a step; now we see how everyone else reacts.” And it isn’t just about Zillow. This applies to everything.

    Please share this with your colleagues and clients.

    Copyright 2021 by Sarah Perkins

  • 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

  • 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

  • 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

  • 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 

  • Greater Phoenix Real Estate Update 1/8/2021

    Welcome to 2021. May this year bring the end of the pandemic, physical/mental/emotional healing, and full classrooms.

    Looking back at 2020, no one expected residential real estate to be the sector to save our economy. The years of underbuilding came to a head as demand increased fueled by record-low mortgage interest rates. Existing homes appreciated by 17% in Greater Phoenix.

    “Nothing sells like a shortage. We have underbuilt new housing relative to demand for a decade. Building will have to exceed household formation for a number of years to reduce the housing stock ‘debt’ we have accumulated.”

    Odeta Kushi, Deputy Chief Economist for First American

    Looking forward, 2021 looks like it will shape up to be another very strong year for housing.

    Politics:

    Just before the November election I wrote about politics and housing and discussed how markets are the strongest with a split Congress. Click here for that post. With the Georgia run-off results, we no longer have a split Congress, what does that mean for real estate?

    Real estate responds to policy, not to the controlling party. However, given that Congress and the White House will all be on the same side of the aisle, it will be easier for President-elect Biden to push through his proposed policies. While this is the case, both the house and the Senate majorities have TINY majorities. In the house, in order to have the majority, a party needs to have at least 218 seats. Currently, House Democrats have 222 seats, the smallest majority in over 20 years. The Senate is 50/50 plus the Vice President’s deciding vote. Since all of Congress is nearly evenly split it is unlikely super progressive policy will pass. Experts believe we will see more centrist voting.

    One thing that does bode well for housing is that it is very bi-partisan, both sides of the aisle support housing initiatives.

    As part of his campaign promises, President-elect Biden has two proposed policies that directly impact real estate.

    The first is getting rid of 1031 exchanges altogether. The 2017 Tax Cuts and Jobs Act eliminated all 1031 exchanges outside of real estate. Previously you could do a 1031 on anything from airplanes to artwork. Now the proposal is to cut the 100-year-old tax law completely. The additional tax revenue would then be slated for free pre-kindergarten and senior care. This impacts both commercial and residential real estate. This is very unpopular in commercial real estate. Experts are afraid that it will significantly decrease the number of transactions each year. NAR opposes this.

    The second proposed policy is a $15,000 first time home buyer tax credit that buyers will be able to use as part of their down payment. Lawmakers and politicians are trying to help first-time homebuyers compete in quickly appreciating markets but they do not understand real estate enough to know what kind of impact that will have on the markets. Creating more demand in an already tight market will only drive prices up further and faster. NAR supports this.

    There is also the question of mortgage regulation. The Biden administration is appointing new leadership for many agencies including the CFPB. Under the Obama administration, the CFPB was heavy into policing and fining financial institutions, like mortgage lenders and title companies. And under the Trump administration, much of the CFPB’s regulatory power was stripped. What it will look like under the Biden administration is still unknown.

    National Real Estate:

    • Nationwide, available single-family homes dropped down to 419,000 as of Monday. That is 60% below normal. (Altos)
    • In late December a second stimulus package was signed by President Trump. In this recent post, I discuss the stimulus’s impact on housing.
    • Headlines continue mentioning month over month sales declines at the end of 2020 while they exclude the 26% year over year sales increase in existing home sales through November. Inventory shortages are the primary culprit. Buyers cannot buy houses that are not for sale. (NAR)

    “In the short term, existing home sales and housing data will moderate to a more normal trend. And this will be a good thing, so don’t buy into any doom and gloom forecasts based on some moderation of the ‘not-normal’: parabolic data. Keep in mind that the years 2020-2024 have the best housing demographics ever recorded in history, which means we have a healthy number of replacement buyers. Only higher mortgage rates can cool off demand – and that could be a good thing because the best housing market is a stable one.”

    Logan Mohtashami, Analyst & Economist for HousingWire

    Housing Demographics:

    Mohtashami explains economics as housing demographics and the recent years have set the stage for an incredibly strong housing market from 2020 through 2024 due to the roughly 32 million Millennials aged 27-33; prime home-buying age. Not only is the Millennial generation the largest, but it is also the most highly educated generation. Not all 32 million will be buyers but First American estimates that 15 million of them will buy homes in the next 10 years. These are what Mohtashami calls replacement buyers, keeping the demand high and inventory low for years to come.

    Lending & Forbearance:

    After hitting all-time lows 16 times in 2020, mortgage rates did it again yesterday, hitting a new all-time low of 2.65% for a 30 year fixed mortgage. Despite the newest low, the chief economists of Freddie Mac and MBA both expect rates to move closer to 3% throughout the year. (Freddie Mac)

    In a recent article, Tim Glaze with HousingWire said, “Consider the state of mortgage rates over the last 40 years: In the 1980s, Len Kiefer of Freddie Mac noted, 30-year mortgage rates averaged 12%; in the 1990s, they averaged 8%; in the 2000s, they averaged 6%; and in the 2010s, rates averaged around 4%.”

    Frank Nothaft, Chief Economist for CoreLogic said, “The housing industry is the most interest-rate sensitive sector in the economy.  When mortgage rates are low, they drive buyer demand and owner refinance, fueling home sales and home purchase and refi originations. We expect home sales in 2021 to be more than in 2020. In fact, we expect home sales relative to the housing stock, a measure of home ‘turnover’, in 2021 to be above the average annual turnover rate of the prior two decades.”

    Forbearance info changes regularly. This post from Wednesday includes the most recent forbearance numbers and exits. The bottom line is that 13% of the forbearance exits, leave without a loss mitigation plan in place. (MBA)

    The AZ Market:

    • Join us on Zoom next Thursday as Tina Tamboer with the Cromford Report does a market update all about Greater Phoenix. Click here for details and registration.
    • Inventory is very low; 70.6% below normal and 53% below this time last year.
    • Demand remains high. It is 31% above normal, a year ago it was 2.4% above normal.
    • We have just over 4 buyers for every listing available on the market.
    • 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 data should be released in March.
    • Valley new home permits are up 16% year over year. (Home Builders Association of Central Arizona)

    Real Estate News:

    • PLS, formerly The Pocket Listing Service, rebranded and relaunched as The Property Listing Service after altering its business to fit within the Clear Cooperation Policy and now shows exclusive listings to the public. (Inman)
    • CoStar purchased the URL houses.com, furthering its entry as a real estate portal with intentions to compete with Zillow. This came shortly after the FTC approved the $250 million acquisition of Homesnap. (Inman)
    • RedfinNow, Redfin’s iBuyer launched in Phoenix this month. Before Opendoor went public RedfinNow referred iBuyer business to Opendoor in markets where RedfinNow did not have a presence. It seems as though that referral partnership is no longer. (HousingWire)

    Final Thoughts:

    Continue being the voice of reason for scared sellers and nervous buyers. Use your market knowledge to bring value and confidence to your clients. And let’s continue being part of the solution.

    Please share this with your colleagues and clients.

    Copyright 2020 by Sarah Perkins

  • Greater Phoenix Real Estate Update 12/18/2020

    Unsurprisingly, the US housing market will finish out the year as the best performing sector in our entire economy. It is good to be part of the solution. Given the performance, low inventory, and low-interest rates driving up demand, a new challenge is emerging – affordability.

    Experts forecast a stabilizing housing market for 2021. A stable housing market is good. It is expected that inventory will rise and prices will continue to increase, only at a slower rate. This is not a collapse, it is normalization and it is the path towards stability. Be mindful of the fear-mongering headlines, no bubble, no collapse, no foreclosure crisis. In 1710, writer Jonathan Swift wrote, “Falsehood flies and the Truth comes limping after it.” Somethings never change.

    Economy.

    Elliott Pollack summed it up with, “The economy will normalize in the second quarter of 2021 due to having COVID-19 vaccines in wide distribution. There is significant pent-up demand in the real estate market, and people are sitting on gobs of cash because they’ve had nowhere to spend it for the past nine months, so we will see explosive growth at first, then continue to grow at above normal trend lines through 2023.”

    The Phoenix metro area ranks as the top U.S. job market in 2020 among bigger cities and Arizona has the third-best job market among states trailing only Utah and Idaho. (Elliott Pollack)

    Real Estate News.

    • On 12/21/2020 Opendoor will be publicly traded on the NASDAQ with the symbol “OPEN.”
    • Mr. Cooper, formerly Nationstar, settled with the Consumer Financial Protection Bureau (CFPB) and will refund $90 million to customers and will pay $6.5 million in damages for foreclosing on borrowers after loan modifications were completed. (HousingWire)
    • Knock Nest is now available in Phoenix. It is a leaseback program that allows homeowners to sell their property Knock and then rent it back from them. Leases have 12 month terms after which the seller turned renter has the option to renew the lease, buy the property back, or move out.
    • Last week Airbnb had the largest IPO in 2020 with an opening trade valued at $101.6 billion; as of opening day, Airbnb is worth more than the three largest hotel chains combined, which are Hilton, Marriot, and Intercontinental. (Business Insiders)
    • Forbes is launching an exclusive, international luxury listing marketplace. The platform is invite only and the minimum listing price allowed is $2 million.
    • CoStar is unlikely to unseat Zillow’s clear position as the most visited portal. However it continues to make moves to create more competition between the two companies. With the acquisition of Homesnap, CoStar is creating new competitors for subsidiaries of Zillow’s who currently have no competitors, such as StreetEasy in NYC. (Inman)

    The AZ Market.

    Cromford Market Index (CMI): The CMI is the best leading indicator available (balance is 100, above 100 is a seller’s market and below 100 is a buyer’s market. Prices rise at 110 and drop at 90). Yesterday it was 400.1, an all-time record high. A week ago it was 387.7, a lot of movement in a week! On May 15 it hit bottom at 145.2.

    Supply: The reason for the CMI’s height is low inventory. After stabilizing for a few months this summer and fall, available listing inventory is dropping again. We are down to 6,645 active listings excluding UCB. That is down 18% since last month and 50% year over year. It is also 66.4% below normal.

    Demand: Our demand is 34.4% above normal, coupled with incredibly low inventory buyers are struggling to get offers accepted. Despite seasonal demand decreases, we still have 4.2 buyers for every available listing.

    • The Taiwan Semiconductor Manufacturing Company just paid $89 million for 1,128 acres in north Phoenix. The factory expects to bring 1,600-1,900 new jobs. (Rose Law Group)
    • According to Realtor.com, Phoenix is #6 of the top 10 strongest housing markets expected in 2021, rankings based on job market strength, affordability (despite rising prices, we are the cheapest big city in the country), and proximity to other major metros.
    • NAR and 20 economists forecasted the top 10 strongest metros for economic strength based on domestic migration, low unemployment, mobility, and more…and Phoenix came in at #1!!

    National Real Estate.

    • As of Monday, there were only 469,000 single-family residences for sale nationwide. There is a total of 84 million single-family residences which means only 0.6% is on the market. (Altos)
    • With 1.4 million NAR members and only 469,000 listings there are 3 Realtors for every available single family listing in the country.
    • Inventory usually drops from Thanksgiving through the second week of January, at which point could see 50,000-60,000 new listings hitting the market each week thereafter. (Altos)

    Appreciation.

    • The average national, annual appreciation since 1991 is 3.8%. This is where the 3-4% average came from. (KCM)
    • The average national, annual appreciation since 2012 is 6.1%. (KCM)
    • Greater Phoenix has seen a nearly 17% appreciation year over year, which has created some concerns about the 2005 bubble, however today’s market is dramatically different.
    • Earlier in the year, the average American homeowner with a mortgage had $177,000 in equity. Today it is $194,000, few had that kind of equity in 2005.

    “Such a frenzy of activity, reminiscent of 2006, raises questions about a bubble and the potential for a painful crash. The answer: THERE IS NO COMPARISON. Back in 2006, dubious adjustable-rate mortgages taxed many buyers’ budgets. Some loans didn’t even require income documentation. Today, buyers are taking out 30-year fixed-rate mortgages. Fourteen years ago, there were 3.8 million homes listed for sale, and home builders were putting up about 2 million new units. Now, inventory is only about 1.5 million homes, and home builders are under producing relative to historical averages.”

    Dr. Lawrence Yun, Chief economist for Nar

    Forbearance.

    After 25 weeks of decreases, we had 2 weeks of increases, followed by a week of staying flat, and now last week, we had a decline in total mortgage loans in forbearance. It dropped from 5.54% to 5.48% or roughly 2.7 million borrowers. This is good news, since 3 weeks makes a trend.

    While people are leaving their forbearance plans, more are leaving through a loan modification which indicates that not everyone has been able to get caught back up, even if they are working.

    Forbearance numbers by stage:

    • Just under 19% are in the initial stage.
    • Just under 79% are on extension.
    • About 2.5% are re-entries.

    Of the total forbearance exits from June 1 through December 6, 2020:

    • 30% continued to make their payments throughout the term.
    • 16% were caught up upon plan exit.
    • 13% did not make all of their payments and exited forbearance without a loss mitigation plan in place.

    For more details on this, click here to see my latest forbearance video.

    Delinquencies.

    While yes, there will be homeowners impacted by foreclosure, it will not be a giant number like we saw in 2009-2012. We are not in a bubble, the today’s price appreciation is due to a supply and demand imbalance, not false demand as was the case in 2005.

    • Keep in mind all loans in forbearance that are late are marked as delinquent despite not being penalized for being late. (Black Knight)
    • Delinquencies improved in October, decreasing by 3.3% to 6.44%, their lowest level since March. At 1.8 million, seriously delinquent loans, which are 90+ days late is dropping but is still 5x what it was in February. (Black Knight)
    • Arizona’s delinquency rate is 5.4%, (national is 6.4%) there are 13 states with lower delinquency rates than AZ so we are almost in the top-performing quarter of the states. (Black Knight)
    • Delinquency rates are the lowest for condos at 4.7%, then 6.8% for single-family houses, and over 9% for 2-4 unit multifamily properties. (Black Knight)

    “The COVID-19 pandemic has primarily hit renters, but it has impacted a lot of homeowners, too. As the housing market muscles its way through the current economic downturn, I see foreclosures forming more of a trickle rather than a flood.”

    Matthew Gardner, Chief Economist for Windermere

    Lending.

    • Yesterday, for the 15th time this year we hit another all-time low for mortgage interest rates. (Freddie Mac)
    • 2020 is on pace to hit nearly $4.4 trillion in first-lien mortgage originations, the largest volume of any year on record.
    • Q3 2020 set records across the board, with the largest single quarter of purchases ($455 billion), refinances ($867 billion) and total lending ($1.3 trillion) ever recorded. (Blackknight)
    • Through September, about 6.4 million homeowners refinanced their primary mortgage, with that number expected to reach over 9 million by the end of the year.
    • Of the roughly 138 million US housing units, 42% have no mortgage, of the roughly 77 million that do have a mortgage about 50% have interest rates in the 4s% or higher. (KCM)
    • While the Fed does not control mortgage interest rates, it’s consistent purchasing of treasuries and mortgage backed securities has kept rates low. At the most recent meeting, the Fed announced that it would continue purchasing at the same rate until there is “substantial progress” towards an overall stronger economy. (MBA)

    Commercial Real Estate.

    Prior to COVID roughly 6% of employees worked from home. In April, 85% of employees worked from home. In mid-October 73% of employees worked from home and our numbers have stayed about the same since. Dallas has the lowest rate of working from home at 60% and San Francisco has the highest rate of 87%. (Elliot Eisenberg)

    93.6% of renters living in large, professionally managed apartment complexes paid their rent through the end of November. That number was 95.2% through November 2019; a decrease of 1.6%. Despite the decrease, it is better than initially expected. (Elliot Eisenberg)

    About 6% of new single family homes are built to rent and will not enter into the market at all. It is expected that nearly 700,000 will be built by 2030. (RCLCO real estate advisors) According to a 2018 National Bureau of Economic Research study, roughly 35% of rentals are single family properties and the demand is rising.

    Phoenix-based Christopher Todd Properties is currently developing 943 single-family built to rent homes in greater Phoenix. These communities have apartment-style amenities like gated entry, community pool and fitness area, and carports for parking.

    Courtesy of Christopher Todd Properties. Christopher Todd Communities at Stadium, a built-for-rent property of 300 houses in Glendale, AZ.

    Final Thoughts.

    Logan Mohtashami of HousingWire said it perfectly, “And remember, my friends, always be the detective, not the troll. Math, facts, and data matter, and the rest is storytelling.”

    Please share this with your colleagues and clients.

    Copyright 2020 by Sarah Perkins

  • Greater Phoenix Real Estate Update 12/11/2020

    Today is all about the AZ market. Yesterday, Lawyers Title hosted a presentation with Tina Tamboer with the Cromford Report. She always has incredible information to share. Below I have combined most of her information from her presentation, along with some additional information from my research.

    Employment.

    The national unemployment rate through November is 6.7%. The Arizona unemployment rate through November is 8%. After running lower than the rest of the country through October, we had some slight gains in unemployment. Tina called it a stutter step.

    There was a short recovery for some and then a long, slow recovery for the large group remaining unemployed. Early on it was about the age of the unemployed, that has changed and now there is one significant indicator in regards to unemployment. It is education level. The largest group of unemployed Americans, at 64%, have only a high school education. The unemployment rate for those with at least 4 years of college is 11%. It is only 2% for those with a graduate degree. This could be a large factor for housing and why it has not been impacted by the high unemployment rates.

    Forbearance.

    Most forbearance plans are 3, 6, or 9 months long. Unless the borrower requests an extension; once the plan has run its course the borrower is removed from the plan. This is why we often see the biggest drops at the end of the month. (Tina Tamboer)

    After two weeks in a row of slight forbearance count increases, the first increases in 25 weeks, I closely watched the numbers released this week, three weeks make an early trend. And they remained flat, unchanged from the previous week, 5.54% of loans and roughly 2.8 million loans in a forbearance plan. (MBA)

    Initial stage forbearance plans decreased. Like the 2 weeks prior, this past week had increases in forbearance plan extensions and re-entries. Nearly 78% of all loans in forbearance are on extension. (MBA)

    Click here to watch my 12 minute forbearance update video from Wednesday.

    Luxury Real Estate.

    Between corporate profits and a bullish stock market, the luxury real estate market is moving faster than ever.

    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.

    The stock market is on the rise. 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. And we have not seen a recovery like this since 2009!

    Cromford Market Index.

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

    Cromford Market Index Continued.

    • 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 387.7, a new record and nearly double the May low.
    • 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.

    What is driving the CMI this time? We have had different drivers over throughout the past 9 months. At the beginning we had a flat supply line with rising demand. Then supply was remained stable while demand increased. Since Thanksgiving, supply started dropping and demand has been relatively stable, only declining very slightly. Demand remains 35% above normal while supply remains 65% below normal. Tina thinks that there might be a slight decrease in demand due to affordability challenges.

    The CMI has been moving at Ludacris speed. In the first 10 days of December we have gone from 375.6 to yesterday’s 387.7. When the market turns, which it has not done yet, how long is the journey back to balance and what does that look like?

    In 2005 it took 8 months from the turn to reach balance. In 2009 it took 4 months. In 2013 it took 6 months. Based on where we are now, even at a very fast clip, it will take at least 10-12 months to reach balance. Because it is still going up today, it will be even longer. As long as you are in a seller’s market prices rise. Prices may rise more slowly, but they still rise. We are nowhere near a crash, we are very far above normal.

    Affordability.

    Wages did not increase from Q2 2020 to Q3 2020 but affordability dropped. Here is a chart from HousingWire illustrating price increases and wage increases. Wages are not keeping up with appreciation, putting pressure on buyers.

    Greater Phoenix is on the edge of no longer being affordable. At the end of Q3 2020 our affordability rate was 61.9, down 3 points from Q2 2020 while wages remained flat. Below 60 is considered unaffordable. We dropped below the affordable range in 2018 and demand dropped. Demand drops when affordability is challenged. Tina believes that we will drop below 60 by the end of Q4 2020. Even if demand would start to come down now, because we are above normal, prices will still rise. The movement takes a long time. It hasn’t started yet, the day isn’t today but at some point there will be a shift.

    When shifts start prices increase more slowly. That is the prediction for 2021 that prices will go up more slowly.

    Appreciation.

    Year over year appreciation through December is nearly 17%. Nearly all of that appreciation has come since May. With the speed of this increase it is no surprise people fear a bubble. This time is very different from 2005. For a more detailed explanation of the market differences, check out my market comparison here.

    Prices are not going to go down. Don’t wait. We haven’t seen a price decline in 9 years.

    Single family rental demand is through the roof. For today’s median home the full mortgage payment is $1,563. For the same house a renter is paying $1,850 and those prices go up each year, in Q4 2019 the rent was $1,595!

    2001 to 2005 rents dropped by 18%, not real housing demand. NYC and San Francisco have dropping rents and increasing rental vacancies. Tina doesn’t recommend buying in an area with dropping rentals rates.

    Supply.

    Available inventory is down 44.6% from 2019. Yikes! For most of the past several months our inventory levels stayed stable, just at very low levels. We were bringing them on the market very quickly but they were selling just as quickly. Since Thanksgiving supply has not been able to keep up with demand and inventory levels are dropping.

    The big question coming into the New Year is how many new listings will we get in January-March? If we do not get enough new listings in January-March we will have a struggle with supply for most of the year. The first half of the year sells more than then second half (in normal markets)

    Year to date through December 6, we have had a 1.9% increase in new listings year over year. The week after Thanksgiving brought fewer new listings than expected. Even with 28% more new listings, it is not enough to keep up with the 35% above normal demand.

    Builders.

    Last week, DR Horton bought 270 square miles of raw land called Superstition Vistas for $245.5 million. It is bigger than Mesa, Gilbert, Chandler, and Queen Creek combined!

    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. The yellow below shows single family developments.

    • Lots of jobs and future development coming to the area.
    • We have exceeded 2019 total permits through October by 3.5% and by 23% in single-family permits.
    • Multi-family is up 30% but mostly for apartment complexes to rent.
    • The cause of the housing shortage: 2000-2019 we had a population growth of 18% and an increase in total housing units of 9%.

    Demand.

    • A lot of our demand is coming from renters because rent has gone up so much. Lots of millennials buyers. (national, 32% of buyers are first time home buyers)
    • Typically we have around 9,100 listings in escrow at this time of year. Today we have 28% more pendings than normal.
    • December typically sees a decline in supply, lots of cancellations and expirations and, of course, lots of closings.
    • Under contract, regardless of when they went into escrow are up 27.9% year over year.
    • Every year we have a drop in listings under contract in the 2nd half of the year. This year we stayed stable, which never ever happens. Busiest December ever.
    • We had a slight slowdown in new contracts after Thanksgiving, better than last year but still weak.
    • Escrow fallouts are down, year over year.
    • 122% gain in sales from 600-800K, year over year.

    This is the best Q4 ever. More sales than ever before. We are up 25% year over year for the quarter. The week after Thanksgiving, listings over $1 million had an accepted contract rate 102% above this time last year. Year to date sales are up 2.5%, this is not higher because of the March slow down.

    Every year CA is the #1 state feeding buyers to AZ. #1 county is LA County, followed by San Diego County and Orange County.

    Who is buying what?

    • 77.3% of buyers are owner occupied, 12.2% are investor purchases, and 2% are iBuyer purchases.
    • Where did the ibuyers go? They are going into lending and they are going traditional and selling regularly on the market.
    • iBuyer purchases are down 56%.
    • FSBOs are being purchased by ibuyers and investors, a great way to approach FSBOs offering help

    Contract Ratio.

    • 50% of all contracts accepted were on the market for 13 days or less.
    • 35% closed over asking in November. Median over asking is $5,100.
    • For every 100 listings on the market there are 174 in escrow.

    Final Thoughts.

    2021 talking point: forbearance expiration, foreclosure moratorium expiration, and affordability. New listings are up 6% so far in Q4 2020. November new listings were up 2% year over year. November sales were up 26% year over year. Under contract up 28% year over year. Luxury is a huge part of the increase. 2020 has been a rollercoaster. Any stability in 2021 will be welcome.

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

    Please share this with your colleagues and clients.

    Copyright 2020 by Sarah Perkins

  • Greater Phoenix Real Estate Update 11/20/2020

    To say that these are times are weird would be an understatement we have confusing elections, a worldwide pandemic, high unemployment, and the residential real estate sector is supporting the US economy.

    “Pending contracts are up strongly, implying that this winter may be one of the best winters for home sales activity. I mean, it’s not going to be spring or summer, so one has to compare this winter with other past winters. And by winter to winter comparison, this year could be one of the best based on the breakout of the pending contracts at a much higher level.”

    Dr. Lawrence Yun, Chief economist for NAR

    The chaos brings many questions. Are we in a housing bubble? No. Is this sustainable? No. Does that mean we are due for a crash? No.

    The AZ Market.

    Housing & Population Growth:

    The worst thing for a housing market is vacant homes.

    • 2001-2006:
      • Maricopa County’s population grew by 16%.
      • Single family inventory grew 23%.
      • Oversupply of housing.
      • Mortgages were easy to get, crazy appreciation, houses were purchased with no intention of being lived in, lots of vacant homes.
    • 2006-2019:
      • Maricopa County’s population grew up by 26%.
      • Single family inventory grew only 17%.
      • Undersupply of housing.
      • Not at risk for lots of vacancies, there is not enough housing for the population.
    • 2020:
      • Extreme undersupply of housing.
      • Inventory has been dropping for the past 6 years.
      • Very few vacant homes.

    Supply:

    In 2014 our inventory levels were normal at about 25,000 active listings. Inventory has been decreasing over the 6 years since then; we now have around 8,000 available listings, which is 63% below normal. In recent weeks, supply has stabilized for the most part and actually started to increase. The 13% increase of new listings in Q3 2020 – 5% increase in October alone – went unnoticed as they were absorbed as quickly as they came on the market. To put this into context, to have a crash, we would need supply levels like we had in 2007 (around 57,000 active listings) more than 7x the inventory today.

    Demand:

    While supply has stabilized, demand continues to rise. We are adding enough listings to maintain our listing position, even as demand increases. Demand is currently over 35% above normal. This time of year we normally see about 9,500 listings in escrow and this year we have over 13,000 in escrow. In normal cycles, November and December have decreased buyer demand, not this year!

    Sales & Appreciation:

    Sales volume is extraordinary for this time of year. In October 35.4% of sales closed over asking, the average is about $5,400. Sales were up 22% year over year in October.

    October 2020 had a year over year appreciation rate of 19.7%. Tina Tamboer with the Cromford Report expects this number to continue to increase through the end of the year. In January 2020 when Tina mentioned a 10% appreciation for 2020 it was shocking, this is, well, twice as shocking!

    Affordability:

    Affordable housing is quickly becoming a big focus both locally and nationwide. Prices are rising very quickly, at unsustainable levels. That does not mean that prices will drop, it means that they will eventually rise more slowly. This will happen either when supply increases or demand decreases. Prices only decrease in buyer’s markets, not in balanced markets.

    The Home Opportunity Index measures affordability, the normal range is 60-75, meaning that Americans earning the current median income, can afford 60-75% of the homes on the market. The higher the number the more affordable the city.

    Affordability dropped from Q2 2020 to Q3 2020. Nationally, it decreased from 59.6 to 58.3. Greater Phoenix remains more affordable than the national average but our quarter to quarter decrease was much more significant. We dropped from 64.8 in Q2 2020 to 61.9 in Q3 2020, which means Arizona households earning the median income of $72,300 can afford 61.9% of what is on the market. The median income did not change from Q2 to Q3. (NAHB/Wells Fargo)

    “Favorable mortgage rates will continue to bring fresh buyers to the market. However, the affordability situation will not improve even with low-interest rates because housing prices are increasing much too fast.”

    Dr. Lawrence Yun

    New Homes:

    • In October, greater Phoenix saw a 58% year over year increase in new construction sales. (Jim Belfiore)
    • In October, new homes made up 22% of all residential sales in greater Phoenix. (Jim Belfiore)
    • In addition to low supply driving prices up, lumber costs, due to shortages, have increased the cost of a new home by about $16,000. (Bureau of Labor Stats)

    Rentals:

    • Rents have increased by 17% since April. Increasing rents is a sign of true demand. Vacant properties cause declining prices. Vacancies are incredibly low.
    • Monthly mortgage payments are lower, for the median house, than are rents. Rents are increasing faster than purchase prices.
    • Median monthly lease for a single family 1,500-2,000 square foot rental increased by $255 year over year to $1,850.
    • According to Corelogic, in September, Phoenix rents saw a 6.9% year over year increase, the largest in the country. Phoenix has topped the chart every month of 2020.

    Real Estate News:

    • Yesterday the Department of Justice (DOJ) simultaneously filed an anti-trust lawsuit against NAR and a proposed settlement. The two organizations had confidentially reached an agreement that makes changes to NAR’s code of ethics and MLS policies regarding providing information on commissions and MLS participation. Click here for details from the DOJ. Click here for details from NAR.
    • Last week NAR’s board of directors approved changes to its Code of Ethics and Standards of Practice. According to Andrea Brambila of Inman, the changes apply “to all of a Realtor’s activities, not just those related to real estate; prohibit hate and harassing speech against protected classes; prohibit all discrimination, not just willful discrimination, against protected classes; and recommend that ethics violations be considered under membership qualification criteria.”
    • Similar to Picasa, Gold Gate, a new commercial real estate firm, is offering fractional ownership for luxury real estate worldwide. Owners can buy “shares” or months in different luxury properties all over the world.
    • A $15,000 first time homebuyer credit is part of the housing proposal created by President-elect Joe Biden. Dr. Lawrence Yun stated that it is helpful for first-time buyers entering the market but it is only a part of the solution. He went on to say, “But that’s not the full story, the full story is that stimulating the demand just by itself I think is insufficient. Right now the housing market is facing a significant housing shortage. So if we add further stimulus to the demand without addressing the supply… it will simply bump up the prices even higher.”

    Real Estate Trends:

    • In 2020 first time home buyers made up 31% of purchases, down from 33% in 2019 and the lowest level since 1987. (NAR) Increasing affordability challenges are the likely culprit.
    • October new home construction starts increased 14.2% year over year and hit the highest level since 2007. (US Census Bureau)
    • Year over year, iBuyer market share is expected to drop by 50% nationwide by the end of 2020. (Mike DelPrete)

    Lending & Forbearance:

    • Phoenix is the #2 city for VA loan origination during the fiscal year 2020, Phoenix saw a 115% increase year over year, behind Washington DC. (Phoenix Business Journal)
    • The MBA revised its 2020 end of the year projections:
      • An estimated $3.9 trillion in total mortgage originations for 2020, the highest since 2003 and 50% up from 2019.
      • At $1.97 trillion, 2020 will have a 91.5% year over year increase in refinance originations, again highest since 2003.
      • At $1.42 trillion, 2020 will have a 16% year over year increase in purchase originations, the highest since 2005.
    • Last week total mortgages in forbearance dropped to roughly 2.7 million or 5.47%, down from 5.67% the week before.
    • Over 76% of loans in forbearance are on extension, meaning they have been in forbearance for more than 6 months. Just under 21% of loans in forbearance are in the initial stages. (MBA)

    Final Thoughts:

    Jobs continue to recover (we have made up over 50% of the jobs lost), albeit at a slower rate than we saw over the summer. Economists continue to be cautiously optimistic and expect improvement and growth in all sectors. The good news of highly effective vaccines drove Wall Street confidence up. The FED is carefully watching and will adjust its treasury holdings and mortgage backed security purchases to keep things as stable as possible. A busy winter season will likely lead into even busier spring and summer seasons. There is a light at the end of this tunnel and it is getting closer.

    Please share this with your colleagues and clients.

    Copyright 2020 by Sarah Perkins