the AZ market

Tag: #AmberKovarik

  • This Week in Phoenix Real Estate (video) 1/4/2021

    In this 10 minute video, Amber Kovarik and I discuss the latest in lending and real estate. We cover inventory, demographics, population growth, interest rates, and appraisals.

    One – Inventory:

    As always, be mindful of the headlines. Yes, we did just have 3 months in a row with decreasing numbers going into escrow. There are two reasons. One, seasonality, it is good to have some semblance of seasonality coming into our market. It is a sign of normalization and normal is stable and stable is good for housing.

    The other reason is the low inventory. I know, it is like beating a dead horse. There are very, very few listings on the market. There are like 6100 properties for sale in greater Phoenix and, as of last week, there were only 437,000 single-family residences on the market in the whole country! Dr. Lawrence Yun has said several times the decline in listings under contract is due to lack of inventory.

    Despite the month-over-month decline, nationwide, through November existing home sales are up nearly 26%!

    Two – Housing Demographics:

    There is a lot of fear about a bubble. There is a lot of data and there are many moving parts, particularly with eviction and foreclosure moratoriums, it is hard to know what will happen next. There are some economists that say that due to housing demographics and timing, COVID actually slowed down the housing market. What I mean by the demographics is that right now the biggest group of millennials are aged 26-32 which is the time when many are getting married, having kids, and settling down. This is the time when most people buy houses. We are also talking about the largest generation and most well-educated generation. Unemployment has hit people the hardest with a high school education or less. Given that this population is the most well educated in history, it is the largest home-buying generation. This extremely large buyer pool is expected to drive a significant amount of real estate transactions from 2020 through the end of 2024. We just need more inventory!

    Three – Census:

    The preliminary census numbers are showing that AZ has had about 1 million people move here from 2010-2020. This could entitle us to another seat in Congress. California had its first-ever drop in population. The counties that drive the largest relocation to AZ is LA County and San Diego County.

    The full census numbers should be out in March.

    Four – Interest Rates:

    Rates have been insulated by the Fed buying mortgage-backed securities. The Georgia Senate race could impact rates in that if a new party becomes the controlling party in the Senate, the markets usually move which could push rates. The market likes stability when things change markets shift. This could create volatility.

    Increased rates will put pressure on affordability. The current low rates are helping with affordability during a time of double-digit appreciation.

    Five – Appraisals:

    Appraisals are still coming in low from time to time. It seems to happen more often when the listing agent does not communicate with the appraiser, prepping them with the comps and other information supporting the price. There are some methods that are working when dealing with a low appraisal. Amber has appraisal gap strategies that are helping buyers win offers.

  • This Week in (Greater Phoenix) Real Estate 11/16/2020

    In this 8 minute video, Amber Kovarik and I discuss the 5 things you need to know about that happened this week in real estate.

    One.

    Last week NAR’s board of directors approved changes to its Code of Ethics and Standards of Practice. According to Andrea Brambila of Iman, 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.”

    Two.

    Supply & Demand. Single family rentals are appreciating faster than single family sales. Today a renter will pay more for the median single family home than would a buyer for the same property. Rents have increased 12% since May. Listings have increased but have been absorbed almost immediately so the inventory increase is not apparent. New listings increased 13% in Q3 2020. New listings in October increased by 5%. For the last month or so we have been hanging out at roughly 8400 active listings excluding UCB. We would like to see that number closer to 25,000.

    Three.

    A $15,000 first time homebuyer credit is part of the housing proposal created by President-elect Joe Biden. Dr. Lawrence Yun, Chief Economist for NAR 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.”

    Four.

    Fannie Mae and Freddie Mac have changed their guidance and will now categorize a sale as being caught up on a mortgage that had been in forbearance. There are two ways to be eligible for a new loan after being in forbearance. The borrower can get caught up, either through a sale or the forborne amount was paid in pull or 3 months of consecutive payments through the forbearance plan/loan modification.

    Five.

    Rate Update. Expecting low rates for the foreseeable future. Stocks are doing well due to the vaccine announcements. FED stated it will continue buying mortgage backed securities to maintain stability and will even increase purchasing if need be.

  • This Week in (Greater Phoenix) Real Estate 11/2/2020

    In this 8 minute video, Amber Kovarik and I discuss the latest in real estate and lending. 2020 is outselling the past few years with far less inventory! The numbers are incredible! And as always, be wary of misleading headlines!

  • This Week in (Greater Phoenix) Real Estate 10/26/2020

    In this 14 minute video, Amber Kovarik and I discuss the latest on housing, lending, and the economy. We go into detail on 2020 numbers, supply & demand, future projections in lending, forbearance, delinquencies, and some cool Arizona news!

    Today’s Takeaways:

    The AZ Market:

    Supply: Inventory is 63% below normal. Active listings excluding UCB crept up slightly to about 8,400 but is still down 43% year over year.

    Demand: Pending sales are up 24% year over year, incredible considering the low inventory. Our demand continues to rise quickly and is 31% above normal.

    Sales & Prices: The median sales price is $330,000, up 18% year over year. The median sales price has increased by 12% since June.

    Rentals: At 5.8%, Phoenix had the largest single family, rental appreciation in the country in August, year over year. Nationwide the increase was 2.1%. (Corelogic)

    National Real Estate:

    • Existing home sales surged 21% in September year over year, pushing us to a seasonally adjusted annual rate of 6.5 million sales, all while inventory is at record lows. (NAR)
      • Pre-pandemic 2020 projections were for about 5.8 million sales.
      • In 2019 there were 5.35 million sales.
    • Rental growth is outpacing homeownership growth. Roughly 2/3 of households are owner-occupied while 1/3 are rentals. Lately, especially in the more expensive urban areas, rentals make up 50% of households. (Inman)
    • Through the first 9 months of 2020 there were 400,000 fewer listings on the market than there were through the first 9 months of 2019. (KCM)
    • Phoenix is the #2 metro area for in-migration from March through September. (Orbital Insight)
      • Nationwide people are moving to more favorable climates, with more favorable taxes, lower cost of living, and less social unrest. (Ivy Zelman)
    • Population growth in Arizona, Utah, Idaho, Texas, and Nevada was 20% from 2010-2020.
    • Population growth in Connecticut, Pennsylvania, New York, Illinois, and California was 3% from 2010-2020.

    Wall Street:

    • More and more real estate companies are going public via IPO or SPAC.
    • On August 18 the S&P 500 closed higher than the previous all-time high on February 19, thus ending the shortest bear market in history. (Jeremy Kisner, Surevest)

    Arizona Facts:

    • Arizona has the 3rd lowest percentage of persons born in state at 39.9%. We are behind Nevada at 27.2% and Florida at 35.8%. Louisiana has the highest at 77.6%. (Elliot Eisenberg)
    • The Greater Phoenix Economic Council (GPEC) was named top economic development organization in the country for cities with populations of 500,000 or more. (Rose Law)

    Delinquencies:

    • Over 6 million households (renters and owners) were either late or missed their full or partial payment in September. (MBA, RIHA)
      • 8.5% or 2.82 million renters missed their payment.
      • 7.1% or 3.37 million owners missed their payment.
    • Early-stage delinquencies, less than 90 days, have dropped down to pre-pandemic levels. (Black Knight)
    • Seriously delinquent, 90+ days, mortgages dropped by 43,000 in September. The first sizeable drop since the onset of COVID 19. (Black Knight)

    Forbearance:

    • FHFA and FHA extended pandemic forbearance plan options to single family owners with FHA loans through 12/31/2020. It was initially set to expire 10/30/2020. FHA forbearance plans are 6 months with an option to extend for an additional 6 months.
    • Mortgages in forbearance dropped from 6.32% to 5.92% to roughly 3 million loans, down from the previous week’s 3.2 million loans. (MBA)
    • This removes another 200,000 from forbearance programs. One reason given for the 400,000 over the past two weeks coming off is that borrowers do not know they can stay on or further negotiate their plans. If borrowers do not make any phone calls or connect with their lenders or servicers they are automatically being removed from their forbearance plan. This is a big deal.

    Lending:

    • According to the Mortgage Bankers Association (MBA), purchase mortgage originations for 2021 are expected to increase by 8.5% from 2020. They expect 2021 will hit an all-time record of $1.54 trillion, just for purchase!
    • Once we are at 5% unemployment interest rates will be on the rise again. At the end of 2021 rates are expected to be around 3.5%.
    • With the slow rate increases refinances are expected to decrease from $1.8 trillion in total volume in 2020 to $950 billion in 2021 and $500 billion in 2022.

    Please share this with your colleagues and clients.

    Copyright 2020 by Sarah Perkins

  • This Week in (Greater Phoenix) Real Estate 10/19/2020

    In this 13 minute video, Amber Kovarik and I discuss the latest on housing, lending, and the economy. We go into detail on supply & demand, future projections, warning for waiting, strategies to help buyers get their offers accepted, equity positions, and more!

    Today’s Takeaways:

    Housing continues to outperform all other economic sectors. It is bolstering our economy and keeping many people employed. There are many outside pressures pushing very hard and yet real estate continues to amaze economists and industry experts alike. Stay mindful of the misleading headlines and continue sharing current information with your clients.

    Logan Mohtashami writes on HousingWire, “Stay positive, healthy and safe – and try not to create problems for yourselves by buying into boy-band folklore and fairytales.”

    Supply & Demand:

    Throughout the entire pandemic real estate as outperformed expert’s forecasts and economists have been surprised and surprised again by the resilience of the residential market. Check out these leading indicators:

    Inventory:

    Nationwide inventory is down 38% and the national median sales price is up 12.9% year over year to $350,000. (Realtor.com)

    Affordability:

    Ivy Zelman, a premier real estate expert, and several other economists have a warning and advice for us in real estate. It is to take advantage now of the historic low rates. The low inventory is likely to stay for a long period of time, especially in the move up market. This pushes up prices. The low mortgage rates are making homes more affordable driving up demand. These rates will not last forever and as rates increase along with the price increases, fewer people will want to move or be able to move. And more people will want to stay with their incredibly low rates. Creating a slowing of the market. Zelman calls it an “immobile market” and believes we will start seeing it in 2022. She expects 2021 to remain strong. But as the economy rebounds and gets healthier the interest rates will rise. A quarter point increase in rates equals a 3% increase in monthly payment which hurts affordability.

    The bottom line is that now is the time to be talking to everyone you know who is even slightly considering a move. Now is the time they can sell and take advantage of the low rates and the fast sales. If they are waiting, they will only be waiting for higher prices and tougher affordability which could lead to longer sales times. Based on her projections we have 15 months to get everyone into their dream home now before we see a potential market shift. And that market shift is only a slowness, no depreciation and certainly no crash. She says there is about a 0% chance of a foreclosure crisis.

    Zelman said, “Whatever they are waiting for, there is no good reason to wait. Waiting will only cost the consumer more.” She said now is the time to take advantage of this once in a lifetime opportunity.

    Forbearance & Equity:

    • Total loans in forbearance dropped from 3.4 million to 3.2 million last week bring the percentage down to 6.32% from 6.81%.
    • Two-thirds of borrowers exiting forbearance were current, repaid forborne amounts, or moved into a permanent loan modification. (MBA)
    • Will not see a flood of foreclosures, American homeowners have 20 year highs in equity.

    Please share this with your colleagues and clients.

    Copyright 2020 by Sarah Perkins

  • This Week in (Greater Phoenix) Real Estate 10/12/2020

    In this 20 minute video, Amber Kovarik and I discuss the latest on housing, lending, and the economy. We go into detail on forbearance, obstacles when purchasing after leaving a forbearance program, helping buyers get their offers accepted, delinquencies, unemployment, and supply & demand in real estate. Greater Phoenix has had a 17% appreciation over the past 12 months!

    Delinquencies:

    • The national non-current (the combination of delinquent and in foreclosure) is 7.2%
    • AZ non-current rate is 5.7%. We have the 12th best rate in the country. Idaho has the lowest non-current rate at 3.8% and Mississippi has the highest non-current rate at 11.7%. (Black Knight)
    • 30-day delinquencies dropped in Q2 2020 indicating new delinquencies may have peaked. (Elliot Eisenberg)
    • Through September 22, 88.9% of mortgages were paid, up from 88.6% in August. (Black Knight)

    Exiting Forbearance:

    In order for a borrower to leave forbearance they have to make 3 consecutive payments and come up with a plan with their servicer or lender on how they will pay back the forborne amount that was deferred while they were in forbearance. One thing that is very important for everyone to know is that forborne payments will be repaid, they are not forgiven.

    Fannie Mae and Freddie Mac recently clarified that if a borrower missed a mortgage payment while in forbearance and did not make 3 timely, consecutive payments post-forbearance they are NOT eligible for new financing whether it is for a new purchase or refinance until 3 consecutive, timely, payments are made.

    There are a number of ways a borrower can leave forbearance, not all of them require the owner to sell their property. Some of these options include:

    • Utilizing a 401K in one of two ways.
      • Individuals are allowed to borrow from their 401K with the option of paying themselves back with interest, since it is a loan being paid back – essentially paying yourself back there are no penalties. Talk to your 401K administrator for details.
      • Through provisions of the CARES act an individual can also withdraw an amount of their 401K with no penalties. Again, talk to your 401K administrator for details.
    • Permanent loan modification or refinance, after making 3 payments in a row, to something that allows borrowers to stay. Some scenarios include adding the forborne amount at the end of the loan, some pay a lump sum to get caught up, some offer payment plans to get caught back up.
    • Rentals are in high demand with quickly appreciating values. What about moving out of the property and renting it out to make up the difference in payments.
    • Sell and buy something more affordable, after 3 payments in a row have been made. Pay off the loan and get a new loan with more agreeable terms.
    • Sell, pay off the loan and forborne amount and rent or move in with family.

    Resources:

    Unemployment:

    September’s numbers came out last Friday showing that our economy added 661,000 jobs. This was below expectations. They did revise up the total of new jobs from August though. The unemployment rate is now 7.9% and we have made up 11.5 million of the 22 million jobs lost, which is over 50%. (US Department of Labor)

    Please share this with your colleagues and clients.

    Copyright 2020 by Sarah Perkins

  • Afternoon Bite 7/20/2020 (Video)

    Every Monday afternoon Amber Kovarik and I talk about what happened this week in our local and national real estate market in 15 minutes or less.

    https://videopress.com/v/BRzI7aXv?posterUrl=https%3A%2F%2Ftheazmarket.com%2Fwp-content%2Fuploads%2F2020%2F06%2Fbite.png&preloadContent=metadata

    Today’s Takeaways:

    Know your numbers to communicate what is really happening in real estate. Provide good information to buyers, sellers, and borrowers. Without actual numbers, it is difficult for a potential consumer to make decisions.

    • According to the US Census Bureau Household Pulse Study, of the nearly 74 million renter-occupied housing units in the country, roughly 16% did not make their June payment. And of the nearly 150 million owner-occupied properties in the country, 5.5% did not make their June payment.
    • In Arizona, of the just over 1.6 million renter-occupied properties 9% did not make their June payment. And of the nearly 3.5 million owner-occupied properties in AZ, only 3.3% did not make their June payment. (US Census Bureau Household Pulse Study)
    • Mortgages in forbearance declined again, for the fourth week in a row. 8.18% of all mortgages are in forbearance, down from 8.39% the previous week. (Mortgage Bankers Association)
    • One-third of mortgages in forbearance are late on their payments. Two-thirds are current. (KCM)
    • Going deeper, of all the mortgages in active forbearance that are late on their mortgage, 77% have at least 20% equity. Only 10% of the past due mortgages have 10% or less equity. (Black Knight)
    • There are two types of unemployment temporary and Core or permanent unemployment. June’s Core unemployment was 5.9%. For comparison, it was 10.5% in April 2010 and 5% in February 2017. (KCM)
    • According to the US Census Bureau, 46% of the people who do not have a job and are over the age of 18 live in households with an income of less than $50,000 a year. These households tend to rent.
    • As economies reopen, we will likely see increases in listings. However, with the surges of new COVID-19 cases across the country (AZ isn’t the worst anymore!) sellers may delay selling, keeping inventories low and prices rising quickly.
    • As the CARES Act is set to expire at the end of the month, delinquencies may rise and that may impact housing however, with the high equity rates, the potential “distressed“ listings will still be regular sales.

    Conclusion:

    Windermere Chief Economist Matthew Gardner said, “We are exactly 120 days into this pandemic and, as much as there were some who fully anticipated that the U.S. housing market would have collapsed already, it simply hasn’t happened — and won’t happen.”

  • Afternoon Bite 6/22/2020 (Video)

    Every Monday afternoon Amber Kovarik and I talk about what happened this week in our local real estate market.

    Today’s Takeaways:

    According to NAR before the pandemic, our housing supply was short by 5-6 million units. Housing starts are still down by 20% year over year.

    Phoenix is still in the ideal affordable range. We are at 63 and the ideal range is 60-75. The higher the number, the more affordable. For a long time, we hung out at 68 and then recently dropped to 63. 59 is considered unaffordable. What that means is based on annual household median income, in Phoenix, it is $72,500; which means that the average AZ family could afford 63% of homes that sold since the beginning of the year.

    Pre-pandemic our inventory was running about 55% below normal. Today we are 52% below normal and it is dropping daily. Pre-pandemic our demand was about 8% above normal. Today we are 4% below normal and only a month ago demand was 20% below normal. As you can see demand is significantly outpacing supply.

    According to Redfin for the week ending on June 14 new listing median asking price is nearly 12% higher than at this time last year and 2% higher than only last week.

    According to a recent Harvard study, wealthier households are spending 17% less than they were in January, while lower-income households are spending only 4% less than they were in January. The study further suggests that the wealthiest 25% of Americans are responsible for 66% of the decline in spending since the beginning of the year.

    Mortgage purchase applications increased for a 9th straight week, leading to a 75% increase since mid-April, a 20% increase year over year, and putting us at an 11 year high.

    Most loan programs are back. 600 credit scores for FHA and VA

    Down payment assistance programs. These are way better than asking for seller concessions in today’s market.

    Rates are super low. Right now about $5,000 in a sales price is equivalent to about $25 a month in payment.

  • Afternoon Bite 5/18/2020 (Video)

    Every Monday Amber Kovarik with Guild Mortgage and I spend 15 minutes (or less) talking about what is currently happening in the real estate market, title, and lending. We give a few key points to share without taking up too much time.

    Today’s Big Takeaways:

    • Cromford Market Index, the best leading market indicator we have, was a 145.8 yesterday. Above 100 is a seller’s market, below 100 is a buyer’s market.
    • Tuesday 5/12 1st day of inventory decline since March 20
    • Thursday 5/14 1st day of no CMI drop since March 20, it fell nearly 100 points in about 2 months. The past 3 weeks the drop has slowed but hasn’t stopped
    • Saturday 5/16 we had our 1st CMI increase and our first demand increase from March 20
    • The demand dropped nearly 28% in the past 2 months and is now increasing
    • We need more inventory. We are still 45% below where we should be
    • Prices remain stable
    • 33 million people have filed for unemployment benefits, however (only) 26 million are receiving unemployment because 7 million are already back at work.
    • 40% of the unemployed make less than $40K a year, it is unlikely that a large proportion were potential home buyers, which is why demand remains more stable
    • In April 76% of people paid their mortgage and/or rent in full
    • In May 69% of people paid their mortgage and/or rent in full
    • On Thursday the CFPB, FHFA and HUD in a joint effort launched a website with info on payment assistance for both renters and borrowers outlined in the CARES Act: https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/
    • Small business owners who received PPP loans are eligible for a home loan.
    • Still no updated guidance on forbearance. There is optimism that this will be addressed soon. Because this is an issue: Simply inquiring about forbearance puts a borrower into forbearance and they will not be able to obtain a new loan until they have 12 months of consecutive payments after being placed in forbearance. Look for this to change as this is very detrimental for those who never end up missing a payment.

    copyright 2020 by Sarah Perkins

  • Afternoon Bite 5/11/2020 (Video)

    Every Monday Amber Kovarik with Guild Mortgage and I spend 15 minutes (or less) talking about what is currently happening in the real estate market, title, and lending. We give a few key points to share without taking up too much time.

    Today’s Big Takeaways:

    • Inventory and demand are increasing, showing that the health of the market is improving
    • April 19th was a turning point for Arizona and the whole country
    • Arizona is running about 45% below where we should be for inventory, our demand has dropped and is at about 20% below normal.
    • When inventory is lower than demand, prices rise.
    • Since April 5th we have seen a 32% increase in week over week growth in new contracts
    • Physical showing requests continue to increase, we have now made up 44% of the 63% drop since the 2/22/2020 peak.
    • Appraisals are coming in low
    • Simply inquiring about forbearance puts a borrower into forbearance and they will not be able to obtain a new loan until they have 12 months of consecutive payments after being placed in forbearance. Look for this to change as this is very detrimental for those who never end up missing a payment.
    • Super low rates are bringing out the side-lined buyers

    copyright 2020 by Sarah Perkins