the AZ market

Tag: #phoenixrealestate

  • Phoenix Area Real Estate Update 8/7/2020

    Disneyland announced its closure due to COVID-19 on March 12. Despite being the usual 31 days, March lasted longer than any other month in history. People all over the world were glued to the news; trying to make sense of what was happening. April 19 was the turning point for Arizona real estate. In May the end was in sight. And then it wasn’t. Now it is August, a time when we used to buy school supplies and take the first day of school photos we are, instead, buying laptops for Kindergarteners begging them to hold still for one more minute.

    The intense political climate has brought more confusion than answers. Today it was announced that 50% of Americans do not trust the media. I was surprised that the number was not higher. We know a lot more now than we did five months ago but a great deal remains to be seen.

    Let’s start with what we do know. Real estate is saving our economy.

    What we know:

    Demand for real estate is intense all over the country and it is reflected in the 11% year over year sales price increase for the last week of July. The national median sales price is up to $315,000. (Redfin)

    TheAZMarket:

    Cromford Market Index (CMI): Is the best leading indicator available (balance is 100, above 100 is a seller’s market, below 100 is a buyer’s market, prices rise at 110, and drop at 90). Yesterday it was 324, the pre-COVID peak was 241 and bottomed out on May 15 at 145.2. This week we blew past the previous record set in 2005 at 312.9.

    Supply: The available inventory continues to stabilize; it just happens to be at an extremely low level. As of yesterday, our inventory is 63.3% below normal. Active listings excluding under contract accepting backups (UCB) are down over 42% year over year and nearly 11% month over month.

    Demand: Pending sales are down 2.5% since last month but up 16% year over year, which is significant given how much lower our inventory is today. Our demand is nearly 19% above normal and increased by 2.6% in the past seven days.

    Sales & Prices: Phoenix metro area closed sales are up nearly 15% month over month and up 16% year over year. The median sales price is $315,000, up 2.5% month over month and nearly 11% year over year. Healthy appreciation is 3% annually.

    Southeast Valley New Listings, Pendings, and Closings:  This week over week comparison for Tempe, Mesa, Chandler, Gilbert, Apache Junction, and Queen Creek since March 15 shows the recent supply stabilization, demand continues to outpace supply, and sales are increasing. Closings always spike at the end of the month.

    What else do we know?

    • Today’s fast-paced, ultra-competitive real estate market is not only due to pent up demand, the historic low-interest rates and dropping inventory are fueling the fire. Realogy CEO Ryan Schneider said, “Today we are seeing inventory down 15 percent or more in every price band compared to a year ago when inventory was already at historic lows.” (Realogy earnings call)
    • NAR has added a new partnership to the Realtor Benefits Program, ReferralExchange, a concierge, lead vetting company. (NAR)
    • Nationally, new unemployment claims last week was 1.2M. 250,000 fewer than the week prior. We are now at 11% unemployment, down from 11.6% the previous week. (US Department of Labor)
    • New Arizona unemployment claims last week declined by 14% from the previous week. (US Department of Labor)
    • Mortgages in forbearance declined for the seventh week in a row, down to 7.67% of all mortgages or roughly 3.8 million loans. (MBA)
    • Delinquencies for commercial mortgage-backed securities hit 9.6% in July, up from 2.62% last year. (Bisnow)
    • Since the beginning of March 72,842 businesses on Yelp permanently closed. (Elliott Pollack)
    • Judge overturns Governor Ducey’s gym closure, stating they must be allowed to prove they can safely operate during the pandemic. (Phoenix New Times)
    • COVID changed homebuyers timelines, and not in the way expected. More are moving up their purchase timelines. (Redfin)

    “Somewhat counterintuitively, the coronavirus-driven recession is propping up the housing market. Homebuyer demand is surging despite GDP taking a historic nosedive in the second quarter, largely because Americans value the home more than ever and are willing to prioritize housing even as they cut back on other expenses. Additionally, the Fed is using low-interest rates to stimulate the economy, which is giving buyers more purchasing power and boosting home sales. But even with low rates, widespread unemployment and financial uncertainty mean not everyone who wants to buy a home is able to.”

    Redfin Chief Economist Daryl Fairweather

    According to a recent report by Point2, using data from Redfin, homebuyer profiles have also changed since the beginning of COVID. Full report: https://www.point2homes.com/news/us-real-estate-news/the-2020-us-homebuyer-profile.html

    What do we think we know?

    • McMansions are making a comeback. Maybe not 5,000 square foot houses, but definitely 3,000 square feet. (Inman)
    • Schools may reopen for in-person learning on 8/17 unless Governor Ducey extends the required delay in tonight’s press conference. In Chandler, where my kids go to school, the first quarter is now completely virtual with the possibility of in-person learning resuming mid-October.
      • Schools are a big part of location, location, location. If they are closed does the demand for a top-notch school district go down?
      • With kids at home, parents cannot go back to work or look for a new job; which will keep the unemployment numbers high.
      • Parents that are working from home are now also simultaneously teaching from home.
    • Both residential and commercial investors are backing away from new purchases. (Bisnow)
    • Economist Elliot Eisenberg said, “In yet another indication of a stalling national economy, after rising by ten percentage points a month in April, May and June, credit card purchases were flat in July and are now ten percent below their pre-Covid-19 level. This flatlining is probably due to rising coronavirus cases and subsequent behavioral changes in addition to state-imposed restrictions. The lack of continued improvement has primarily hurt restaurants/bars, gas stations, lodging, and airlines.”
    • Since February, rent growth is slowing at a greater rate in urban areas than it is in suburban areas. Reaffirming suburban migration trends. (Zillow)
    • Despite dropping to their lowest levels the “Investor Confidence Index” and “Startup Confidence Index,” investors in this sector are optimistic due to warp speed change, innovation, and increased adoption of new technologies within real estate. (MetaProp)

    What we do not know:

    • Typically, the second half of the year sells less than the first half. Starting in July we tend to see an increase in available listings and that increase remains through November. It is too early to tell if 2020 will fit the pattern.
    • 85% of college students want to return to campus. Colleges and universities want to reopen but how? Some economists question whether major universities will be able to weather this storm. What would Tempe look like without ASU? (Chronicles of Higher Education)
    • StreetEasy, a Zillow owned, NYC listing portal is implementing a 24-hour rule similar to the Clear Cooperation Policy. Non-compliance could lead to loss of the system’s tools and advertising. Will other advertising platforms follow suit? (Zillow)
    • eXp, coming off its most profitable quarter ever, purchased Showcase IDX with plans to create a consumer-facing search portal to compete with Zillow, Realtor.com, and Redfin. Is it possible to compete with portals of this size? (Inman)
    • In an effort to bring commercial tenants back into offices, landlords are now offering healthcare benefits through virtual health startup, Eden Health. Will it work? (Bisnow)
    • What is the future of commercial office space? Projections continue to indicate more trouble for the sector due to more permanent work from home options. (Bisnow)
    • The FED is playing a large role in bolstering the economy. The outcomes of the recent expiration of the expanded unemployment benefits created by the CAREs Act remains to be seen.
    • 1031 Exchanges may be on the chopping block again. Getting rid of the nearly 100-year-old tax program to fund Joe Biden’s childcare and elder-care proposal. What does that mean for real estate? (Inman)

    Too cool not to share:

    Loftus Hall, a 900 year old residential property in Ireland hit the market for $2.9M. In AZ an old house was built in 1980! Check it out here. https://www.irishcentral.com/dream-homes/irelands-haunted-house-sale

    Final Thoughts:

    There is a lot of information coming at us all of the time. After being the cause of a major economic downturn 12 years ago, the real estate industry is taking its role as the solution very seriously. We continue to overcome hurdle after hurdle. I am optimistic that we will continue to do so as we prepare for even more hurdles in the coming months.

    Copyright 2020 by Sarah Perkins

  • Candid Conversations with Jenn Newman (video)

    Jenn Newman with the Brokery invited me to be a guest on her video series “Candid Conversations.” In this video interview we discuss the COVID-19 pandemic and it’s implications for the Phoenix metro area real estate market. We cover where we are now, supply and demand, what is happening with prices, and our projections for the future.

    Jenn Newman is a top-selling Realtor who specializes in Phoenix, Scottsdale, and Paradise Valley real estate. She can be reached at 480-848-5222 or www.TheJennNewman.com.

  • Real Estate Market Update

    Real Estate Market Update

    Tina Tamboer, with the Cromford Report, recently presented on the residential real estate market in the Phoenix metro area.
    To subscribe to the Cromford Report, click here: http://cromfordreport.com/join-armls.html. The complete presentation is available to subscribers.
    Here are my notes:
    Forget everything that Tina said at the beginning of 2019, even forget what she said last quarter. Everything is different. Again.
    Cromford Market Index (CMI):

    • 100 is balanced, above 100 is a seller’s market, under 100 is a buyer’s market
    • Cromford Market Index 184.2 (strong seller’s market)
    • Supply 57.2 and dropping
    • Demand index 105.3
    • Every week the CMI has increased significantly
    • we are higher than we were last year
    • CMI hasn’t been this high since 2004
    • Currently tracking 2004 demand

    From February through June of 2019, we went from the weakest seller’s market in 5 years to the strongest seller’s market in 14 years! This happened in a span of 5 months (long term chart)!!
    2005 PTSD?

    • Despite the numbers tracking close to 2005, our market today is very different than in 2005
    • We have real demand today
    • 2005 was false demand
    • we have today something we didn’t have in 2005, skepticism. We are not there now
    • We are not in bubble range but are watching it closely

    Supply & Demand

    • When supply and demand move together, everything is great
    • When they move together above CMI of 100, there are lots of listings, lots of sales
    • When supply and demand move apart, things go crazy, everything becomes unstable
    • February 2019 supply and demand broke up, despite expectations of a flat, calm, easy market
    • 2004 saw higher transaction volume than today due to our low inventory
    • Prices will continue to rise as long as supply and demand move apart
    • Prices are expected to continue to rise through 2019 and into 2020

    Appreciation

    • We are not in a bubble but we are a bit high for regular appreciation
    • We moved above the regular appreciation level at the beginning of 2019
    • Properties asking $150-225K have the highest appreciation rate
    • Properties asking over $500K, 1-3% appreciation rate (balanced market, equals rate of inflation)
    • Properties asking $225-500K, 3-5% appreciation rate (above rate of inflation, seller’s market but not huge gains)
    • Properties asking $150-225K, 6-10% appreciation rate (lots of fix and flip investors, area with the most appreciation)
    • Properties asking under $150K, 2-5% appreciation rate
    • first half of 2019 was tracking behind 2018 for amount in escrow
    • turned in February, we are now tracking above 2018
    • tracking volume of 2017 but with higher price points
    • seasonally between May and December, we have a 30% drop of quantity of properties in escrow
    • best time to buy is the 2nd half of the year, the very best is the 4th quarter, buyers do not give up on the market, this is true for all price points

    What Effects demand?

    • interest rates
    • 2011-2014, 45% of purchases were for cash
    • mortgage rates have dropped, again
    • when rates went up slightly in March, buyers got off the fence. People thought rates hit the bottom.
    • appreciation/depreciation (affordability)
    • affordability index tracks affordability with the changes in wages
    • recent wage increases have put Phoenix back to being affordable
    • 2004 we were affordable, 2005 with a 45% increase we were no longer affordable
    • relocation (inbound)
    • employment/income
    • 2.2M people employed, largest it has ever been
    • Phoenix job growth is outpacing the rest of the country, by increasing 2-3%, nationally it is around 1%
    • 3 continuous months of wage increases (April, May, June)
    • click here for the interactive job-center map on the Maricopa County Association of Governments website: https://geo.azmag.gov/maps/azemployment/
    • loose/tight lending practices
    • population growth
    • tons of inbound relocation
    • Largest group is from southern California
    • #1 source of incoming people LA county
    • #2 San Diego county
    • #3 Chicago
    • Here is the map of to see where people are coming from: https://flowsmapper.geo.census.gov/map.html
    • cost to rent vs buy
    • people will rent when it makes more financial sense to do so
    • 2018 prices are up 8.1%, so far in 2019 prices are up 6.5%
    • people are thinking it is easier for them to rent
    • cost of sfr rent has increased 7.1%/ patio homes rent increased 7.8%
    • median rental $1700 monthly for 1802 square feet
    • Tina used the Zillow calculations to estimate equity over 5 years (60 months)
    • Using the median sales price of $288,000 for a 1805 square foot single family residence, here is the calculator: https://www.zillow.com/mortgage-calculator/ (schedule from Zillow, click full report, go to month 60)
    • If purchased for $246,452; after 5 years with no appreciation owners now have $41,500 in equity
    • Based on the current rate of inflation, with 5 years of payments adds $71,500 in equity
    • 2005 purchase prices increased, rent prices did not, sign of false demand
    • Today rents and purchase prices are rising, sign of true demand
    • consumer sentiment (how you feel about the market, which could trump everything else)
    • we are at historically low rates and everyone is getting raises
    • consumer sentiment is going up when people get raises
    • now people have moreconfidence and feel better about buying

    Fix & Flips

    • Biggest gains ($60,000 or 60% margins) in areas with cheap houses with up and coming employment centers
    • See https://geo.azmag.gov/maps/azemployment/
    • Luxury flippers are making up to 60% in Scottsdale on houses over $500,000
    • Headlines define flips as: a property purchased and sold within 2 years
    • 2013 was the biggest year for flippers
    • Flippers love sellers markets and retreat in balanced or buyers markets
    • iBuyers are doing most of their business between $200K-$250K
    • iBuyer purchases are considered a FSBO, which is $127 per square foot for $200K-$250K
    • iBuyer sells, on average, 7% more than the contract price. average on mls sales 9% increase between $200K-$250K

    What Effects Supply?

    • new home construction
    • appreciation/depreciation (equity)
    • foreclosures
    • relocation (outbound)
    • divorce/illness/death/job losses/tragedy
    • cost to renovate vs move up
    • consumer sentiment (feeling)

    Supply

    • 2019 brand new listings June-July 10.7% lower than in 2018. This is the first time this has happened since 2001
    • we had roughly half the number of employed people and half the number of houses in 2001
    • people don’t want to move
    • when we have sellers turning and buying again, then it is a wash on supply
    • 2010 lots of outbound relocation, loss of employment
    • 2014 was the year for Canadian buyers due to beneficial exchange rates
    • supply is plummeting, we are down 10.9% in supply, southeast valley 9.7% down inventory
    • new home construction eases up options but not a lot
    • properties over $2M inventory is up over 13%

    Prices

    • SE valley average sold price is between $100-400K
    • South Tempe is the only place in the SE Valley with an average over $500K
    • seller asking price is up 6.8% from year over year
    • Pendings are up 12% through July year over year
    • SE valley pendings are up 16% year over year
    • decline in offering closing costs
    • Q3 2015 27.9% of closings included seller concessions
    • today it is way lower
    • 30-40% of sales $150-250K have some sort of closing costs
    • 24-28% of those houses are selling over asking (making up the concessions paid)
    • outskirts of town sellers can negotiate more
    • Tina suggests checking out renovation loans
    • 19% sold over list price July 2019
    • correlates with June 2004
    • in May 2005 it was 38%

    Short Term Rentals

    • Are today’s false demand
    • AZ recently adjusted the regulation to not regulate. now you get a tax id.
    • PV & Sedona started the regulation movement
    • #1 risk of airbnb: everything is wonderful all the time
    • #2. we don’t know if this is the beginning of regulation. will taxes go up?

    Final Thoughts

    • interest rates dropped and everyone got a raise
    • Our market is still considered affordable
    • there is no end in sight for this seller’s market
    • prices have not come down and they are not projected to come down anytime soon. definitely not this year.
    • Next predicted recession is in 2020, will it effect real estate?
    • first thing to drop is tourism during a recession, will make an impact on Airbnb
    • 10% drop is the new definition of a crash. Always ask how a “market crash” is defined when people talk about a crash. Many of us think of the 50-60% days.
  • Chandler Update with Micah Miranda & Councilman Stewart

    Chandler Update with Micah Miranda & Councilman Stewart

    • Priorities
      • Fiscal Responsibility: AAA rating. lowest cost per service.
      • Water preservation & conservation: 100 years of water, they have made lots of arrangements. they do this for each project they do. They get it from the ground water from Gila reservation
      • Transportation
      • Infrastructure
      • Safe neighborhoods
      • Responsible development
    • Chandler Police Chief just won Police Chief of the year for entire USA
      • 2018 lowest crime rate since 1986
    • National awards
    • AAA bond ratings which helps get loans without having to raise taxes.
    • Huge population growth
      • Fewer multifamily projects in 2019 than 2018 Increased single family projects in 2019 Majority of growth is in southeast Chandler
    • Housing
      • 106,688 total housing units
      • 73.5% single family homes
      • 26.5% multi-family homes
      • 141 new houses added a month, on average
    • K-12 Education
      • Chandler Unified School District (CUSD) just won #1 school district in AZ (niche.com) vision 2030 is to be the #1 school district in USA voters approve school spending nearly 100% of the time
    • Currently modernizing Chandler Municipal airport, moving towards jets to accommodate business travelers and making it quieter. The hobby prop planes are louder.
    • Employment
      • economic development is all about bringing in more bodies
      • Existing employers
      • New businesses
      • New Banner hospital coming soon to 202 and Alma School
      • working to build a bigger variety of employment, not just semiconductors
    • Recently won best economic development department in AZ
    • Mica Miranda, head of the department, travels to businesses across the country to recruit to Chandler
    • Chandler is competing with Dallas, Tampa, Austin for businesses
    • By bringing in more businesses and jobs, taxes are subsidized so increases are not needed to support growing population
      • Price Corridor job creation zone Airport job creation zone
    • Commercial building fill rate/vacancy rate (page 17)
      • office 14% flex 7% industrial 5% retail all time low
    • Downtown Updates
    • Park Updates
      • 67 completed parks
      • 3 planned parks
      • 1200 acres of park space
      • talking about youth sports tourism (not a money maker but people want them)
      • adding to tumbleweed, move that towards a more competitive sports complex
      • also working with the schools to use their fields. adding more lights to tumbleweed
    • Lots of events to unify all of the different aspects of Chandler
    • Festivals to connect the old and the new
    • Follow City of Chandler on LinkedIn and Facebook to see updates
    • Sign Up for Chandler’s newsletter at https://www.visitchandler.com/about-chandler/enwsletter/

  • Inman/Industry Update from July 2018

    Inman/Industry Update from July 2018

    Most Talked about at Inman:

    • #1 topic: Compass. A traditional brokerage spending huge amounts of money to advertise that they are a tech company. Goal is to have 20% market share in the top 20 metros nationwide by 2020. They are buying brokerages. Expect to see them in AZ by 2019.
    • #2 topic: Brad Inman’s interview with Gary Keller. Click here to see the full interview: https://www.youtube.com/watch?v=IoHwEgo7CUg
    • #3 topic: Phoenix: all eyes are on us to see how our local industry responds to the marketplace shifts, emerging models, and iBuyers

    Non-Real Estate Emerging Trends:

    • Privacy: voice activation and identity verification
    • Data: Who owns your data? How is it used? How can we protect it?

    *Let me know if you would like the steps to download the data Facebook has on you.

    • Uber & AirBNB are not just platforms anymore. Uber is buying taxis and AirBNB is buying houses and small hotels

    Where We Were:

    • Buyers agents emerged in the late 80s
    • 2005/2006 Zillow asks NAR to share data
    • Realtors moved from sales to customer service=Realtors help buyers buy homes not find homes

    *Let me know if you would like the charts Amanda showed in class

    Emerging Models:

    • Model #1: Tech or templated. Online discount brokerage, call center, selling through an app, limited support, W2 employees. Example: Homie
    • Model #2: Hybrid: great technology and traditional agents, specific services provided, lower costs, either 1099 or W2. Example: Redfin and Purplebricks
    • Model #3: Traditional: high volume, high value, high cost, must include clear value

    New Tools:

    • Glide, http://www.glide.com/, online SPDS. Integrates with Zip Forms. $25 monthly
    • Homesnap, https://www.homesnap.com/pro direct ARMLS & Showingtime integration. Client search and messaging capabilities. Free.
    • Unison, https://www.unison.com/, provides 1/2 of down payment, never paid back, owners share ½ of the equity when property sells within 30 years. no limits.
    • Loftium, https://www.loftium.com/, provides funds for down payment, requires for first 2 years one room is rented on Airbnb. They run their own data to figure out how much they will put down.
    • Propy, https://propy.com/, Sell properties through Blockchain (step by step logical process that executes a contract) Propy handles the exchange and provide the seller in USD. Good for global buyers. Agents does sales call with Propy to post listing. Charge for currency conversion incurred by buyer.
    • Kleard, https://www.kleard.com/, open house sign-in that requires dual verification for everyone

    Database:

    • Liondesk, http://liondesk.com/, CRM, automated messaging, reminders, sign riders, background info research, $25 monthly

    *Let me know if you are interested in our Lawyers Title discount to make it $20 monthly

    *Let me know if you are interested in our Lawyers Title discount to save 10%.

    All-In-One Systems:

    • Evabot, https://www.evabot.ai/, conversational artificial intelligence that chats with consumer and figures out gifts for closing. very conversational, all through text
    • Brivity, https://www.brivity.com/, all in one platform, integrates with ARMLS, Zipforms, Skyslope, CRM. starts at $199 monthly
    • Realsynch, https://www.realsynch.com/, integrates as much as possible but not everything. it is useful while we wait for a lower cost option
    • Chime, https://chime.me/, integrates marketing & client info

    Smart Home Technology:

    Photography:

    • Boxbrownie, https://www.boxbrownie.com/, virtual staging ($32) and photo editing, item removal ($4), best virtual staging. turn daytime photos to dusk photos $28. also do floorplans and 3D plans
    • Proxypics, https://proxypics.com/, stock photo specific to location. photographers compete
    • Restb, https://restb.ai/, looks at photos and is able to decipher what is in the photos. Zillow is using this info for their Zestimate to make the info more accurate. Allows people to search based on what is in the photos. available to build integration through website.

    Robots:

    Voice Automation:

    • VoiceterPro, https://www.voiceterpro.com/, shares your skill on Alexa, downloadable through Amazon apps. Partnering with restb.ai to use for searches, $349 monthly
    • Boomerang, https://www.boomerangapp.com/, use to email from phone. selects emails to respond to first. speed of voice automation

    Augmented Reality:

    • Hutch, https://www.hutch.com/, when showing vacant homes select the type of room and style, place furniture to see how they would look in the room. completely free. they make money by selling products. Zillow has invested in this system.

    Virtual Reality:

    Websites:

    Lead Conversion:

    Lead Generation: