the AZ market

Tag: #thisweekinrealestate

  • This Week in Phoenix Real Estate (video)

    In this 7 minute video, I talk about the 4 things you need to know about greater Phoenix real estate this week.

    One – Inventory:

    After stabilizing for a few months this summer and fall, available listing inventory is dropping again. We are down to 6,800 active listings. That is down 18% since last month and 50% year over year. It is also 67% below normal.

    Our demand is 34% above normal, coupled with incredibly low inventory buyers are struggling to get offers accepted. Despite seasonal demand decreases, we still have about 4 buyers for every available listing.

    Two – Appreciation:

    The very low supply and above normal demand has pushed prices up all year. We have been in an appreciating market for 8 years. Year over year, the greater Phoenix is running at about a 17% appreciation rate. The huge increases have made some people afraid we are in a bubble, however, today’s market is dramatically different. Dr. Lawrence Yun said, “There is no comparison” between today’s market and the bubble from 2004-2006.

    Today, we have true demand versus the false demand we had in 2005. Rents decreased during the bubble, people bought houses solely to park money, today people are living in the property and single family rents are appreciating faster than houses for sale. In 2005, there were extremely loose lending options available requiring no money down and lending up to 120% of the purchase price. Today in order to get a loan, a borrower must have a down payment and meet certain criteria.

    Today, the average American homeowner with a mortgage has $194,000 in equity, providing owners with a lot of options. When the market crashed in 2008, few were left with options.

    Three – Lending:

    2020 is on pace to hit nearly $4.4 trillion in first-lien mortgage originations, the largest volume in history.

    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. Chairman Powell realizes that this will take time and is prepared to stay the course throughout the recovery.

    Four – Built to Rent: 

    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. Nationwide, roughly 35% of rentals are single family properties and the demand is rising. There are about 84 million single family residences across the country.

    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. Many of these are 1-2 bedrooms and are roughly 1,000 square feet renting for about $1900 a month.

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

  • This Week in Phoenix Real Estate (video)

    In this 12 minute video Amber Kovarik and I talk about what is happening this week in real estate.

    Today’s Takeaways.

    Right now there are a lot of headlines about how the housing market is softening, that we are turning into a buyers market. That is not the case. What is the case is that there was a slight decrease in contract signings from September to October, a 1.1% decrease. That doesn’t mention that there was still a 20% year over year increase. Seasonality could be coming into play now, in that it does get a little quieter around the holidays. What the bigger factor is lack of inventory. A buyer cannot write an offer on a property that is not for sale.

    To put it in perspective, in the US there are about 140 million housing units. Of those, about 84 million are single family homes. (Greater Phoenix has about 2 million housing units and just over 1.4 million single family homes) Last week, for the first time in history, the number of single family homes for sale nationwide dropped to just below 500,000.

    Greater Phoenix has about 4 buyers for every available listing. In order for the Phoenix market to be balanced we would need 25,000-35,000 active listings, we have 7,300. Aside from New York and San Francisco all other major metros are in similar situations. There are some areas in the country that have sufficient inventory for the demand giving us a national average of about 3 buyers for every listing nationwide.

    Interesting Facts.

    • Demand for primary homes is up 50% and for second homes is up 100%, year over year (Redfin)
    • 19% of buyers paid cash in 2019 and 2020. (HousingWire)
    • For the fourth time, FHFA extended the foreclosure and eviction moratoriums to January 31, 2021. (HousingWire)
    • Mortgage interest rates have hit all-time lows 14 times this year. (MBA)

    Every time we get news that is not favorable for the economy interest rates have gone down. There is so much uncertainty that the fed has just keeps buying more and more mortgage-backed securities. It likely will not go much lower.

    Appraisal delays continue. 45 day escrow periods can help make things go more smoothly. Bring on the harmony to a real estate transaction!

    With the new conforming loan limits a buyer can now purchase a property for $577,000 with 5% down without having to get a jumbo loan.

    With the new FHA limits a buyer can now buy a property for $381,000 with 3.5% down.

  • This Week in Phoenix Real Estate (video)

    In this 4 minute video, I talk about the 4 things that happened this week in real estate that you need to know about.

    ONE.

    Supply. In past years, October usually sees a slight increase in new listings and then a decline in November and December. In October we had a 5% increase in new listings which basically kept up with the elevated levels of demand. In November we have had a decline in new listings, although not as large of as decline in past years. Despite that, demand continues to increase and the new listings are once again no longer keeping up with the demand and inventory is dropping. Demand is over 35% above normal and supply is 64% below normal. As of yesterday we only had about 7700 active listings available, excluding UCB. Low supply with high demand pushes prices higher, which is why we are looking at a potential appreciation of 20% this year. Normal is 3%!

    TWO.

    The build to rent phenomenon continues to gain traction. Greater Phoenix is will soon be home to the largest build to rent community in the country. This year Christopher Todd Communities purchased and is developing 5 separate build to rent neighborhoods, totaling 943 homes.

    THREE.

    Last week, CoStar, the nation’s largest commercial real estate data provider, agreed to purchase Homesnap for $250 million. This is part of an effort to enter the residential real estate space. It already owns apartments.com and purchased the company behind auctions.com earlier this year. CoStar is also a possible contender for the purchase of CoreLogic, the nation’s largest MLS data provider. CoStar founder and CEO, Andy Florance has his sights set on disrupting Zillow’s position as top residential real estate portal.

    FOUR.

    This year we have hit all-time lows for mortgage interest rates on a 30 year fixed mortgage 13 times!

    2020 30-Year Fixed Mortgage Interest Rates

    2020 30-Year Fixed Mortgage Interest Rates

  • This Week in (Greater Phoenix) Real Estate 11/23/2020

    In this 10 minute video I talk about the 3 things that happened this week in real estate that you need to know about.

    One.

    Thursday 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.

    Two.

    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.”

    Three.

    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)

  • 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

  • This Week in (Greater Phoenix) Real Estate 10/5/2020

    Every Monday I spend 15 minutes (or less) discussing what happened this week in real estate, lending, and the economy.

    I apologize for the blurry video! I tried a new platform today.

    Today’s Takeaways:

    Breaking News:

    Judge denied NAR’s motion to dismiss the class action buyer commission law suit filed 18 months ago. Expect more motions in the future. (Inman)

    The AZ Market:

    Supply: New listings have increased by 11% but they were absorbed as quickly as they arrived so our total inventory remains very low. As of yesterday, our inventory is 63.8% below normal. Active listings excluding under contract accepting backups (UCB) are still around 8,100 (we should have 25,000) down over 41% year over year.

    Demand: Pending sales are up 25% year over year, huge despite our low inventory and time of year. Our demand is nearly 27% above normal. Demand rates slowed early in September and picked up some speed towards the end of the month.

    National Real Estate:

    In August we hit 6 million (seasonally adjusted annual rate) existing home sales. The last time we hit that number was December of 2006. Sales were up 10.5% year over year. This is particularly surprising since there were only 1.41 million properties (annualized rate) on the market in August, the lowest level on record, with limited data prior to 1999. (Matthew Gardner, Windermere Chief Economist)

    The Fannie Mae Home Purchase Sentiment Index illustrates consumer confidence for buying and selling real estate. According to the most recent update, from August, consumers believe it is a good time to buy. The buyer consumer confidence index has fully recovered to pre-pandemic levels. What is interesting is that seller consumer confidence has not fully recovered. This is seen in our low inventory levels with continued high demand.

    Many expect that when consumer confidence for selling fully rebounds is when we will see an increase in inventory. As sellers gain confidence and enter the market the extreme sales price appreciation will slow and buyers will have more choices. This will be good for buyers and for the overall health of the real estate market.

    Real Estate News:

    • Realtor.com and Rocket Mortgage announced an advertising partnership that directs buyers to Rocket Mortgage’s pre-approval application for a digital mortgage approval.
    • Facebook announced it is working on a new augmented reality glasses project. Remember Google Glass? Similar but with newer technology. The project is several years from completion. Proptech investors are already planning on how to use it within real estate and property management. Starting in San Francisco and Seattle, Facebook has teams out collecting information via sensors gathering video, audio, and location data. Facebook is collecting data from inside buildings as well.

    Forbearance:

    For the 16th straight week loans in forbearance decreased. They went from 6.93% to 6.87% dropping the number to roughly 3.4 million mortgages enrolled in a forbearance plan. (MBA)

    Remind your clients that there are options to keep them in their houses.

    Resources:

    Economy:

    • College enrollment is down 2.5% year over year. During economic downturns, community colleges tend to see an increase in enrollment however, this year enrollment is down 7.5%. (National Student Clearinghouse Research Center)
    • Personal savings rates have increased to 24% compared to early March when they were 7%. Bank deposits are up $2 trillion in 6 months. (Matt Stephani, Cavanal Hill Investment Management)
    • Elliott Pollack expects that nearly all industries in Greater Phoenix will be fully recovered by the end of 2022 and that housing will continue being the strongest sector.
    • Nationally, new business applications dropped from 27,000 a week to 18,000 a week from mid-March through mid-April. By early July they were up to 40,000 a week, the average is 22,500 a week. Applications have dropped since July but remain 20% above normal. This economy is driving entrepreneurship! (Elliot Eisenberg)

    Please share this with your colleagues and clients.

    Copyright 2020 by Sarah Perkins