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June 18, 2021

Homeowners got $2 trillion richer during the first three months of the year

Homeowners got $2 trillion richer during the first three months of the year

 

Homeowners are getting richer and richer as prices keep soaring – and the numbers are staggering.

Those with mortgages — about 62% of all properties — saw their equity jump by 20% in the first quarter from a year earlier, according to CoreLogic. This represents a collective cash gain of close to $2 trillion. Per borrower, the average gain was $33,400.

The massive gain is thanks to soaring home prices, which CoreLogic said were up over 11% in March, the end of the quarter, from a year earlier. That’s the sharpest gain since 2006. Prices rose an even stronger 13% in April.

High demand for homes spurred by the coronavirus pandemic amid an already low supply caused bidding wars in markets across the nation. Record-low mortgage rates for much of last year only added to the buying frenzy and helped fuel the price gains.

“Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic,” said Frank Martell, president and CEO of CoreLogic. “These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market, especially for older homeowners and baby boomers who’ve experienced years of price appreciation.”

As of June 1, there were still just over 2 million homeowners in Covid-related mortgage bailout programs, according to the Black Knight real estate data company. As these plans begin to expire, having home equity will help those in trouble. They can still sell and get out with a potential profit if they have to.

“This reduces the likelihood for a large numbers of distressed sales of homeowners to emerge from forbearance later in the year,” CoreLogic chief economist Frank Nothaft said, adding that the average homeowner now has about $216,000 in equity.

 The share of borrowers in a negative equity position, owing more on their mortgages than their homes are worth, consequently dropped. From the fourth quarter of 2020 to the first quarter of 2021, the total number of mortgaged homes in negative equity decreased by 7% to 1.4 million homes, or 2.6% of all mortgaged properties. Annually, the number of underwater homes dropped by 24%.

Home values are expected to cool off in coming months because buyers are already hitting an affordability wall. Sales have begun to slow, and price drops usually follow.

Home prices are not, however, expected to crash, since there is still strong demand for housing, and the demographics support that going forward. As prices moderate, buyers will come back. Unlike the last time home prices crashed, today’s mortgage underwriting is far more stringent.

Posted in Real Estate News
June 16, 2021

With many Americans house rich, here are the best ways to tap your home for cash

Many Americans are suddenly house rich. On paper, anyway.

Soaring home prices have resulted in a record amount of home equity on hand. By the end of last year, roughly 46 million homeowners held a total $7.3 trillion in equity to tap, the largest amount ever recorded, according to Black Knight, a mortgage technology and research firm — the equivalent of roughly $158,000, on average, per homeowner.

That, along with near rock-bottom mortgage interest rates, drove a growing number of borrowers to take money out of their homes.

In the first quarter of 2021, the amount of home equity cashed out rose to $49.6 billion — the highest level since 2007, during the last housing boom. Including home equity lines of credit, Americans pulled out a total of $70.4 billion in just the last few months, according to the most recent data from Freddie Mac.

Although cash-out volume is the highest it’s been in nearly 15 years, considering how much equity homeowners are sitting on, “the amount cashed out is pretty modest,” said Len Kiefer, deputy chief economist at Freddie Mac.

Still, it’s not always easy to access that money. Since the start of the Covid pandemic, the entire industry tightened access to mortgages and several large banks stopped offering home equity lines of credit and cash-out refinances altogether to lower their exposure — or risk — during uncertain economic times.

How a HELOC and a cash-out refinance differ

Up until last year, a HELOC, which is a revolving line of credit but with better rates than a credit card, had been a popular way to borrow against the equity you’ve accumulated in your home.  

The average interest rate on this type of credit is 4.86%, according to Bankrate.com. Meanwhile, credit cards charge nearly 16%, on average.

Some banks do still offer this option, although most have tightened their standards, at least somewhat. That means homeowners must have higher credit scores and lower debt-to-income ratios.

“Generally, the higher your credit score, the easier it is going to be to access home equity,” said LendingTree’s chief economist, Tendayi Kapfidze.

There is, however, a better way to free up some of that money, he added.

“Because interest rates are so low, your best bet is going to be cash-out refinance,” Kapfidze said. “The rates are lower than a home equity loan rate and lower than your existing mortgage rate.”

Homeowners may also be able to deduct the interest on the first $750,000 of the new mortgage if the cash-out funds are used to make capital improvements (although since fewer people now itemize, most households won’t benefit from this write-off).

This works well when mortgage rates fall because even though you are refinancing your current mortgage and taking out a bigger mortgage, you are lowering your interest payment at the same time.

“Substantial opportunity continues to exist today, as nearly $2 trillion in conforming mortgages have the ability to refinance and reduce their interest rate by at least half a percentage point,” said Sam Khater, Freddie Mac’s chief economist, in a recent statement.

“If you haven’t been looking at interest rates over the last year, now would be a great time to check that out,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York.

On a 30-year mortgage, rates below 3% are still widely available. “Even those who received pretty low rates are finding themselves refinancing at lower rates today,” Boneparth said.

Still, the most preferable terms go to borrowers with high credit scores. “Most people have good enough credit but the best rates go to those with 740 or above,” added Greg McBride, chief financial analyst at Bankrate.com.

 

To be sure, there are some limitations for cash-out refinances, as well.

For starters, most lenders will require that you keep at least 20% equity in your home, if not more, as a cushion in case home prices fall.

“This isn’t 2005, you can’t pull out every last nickel you have in the home,” McBride added.

Further, a cash-out refinance often means extending your repayment term, which can squeeze your monthly budget in the long run, along with having to pay closing costs upfront.

As a rule of thumb, “if you can reduce your rate by half to three-quarters of a percentage point, it’s worth looking at,” McBride said. “That’s usually the tipping point.”

Then, “you can earn back your costs in a year and a half,” he said, and “refinancing becomes very compelling.”  

And finally, refinancing opportunities could be short-lived. Mortgage rates won’t stay low forever, particularly as inflation ticks higher.

“That should add some urgency to getting a refinancing done sooner than later,” McBride said. “The economy is heating up — those are the conditions that produce higher mortgage rates.”

Posted in Real Estate News
June 14, 2021

Phoenix Real Estate update for June 2021

Should Buyers Wait to Buy?
Median Sales Price $390K, up 32% from 2020

For Buyers:
There’s a lot of conflicting advice for buyers online these days, and there’s no shortage of headlines advising them to wait. Many authors cite the unpleasantness of multiple competing offers and rising prices as the reason to wait out the market. This is despite their acknowledgment that home values are not expected to stop rising in the near future and that interest rates are expected to eventually rise. 

It’s undeniably more pleasant to purchase a home when there’s a plethora to choose from and you’re the only game in town, however there’s a reason you may be the only buyer in that scenario.  That’s the end of a Seller Market, and signifies the top of price.

The top of price is either the beginning of a Balanced Market or a Buyer Market, which either way means the end of exciting annual appreciation rates. There’s a misconception that waiting for a Buyer Market to buy a home is a good idea.  This is not true.  Home values decline in Buyer Markets because, by definition, there are more homes than buyers to buy them. While that sounds like a magical dream land these days, the reality is that no one likes to purchase a home and watch its value decline or go flat. Ironically, if you want your home to appreciate right after you buy it, then you want to buy in a Seller Market.  Perhaps we should rename Seller Markets “Winner Markets”, because both buyers and sellers win in a sense.

Admittedly, the extreme Seller Market Greater Phoenix is experiencing doesn’t feel like “winning”, but there is some relief on the horizon.  The market has been losing strength since mid-March, but it’s not plummeting.  At it’s current rate of decline, the Greater Phoenix market is still projected to remain in a Seller Market for 16 months. That’s a target of October 2022 before prices stop rising. As the Seller Market weakens, appreciation rates will still be positive moving forward but there will be a little more supply to accommodate demand.  My advice to buyers frustrated with the market, don’t wait for the market to balance out.  Take a breath, take a vacation, but don’t give up. Change is subtle.

For Sellers: 
Typically this time of year we start talking about the imminent “Summer Slowdown” in contract activity as kids are out of school and people take vacations to escape the heat. Last year, the Greater Phoenix market didn’t experience this typical seasonal trend. As trips were cancelled and people stayed home, there was a large surge in purchase contract activity that continued through the end of the year. This year, as people are getting back to some form of normalcy, it looks like we will see a seasonal slowdown in buyer activity once again. If the trend continues and the market follows previous years, we should expect contract activity to slowly decline through the end of the year.

The seasonal slowdown is typically nothing to be concerned about, mainly because there tends to be a dip in new listings as well. However this year there’s an event coming up that could alter that scenario, that is the end of forbearance for many homeowners. While the vast majority of forbearances have ended with homeowners staying in their home, anywhere from 16%-20% have resorted to selling their home one way or another according to the Mortgage Bankers Association. This could result in an increase in supply over the next few months, adding extra days of marketing time to your listing and possibly a few price reductions.  Stay tuned.

May 18, 2021

Phoenix Real Estate update for May 2021

62.8% of Homes Sold Considered Affordable Last Quarter
Median Sales Price Up 27%, Incomes Up 26%

 

Phoenix Real Estate update for May 2021

 

For Buyers:
Despite all the incredible news about rising real estate prices, a family making the median income of $79,000 in Greater Phoenix could still afford 62.8% of what sold in the first quarter of 2021. The National Association of Home Builders (NAHB.org) assumes that “a family can afford to spend 28% of its gross income on housing.” That means 62.8% of homes sold cost their new owners $1,843 per month or less assuming a 10% down payment and including principal, interest, taxes and insurance. According to HUD, $79,000 represents a 26% increase in the local median annual income over the past 5 years; up $16,500 from $62,500 in 2016. 

While reassuring, it doesn’t remove the frustrations of competing for homes in this marketplace. Last month, 56% of all sales closed over asking price and half of them went $15,000 over or more to win. For the last 7 weeks, half of all listings that went under contract in the MLS were active for just 6 days or less.

However, the last few months have shown a glimmer of relief for buyers as supply counts actually stopped declining; and in price ranges between $500K-$800K they have noticeably increased 40% since February. Supply is still 69% lower than last year at this time so there’s a long way to go before it’s considered normal, but it’s something. 

For Sellers:
You’re not going to notice this, but the housing market has begun to cool down.  It’s still hot however, like 400 degrees is still hot despite being cooler than 500 degrees. Sellers can still expect multiple offers and closings over asking price; however it’s important to note that supply has stopped dropping and has been rising in certain price points over $500K.  Seasonally speaking, Greater Phoenix supply should be dropping at this time of year, not going flat or rising.  When measures go against the season, it can be the beginning of a shift.  

The reason this shift will not be noticed is because supply is still much lower than demand, so any slight increase in competition is inconsequential to a seller’s ability to secure a buyer, even one willing to pay over asking price. One of the early indicators that a market is shifting, however, is the number of list price reductions. For example, supply between $600K-$800K has risen 45% since late February; in the same time frame, the number of weekly price reductions increased 223% and hit the highest count taken in nearly 6 months. That’s notable.  However in other price points where supply has flattened out, price reductions have remained low and stable.

The advantage in any market, not just housing, is being one of the first to know when things are shifting. 

Posted in Real Estate News
April 20, 2021

Phoenix Real Estate update for April 2021

One Year After Start of Pandemic - Luxury has Exploded
Homes Selling for 101% of List Price on Average
For Buyers:
With 54% of all sales closed over asking price so far in April, the average sale price per square foot is now higher than the list price for every price range up to $1M.  In a balanced market, homes typically sell within 97% of list price; that percentage is now 101%. This means that, for the past month or so, the majority of list prices have been the starting price for where negotiations begin instead of a top price to work down from. In past extreme seller markets, $5,000 over asking was typically enough to win a contract; that was true last year as well when the market took off.  However, last January the median over ask was $6,000; by February it was 10,000; in March it was $11,000; and so far in April it’s $15,000.  The highest was $905,000 over list price   closed in March (It was an auction for a 10-acre property in Cave Creek that sold for $2,255,000). By price range, over 62% of homes listed between $250K-$400K closed over asking price; the percentage is 54% for sales between $400K-$600K;  47% between $600K-$900K; 30% between $900K-$2.5M;  9.5% over $2.5M. Putting an offer in over asking price may cause a buyer some anxiety, especially a first-time home buyer.  The median sale price is now $360K. Since January, the sales price per square foot for a home between $300K-$400K has appreciated 6%.  That’s approximately 2% per month and the current sale price to list price ratio within the price range is 102.4%.  If this rate of appreciation continues in the short term, a buyer who paid 4% over asking price on a $360K home ($14,400 over) would recoup their investment through appreciation in approximately 2 months.

 

 

For Sellers:
The luxury market has been exploding since last summer and continues to be at the strongest level ever seen in Greater Phoenix. The number of listings under contract over $1M is up 156% over last year; but the number under contract between $2M-$3M is up 296% and over $3M is up  212%. In a typical market, sales prices in this range would be landing around 93% of list price.  However in the 2021 market, the sales price ratio is averaging 98% of list. The luxury market is also keeping up with the rest of the market in terms of marketing time.  Prior to contract, half of the contracts accepted valley wide in the last week were on the market 6 days or less.  Over $1M, the median was 12 days prior to contract.  Over $2M, the median is 67 days. The market over $1M is outperforming in terms of annual appreciation in sales price per square foot.  The median price for a 4,000-5,000 square foot home is running at $1.1M with an appreciation rate of 31%.  The median price for a 5,000-10,000 square foot home is $2.3M with an appreciation rate of 35%.  For perspective, the median price of a 1,500-2,000 square foot home is $365K with an appreciation rate of 25%.

 

 

As always, please keep me posted if you have any questions or commentary on the real estate market.  Happy to discuss!   I hope all is well!
Posted in Real Estate News
March 29, 2021

31% of young adults relocated during Covid. But they aren’t giving up on cities altogether

31% of young adults relocated during Covid. But they aren’t giving up on cities altogether

 

 

  • Gen Z and millennials were most likely to relocate during the Covid-19 pandemic.
  • Yet many of those who moved didn’t stray far from cities.
  • Here’s what we know about why they moved.
  • A pandemic migration has been underway, at least for young adults ages 18 to 31.

    That’s according to a Bankrate.com survey that found 31% of people in that age cohort relocated either permanently or for an extended period of time during the Covid pandemic. That’s compared with 16% of adults overall.

    Gen Z — who range from ages 18 to 24 — were most likely to pick up stakes, with 32% relocating. That was followed by millennials — ages 25 to 40 — at 26%.

    Members of Gen X — ages 41 to 56 — and baby boomers — ages 57 to 75 — were least likely to relocate, with 10% and 5% having made moves, respectively.

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    The main reason people relocated was to be closer to friends and family, which was cited by 31% of respondents. That was followed by more affordable living, with 27%, or relocating for a job, 21%.

    Others were motivated by opportunities for more space, 18%; different climates, 17%; or the ability to work from anywhere, 17%.

    While many of the respondents left cities, they did not go far.

    In the New York metro area, three of the five most popular places to relocate from Manhattan were less than 15 miles away, according to Bankrate’s analysis of data from the U.S. Postal Service.

    Meanwhile, people who left other cities, such as Austin, Texas, Dallas, Houston or Orlando, Florida, mostly chose new home bases that are less than 30 miles away.

    “It really seems like people are just leaving the densest neighborhoods to go to places where they may be able to get a bit more bang for their buck,” said Zach Wichter, a mortgage and real estate reporter at Bankrate.

    Bankrate’s research came from an online survey conducted in February that included 5,158 adults. They also analyzed U.S. Postal Service change of address requests from Jan. 1 through Dec. 31, 2020.

Posted in Real Estate News
March 26, 2021

Nation Eviction ban is set to expire at the end of March

The national eviction ban is set to expire at the end of March. The CDC likely will extend it

 

KEY POINTS
  • The Centers for Disease Control and Prevention may be moving to extend the ban on evictions across the country. 
  • Housing experts say to truly stop evictions during the public health crisis, though, the ban must also be improved.

The Centers for Disease Control and Prevention may be moving to extend the national eviction moratorium that has been in effect since September and is now scheduled to expire at the end of March.

The CDC has sent a proposal to the Office of Management and Budget for regulatory review, which experts say indicates that the health agency is taking steps to keep the protection in place as coronavirus cases surge in many statesand millions of Americans remain behind on their rent.

“It’s not a guarantee, but the submission to OMB means that it is likely that the administration will extend the CDC order on evictions,” said Shamus Roller, executive director of the National Housing Law Project.

Diane Yentel, president and CEO of the National Low Income Housing Coalition, agreed, saying it was “very likely” the ban will be extended before it lapses in nine days.

CDC spokesman Jason McDonald said a decision to extend the moratorium has not been made. The White House did not immediately respond to a request for comment.

Landlord groups have opposed the eviction ban, saying the pandemic has gone on for more than a year now and that they cannot continue housing tenants for free and allowing them to rack up arrears.

“Short-term policies like eviction moratoria leave renters accruing insurmountable debt and jeopardize the ability for rental housing providers to provide safe, affordable housing,” said Bob Pinnegar, president of the National Apartment Association.

 

Housing advocates point out that Congress has now allocated more than $45 billion in rental assistance to address those arrears, and say it would be a waste of that money to allow evictions to proceed before it reaches renters and their landlords.

“President Biden must extend the moratorium until the emergency rental assistance funds are expended,” Yentel said.

Recent research has found that evictions have led to as many as 400,000 additional coronavirus cases during the pandemic because many displaced people double up with family members or friends or are forced to turn to crowded shelters.

“Increased evictions lead to increased spread of, and potentially deaths from, Covid-19,” Yentel said.

As of January, nearly 20% of renters in the U.S. were behind on their housing payments.

Calls to improve the CDC’s eviction ban

Although the CDC has barred most evictions amid the public health crisis, many landlords are pushing out their tenants anyway.

Since the CDC ban took effect, Jim Baker, executive director of the Private Equity Stakeholder Project, has counted close to 50,000 new eviction cases filed by corporate landlords in Arizona, Florida, Georgia, Nevada, Tennessee and Texas alone.

During the same period, The Eviction Lab at Princeton University has identified more than 180,000 evictions in the five states and 19 cities that it tracks.

Yet another report found that the CDC ban stopped fewer than 10% of eviction cases in Harris County, Texas, where most of Houston is located.

Housing experts say that to truly stop evictions during the public health crisis, renters shouldn’t have to apply for the protection; rather, all steps of an eviction should be stayed in the courts, and clear penalties for landlords who violate the law need to be established.

Matthew Turner is one of the millions of Americans struggling to pay his rent in the pandemic.

 

In October, he was laid off from his job as a consultant. He and his husband, Gerard, have used up all of their savings and sold their furniture, including their bed, to stay in their home over the last few months. They’re currently sleeping on the floor in their two-bedroom apartment in Raleigh, North Carolina.

They’re now out of options and won’t be able to come up with April’s rent. If they’re forced to leave, Turner says they’ll have to sleep in his van.

He hopes the CDC ban is extended, but he says it also needs to be improved. Over the last few months, he’s witnessed many of his neighbors get evicted despite the law.

“I see people leaving every day, bringing their furniture and putting it into the dump,” Turner, 48, said. “It just doesn’t reach people here. I don’t feel safe at all.”

Posted in Community News
March 24, 2021

Phoenix Real Estate update for March 2021

44% of Sales Closed Over Asking Price
New Listing Counts Lowest in Over 20 Years

 

 

For Buyers:
44% of sales through the Arizona Regional MLS have closed over asking price in the last 30 days. The median amount over asking price for all price ranges combined is $10,000 with a range between $1 to $310,000. (I know what you’re thinking, “$1 over? What is this, ‘The Price is Right’?” In some cases, yes.)
While 56% of all homes still sell for at or below list price, if you have a budget between $250K-$400K, the percentage selling over list is highest at 52% with the median amount over asking at $10,000.  However even if your budget is over $400K, a significant percentage is closing over asking price.  Up to $800K, 42% have sold over list with a median escalation of $12,000-$15,000. From $800K-$1M, 30% sold over list with a median escalation of $17,000-$20,000.  From $1M-$2.5M, 20% sold over list with a median escalation of $30,000-$50,000. Over $2.5M, only 2 sold over asking price with a median escalation of $150,000.
Over the past 6 weeks, REALTORS® have added an average of 2,059 new listings per week to the Arizona Regional MLS.  During the same time period, an average of 2,312 contracts were accepted per week. This is what has caused the overall supply of homes to consistently drop and competition between buyers to escalate.
While just over 2,000 new listings per week may seem like a lot, it’s actually the lowest rate for this time of year in at least 20 years. A normal level would be considered around 2,500 new listings.

For Sellers:
While supply is still 77% below normal for this time of year and demand is 17% above normal, demand has been dropping faster than supply over the last 30 days.  It’s not noticeable when one is in the midst of a contract negotiation today because sellers rarely notice when they’re getting, for example, only 15 offers instead of 25.  But consider last December demand was 35% above normal; at this rate, demand could be at a normal level in a couple months and below normal by June.  This will not cause prices to decline because there are still a miniscule number of competing listings in the MLS, but it could mean that the second half of 2021 could look different from the first, especially if there’s a temporary boost in new listings after the forbearance period ends and the foreclosure moratorium is lifted.
The average mortgage rate rose to 3.02% this month according to Freddie Mac.  Even though this is still considered an excellent rate, it understandably weakens the purchasing power for some buyers and reduces the affordability measure for Greater Phoenix overall.  When a family making the median income can afford less than 60% of what’s selling, demand is typically expected to suffer.  However, buyers with median incomes coming from Los Angeles and San Francisco are used to only affording 9-11% of what’s selling in their home towns, so Greater Phoenix prices look amazing by comparison.  In fact, for some the idea of being able to own a home at all is amazing.

Posted in Real Estate News
Feb. 16, 2021

Phoenix Real Estate update for February 2021

Median Sales Price Up 18%, Inventory Down 61%
Luxury Sales Over $3M up 140%

 

February phoenix real estate market update

 

For Buyers:
Yes, it’s still a good time to buy.  Is it fun?  No.  

Inventory is down 61% from this time last year and competition among buyers is steep.  New listings are not keeping up with demand and the purchase experience can be stressful, disappointing and heartbreaking; but it’s a good time to buy.

The median sales price has risen 18% to $339,000 and the median monthly rental rate through the Arizona Regional MLS has also risen 18%.  A 1,500-2,000 square foot home is roughly $1,600-$1,700 per month to purchase with 10% down while that same home rents at a median of $1,850 per month, up $250 over last year at this time.  For those who would like to reduce and stabilize their monthly housing expense with a historically low 30-year fixed mortgage rate, it’s a good time to buy.

According to the National Association of Home Builders, a family making the median annual income of $72,300 in Greater Phoenix could afford 60.6% of what sold in the 4th Quarter of 2020. That rate has been steadily declining, but it’s still within the normal range of 60-75% for now.  In San Francisco, the median sales price is $1,350,000 and a family making the median annual income of $130,900 can only afford 11% of what’s selling there.  For those who can work from home and no longer need to live in the same expensive city as their employer, it’s a good time to buy.

Finally, it’s a good time to buy because Greater Phoenix is experiencing a housing shortage. Over the past decade a gap between the total number of housing units built and the total number of people to be housed has been growing wider and developers have not been able to bridge it.  This is not something that will be solved this year, and probably not next year either. As affordability wanes, it’s a good time to stake your claim on a home while it’s still an option.

For Sellers:
Brace yourself, the showings are coming.  It’s not uncommon these days to see a stampede of buyers through a home within the first day or so on the market.  It doesn’t matter the price range, all areas and types of homes are flying off the market and so far this month 37% of closings are over asking price. 

The most impressive development has been in the luxury market. After California announced it was considering raising income and other taxes last summer, contracts over $1M surged in Greater Phoenix. So far in 2021, sales between $1M-$3M are up 102% and sales over $3M are up 140% over last year and there is little sign of a slow down.  

Appreciation rates based on annual sales between $1M-$2M range between 5%-6.5% and 2%-5% over $2M.  While the northeast cities of Paradise Valley and Scottsdale have long been associated with luxury real estate, Gilbert has emerged in the top 5 cities for sales over $1M in 2020.

Appreciation rates for homes sold below $600K range from 7%-11% annually and 5%-7% for sales between $600K-$1M.

Posted in Real Estate News
Jan. 19, 2021

Phoenix Real Estate update for January 2021

2020 Broke the Record for Luxury Sales
Supply Down 51%, Slim Pickings in 2021

January 2021 real estate update

For Buyers:
There were 111,036 new listings added to the Arizona Regional MLS (ARMLS) in 2020, only 38 more than 2019, while 100,650 sold.  As of January 10th, 2021 there were only 6,162 listings still active in the MLS, which is the lowest supply count recorded in at least 20 years. To make matters worse, 10% of those properties are outside of the Greater Phoenix boundary.

While the number of new listings barely changed last year, demand for homes accelerated between June and December to 35% above normal. Luxury sales over $1M soared after the pandemic restrictions were lifted. While they were already up 7.7% over 2019 at the end of June, by the end of December annual luxury sales were up 48.7%, securing an enormous record for 2020 at 2,575 sales over $1M.

Outside of the MLS, new home developers have been struggling to meet demand as well.  Despite the road blocks in production due the pandemic, forest fires and supply line disruptions, as of November builders still managed to sell 14% more homes and obtain 28,204 more single family permits for future supply, up 24% over 2019.  The median price of a new single family home only rose 6% from $333K to $353K and considering the median price of a resale home is $335K, that’s extremely competitive.

As supply began to drop last month, December saw 33% of sales closed over asking price and only 10% involved seller-paid closing costs in the 4th Quarter.
Bottom line for buyers starting their search in 2021, be on top of your loan and be ready to pounce on every new listing that fits your needs. Many new listings will be on the market for less than a week prior to accepting a contract.

For Sellers:
The state of Arizona ranked 3rd in the nation for population growth behind Texas and Florida in the latest 2020 Census release.  When the full report comes out later this year, we expect to see California as the #1 source of inbound migration for Greater Phoenix.  Moving companies such as Atlas, United Van Lines and North American have released their annual migration reports and 2 out of the 3 list Arizona in their Top 5 states for inbound moves. United Van Lines specifically cites “retirement” as the primary reason for 37% of inbound moves, 70% were over 55 years old and 63% made incomes over $100,000 per year.

While median home prices have risen 15.5% year-over-year, the median rental rates through ARMLS have also risen 12.9% from $1,550 to $1,750/month. This increase, combined with historically low mortgage rates, has fueled more demand to purchase. 

As the population continues to grow, the housing gap is becoming harder to close. After a decade of underbuilding, this will take more than a few months or a year to correct.  However as prices rise and affordability quickly drops, it’s reasonable to expect some demand to drop with it. With that expectation, home prices are still projected to rise throughout 2021 but possibly at a slower rate in the latter half of the year.  It will be another great year for sellers.