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Nov. 15, 2021

Phoenix Real Estate Market update for November 2021

2022 Housing Predictions: Who to Believe?
Median Price Currently Rising 1% per Month on Average


For Buyers:
‘Tis the season for 2022 projections in the housing market and, as expected, there are conflicting opinions among national housing analysts. Zillow and Goldman Sachs predict home values will rise nationally 14-16% between now and the end of 2022. CoreLogic released their prediction that home values will only rise 1.9% next year, citing a concern with rising interest rates. Then there’s Zelman and Associates warning that investors are over-building and over-buying as household formation and population growth are weak, challenging the notion of a housing shortage.




Who do we believe?  Zillow recently pulled out of the business of buying homes after realizing their algorithm was failing to accurately value homes under current market conditions. CoreLogic’s prediction last year, that home values would drop 6.6% by May 2021, was a gross misfire as values soared instead. While Zelman is waiving a caution flag, the organization is stopping short of issuing a price prediction for next year.


In the meantime, prices in Greater Phoenix continue to rise. Prior to 2020, the median had been rising at 0.6%-0.8% per month on average (7-10% per year) which was in response to a milder seller market.  In the 2020-2021 extreme seller market, that average rose to 1.3% per month in 2020 and 2.3% per month so far in 2021, with a peak in the Spring between 3-5% and 1% per month average since June.  
Many local analysts agree the past rate of increase is indeed unsustainable. The payment for a 1,500-2,000 sqft home has risen 33%, or $500/month since last November, and the median rent on the MLS for the same sized home increased $372/month. At the rate prices have been increasing for the past 2 years, returning to a mere 7-10% annually would be considered a massive relief for buyers.



For Sellers:
While the caution flags are waving for a softer housing market next year, there are a number of positive indicators in Greater Phoenix that may keep our market appreciating, albeit slower. While interest rates, affordability, sluggish population growth and household formation are valid reasons for concern, here are a few counter-indicators to consider:


  • Lending practices have loosened up with the new $625,000 loan limit and more consideration of self-employed borrowers
  • Arizona is ranked in the top 10 states for population growth and household formation over the past decade due primarily to domestic migration
  • Per the Arizona Department of Economic Opportunity’s October Employment Report:
    • Jobs and the labor force have completely recovered from last year’s pandemic losses
    • Unemployment claims have fallen to pre-pandemic levels
    • W-2 Incomes have continued to rise and are up 3.4% YOY
Posted in Real Estate News
Sept. 13, 2021

Phoenix Real Estate update for September 2021

Contract Activity Spiked 20% In This Price Range
Luxury Sellers Over $1M Enjoying a Hot Summer


Phoenix Real estate market September 2021

For Buyers:
Buyer demand has rallied sharply over the past 4 weeks, which is unusual for this time of year.  The rally is exclusively between $400K-$800K, spiking nearly 20% in contract activity since the end of July.  We have to wait until the transactions close and record to identify the buyers, but judging from July’s closing analysis we expect to find a surge in iBuyer purchases (aka “Internet Buyers”). The most notable iBuyers active in Greater Phoenix are OpenDoor, OfferPad, Zillow, and now RedFin. At least one of these organizations has increased their approved acquisition price to a $750,000 limit, which could explain the sudden spike in sales. iBuyers do not buy and hold property, they primarily engage in a short-term flip strategy and their activity does not constitute true demand. True demand is someone who will live in the home or rent it to someone who will live in the home. Flip investors are strictly the middlemen between the seller and the final buyer, which adds one extra closing to the books and makes true demand appear larger than reality by increasing the total number of sales without increasing the level of supply. The existence of institutional flip investors in the marketplace can be frustrating for buyers from a competition standpoint, but in the end these buyers still need to re-sell the home to someone. As prices have reached levels beyond the affordability threshold for a larger percentage of residents, the question is whether or not iBuyers will be able to flip their acquisitions with the same profit margins going forward. Permits for new homes are up 32% for January through July this year and are at their highest since 2006.  Considering the average build time for a new home is anywhere from 10-14 months due to supply chain disruptions, iBuyers and sellers in general may be seeing more competition from new construction starting in the 4th quarter 2021 and into early 2022. 

For Sellers: 
While the $400K-$800K market is seeing elevated activity, the luxury market over $1M is a different story. Make no mistake, the luxury market is still extremely hot but it’s not because buyer activity is rising. Listings in escrow over $1M have dropped 17% since June, but that’s normal for this time of year in this segment. The reason the luxury market is still hot is due to a simultaneous drop in competing supply.  It’s more prominent over $1.5M where supply has dropped 10%, also since June. So if contract activity isn’t rising, then why is supply over $1M dropping?  It’s seasonal.  Every year from May to July there’s an elevated number of cancelled and expired listings in this price point, which reduces the number of active listings. This year was no different.  Additionally, the number of new listings added monthly to supply dropped 26% between April and August, which meant there were fewer new listings to replenish those that cancelled or expired.  The result is a luxury supply count 31% lower than this time last year. This is good news for the sellers who remained active over the summer.  Even though luxury demand came down, it’s still 21% higher than it was last September with fewer competitors. If the market follows its seasonal tendencies there will be a rally of new listings coming to the party in October, possibly giving buyers more choice in the 4th quarter.

Posted in Real Estate News
Aug. 16, 2021

Phoenix Real Estate Update for August 2021


Supply Up 42% Since May, Price Reductions Up 131%
Affordability Dips Below Normal to 56%


For Buyers:
There is a little relief ahead for buyers in Greater Phoenix.  Supply continues to rise in price points between $300K-$1.5M and buyer demand has settled into a normal seasonal cool down that is expected to last through the end of the year.  What this means for buyers is the 2nd half of 2021 so far has more choice and less competition. There are two things going on right now in the market.  The first is a non-seasonal increase in supply, fueled by a high number of new listings hitting the market every week. Typically August is the low point of the summer season for supply. However this year it is the high point and continuing to rise, up 42% since May. That’s good news for buyers as it provides more choice. The second is a seasonal decline in buyer activity.  Typically buyer demand shoots up in the first half of the year, peaking around May, then it gradually declines in the 2nd half of the year. Last year the market saw the opposite due to the pandemic, demand dropped when it was supposed to rise and rose when it was supposed to drop.  The return to a normal seasonal rhythm in 2021 means that there may be slightly less competition from other buyers in the 3rd and 4th quarters.  This doesn’t mean the housing market has gone cold; it has simply made it a little more tolerable to navigate. To put it in numbers, on April 8th, there were 12,862 listings under contract and only 4,177 active. Today on August 9th, there are 11,743 under contract and 7,166 active.  Add a recent decline in interest rates keeping payments down and exhausted buyers have a little more room to breathe.
For Sellers: 
The Home Opportunity Index (HOI), published by the National Association of Home Builders every quarter, measures housing affordability based on the median family income per metro area.  Last quarter, the HOI for Greater Phoenix fell to 56 (we predicted it would be 57 based on preliminary MLS data).  This is below the normal range for the Phoenix metro area of 60-75. What does this mean?  This means that a household making the median family income of $79,000 per year could technically afford 56% of what sold in the 2nd Quarter of 2021. The last time the HOI dipped below 60 was in the 4th Quarter of 2018 when it hit 57. The market responded with a drop in annual appreciation from 10% to just 4% within 3 months. Since June of this year, annual appreciation of the monthly median sales price has declined from 32% to 28%.  As affordability declines, it’s reasonable to expect the market will begin to resist the prices sellers initially ask for their homes. In other words, there will be fewer buyers able to bear dramatic monthly increases in home costs like those seen over the past year. Meanwhile, exuberant sellers continue to list their homes at prices that defy comparable sales. As these homes sit for an extra day or two on the market without an accepted contract, weekly price reductions have risen 131% since May with a median price drop of $14,000. Typically, the median price reduction is $5,000. Of course, there are still properties closing over asking price. However, those contracts were accepted approximately 1-1.5 months ago when the market was hotter than it is now. The percentage of sales over asking price has declined from 60% to 55% over the past two months, with the median amount over list price declining as well from $20,000 to $15,000. We expect this trend to continue.

Posted in Real Estate News
July 16, 2021

Phoenix Real Estate Update for July 2021

What’s Ahead for Sellers as Demand Weakens
Median Sales Price Up 29%, Fewer Contracts


For Buyers:

Buyers with budgets over $300,000 may be noticing that they have more listings to choose from compared to a few months ago. This is especially true in the price points between $400,000 and $800,000 where inventory has grown 92% since February. When a buyer has, for example, 4 or 5 homes available that meet their criteria instead of just one, they are less inclined to throw all of their ammunition into one home in order to win it. They may still offer full price or more, but may not be under as much pressure to waive contingencies and shorten inspection periods.

As this subtle change proliferates with more inventory, the buyer experience will become less stressful. As the median sale price continues to rise, affordability is something to pay attention to. Not what’s affordable to you necessarily, especially if you’re out of state, but what percentage of the local population can afford your home if you need to sell right away or sometime in the future. A family making the median income in Greater Phoenix could afford 63% of what sold in the 1st quarter of 2021. That was within the normal range of 60-75%, indicating a good time to buy or sell. While we wait until August for the 2nd quarter measures to be released, we expect the new measure to land around 57%, slightly below normal.  This does not indicate that the market will plunge into a buyer market causing prices to decline, but it does indicate a reason to expect prices to rise much slower going forward.

For Sellers:
The Greater Phoenix housing market continues to shift from an extreme seller market into a less extreme seller market. As prices continue to rise, more new sellers are motivated to put their home on the market and fewer buyers are able or willing to pay the higher price. Over the next 5 months, give or take, the market is expected to move into a weaker seller market, driven in part by dwindling affordability and buyer fatigue.

The first half of 2021 has been so insane with contingency waivers and exorbitant offers over asking price that many sellers may not know what a normal seller market looks like. Here are a few things to expect:

  • Sales price appreciation will not average 3.1% per month. April 2021 saw prices appreciate 5.1% within 4 weeks. May was 2.3%. June was 1.1%. From 2015-2019, a long-term seller market but much weaker than today, prices appreciated at an average of 0.5% per month with a range between 0.3% and 0.8%.
  • There will be more list price reductions. It’s important to remember that the sales price is the LAST thing to respond in a shifting market. One of the first things to respond is a list price, in the form of a price reduction. When a seller overshoots what the market can bear, they will get the silent treatment in the form of zero offers. That triggers a price reduction by the seller. Weekly price reductions have risen 112%   since mid-February from 317 in a week to 672. In a weaker seller market, expect between 1,500-2,000 price reductions every week.
  • Sellers will get their price, but pay more in concessions. If a seller prices their home high in anticipation of excess demand but only gets one offer instead of multiple offers, they are more likely to accept home warranties, do repairs and offer concessions. Currently the percentage of sales involving concessions is very low at 4%, up from 2.7% the week prior. In 2019, a good seller market, 25% of closed sales involved seller concessions.
Posted in Real Estate News
June 23, 2021

Here are tips on whether you should eliminate that mortgage in retirement

Here are tips on whether you should eliminate that mortgage in retirement

When it comes to whether retirees should pay off their mortgage in retirement, there typically is no clear-cut answer.

That’s because like most things about planning for (and in) your post-working years, the decision depends on your specific situation.

Obviously, a couple of benefits come with paying off a mortgage: Your monthly obligations drop, which can provide more wiggle room in your cash flow. 

Yet depending on your tax situation and your available remaining assets — as well as where the pay-off money would come from — you may face financial implications that would need to sit well with you.

Here’s what the experts have to say.

The math

Sometimes, the calculation can be cut and dried. That is, if you’re paying more in interest on your mortgage than the interest you’re earning on the money you’d use to pay it off — and the tax consequences of doing so would be minimal — it may be an easy decision.

“Do you have the cash just lying around in a checking account? If so, then it may be a no-brainer to pay off a debt costing you a few percentage points when you’re earning nothing on cash in today’s rate environment,” said certified financial planner Brian Schmehil, director of wealth management for The Mather Group in Chicago.

Likewise, if you’re invested in bonds that are yielding 1.5% and you’re paying more than that on your mortgage, you essentially are negating the gains from the bonds, said CFP Allan Roth, founder of Wealth Logic in Colorado Springs, Colorado. 

He also pointed out that if you’re paying, say, 2.5% on your mortgage and you pay it off, you essentially just earned that rate on the money you used to retire the loan.

“It would be a risk-free, tax-free, 2.5% return,” Roth said. 

Additionally, you didn’t have to sell an asset for that return: Your home, whose value could rise, remains yours.

On the other hand, if the money you’d use to pay off the mortgage is invested through a retirement account, the interest-rate comparison may not work in your favor.

“If that’s the case, it may not be in your financial best interest to pull money out of a retirement account to pay down a debt that’s costing you less than what you otherwise might make by investing it,” Schmehil said.

Also, if you’ve been able to deduct mortgage interest on your tax return — you must itemize your deductions to get that break — keep in mind that this benefit will disappear. (Most taxpayers do not itemize, however.)


There also may be tax consequences to taking a distribution from your retirement funds.

Unless the account is a Roth — whose contributions are made post-tax but distributions are generally tax-free — your withdrawals would typically be taxable. Traditional 401(k) plans and individual retirement accounts provide a tax break for contributions, while distributions are taxed as ordinary income.

“If that distribution moves you from the 12% to 22% marginal bracket, or from the 24% to 32% bracket, then you’re paying Uncle Sam a tax premium of 8% to 10% just to pay off a debt that may only cost you 3%,” Schmehil said.

However, if you do decide to use those retirement assets to eliminate your mortgage and want to minimize the taxes, you could spread out the payoff over several years, said Roth at Wealth Logic.

“If you’re in the 12% marginal bracket, I’d say withdraw an amount that keeps you at that 12% rate each year,” Roth said.

Additionally, be aware that when you pay off your mortgage, the cash you use essentially converts to equity in your home — which you may or may not be able to tap easily down the road.

In other words, if having an illiquid asset — your house — would interfere with meeting your financial goals, it may be better to keep the money elsewhere, either in a cash or investment account, depending on your goals and risk tolerance (how long until you need the money and whether you can stomach volatility in the markets).

Schmehil and other financial advisors said, however, that even if you determine the math suggests it would make more financial sense to continue paying your mortgage, there is the emotional factor in the calculus that can — and perhaps should — weigh heavily.

“Yes, clients could potentially make more money by leaving capital with us to manage and attain higher returns net of taxes than the interest cost of their mortgage,” said CFP Larry Ginsburg, owner and president of Ginsburg Financial Advisors in Oakland, California.

“Why speculate with their home equity? What major benefit does this furnish to a client?” Ginsburg said. “We generally recommend paying off the mortgage and receiving the emotional benefit of lowering fixed overhead.”

For instance, he said, it helps ease retirees’ anxiety level during market downturns because they worry less about how their income is affected, even when they have no reason to be concerned.

Ginsburg said that clients who have initially disagreed with his advice to get rid of their mortgage have later thanked him. 

“I’ve never had someone come back to me and say they were unhappy that they paid off their mortgage,” he said.

June 21, 2021

A third of Americans found errors on their credit reports. Here’s how to fix those mistakes

A third of Americans found errors on their credit reports. Here’s how to fix those mistakes

Before you take out a mortgage or car loan, check your credit report. 

It may have a mistake that could cost you.

It’s not as uncommon as you may think. More than one-third, or 34%, of Americans found at least one error on their credit report, according to a new Consumer Reports investigation. Consumer Reports asked volunteers to get a copy of their credit report and check for errors and 5,858 did so between Feb. 1 and April 1.

Twenty-nine percent found personal information errors and 11% found account information errors.

Mistakes about personal information may not hurt your credit score, but could make it more difficult or impossible to access your credit report, said Consumer Reports policy analyst Syed Ejaz. Mistakes about account information, on the other hand, can damage your credit score.

That three-digit number has a direct impact on your ability to get loans, such as a mortgage, and what interest rate you will pay.

“Unfortunately, sometimes folks find out way too late, when they are in the middle of getting a loan for a new house or car,” Ejaz said.

“That is why it is really important to make sure you check your credit report and assess it for accuracy.”

The Consumer Data Industry Association, which represents the major credit reporting companies Equifax, Experian and TransUnion, issued a lengthy statement in response to Consumer Reports’ findings. It called the story “completely false and misleading” and said the industry has a 98% accuracy rate.

“Accuracy is the bedrock of the credit reporting industry and getting credit reports right for consumers is our most important job,” the statement said.

Consumer Reports isn’t the only organization to report on errors. A 2012 studyby the Federal Trade Commission found 25% of Americans had a mistake on their credit reports.

The best thing to do is to stay on top of your credit reports through While typically available free of charge from each reporting firm once a year, Equifax, Experian and TransUnion are offering free weekly credit reports through April 20, 2022.

Fixing a mistake

If the error is about your personal information and it is preventing you from accessing your credit reports online or by telephone, write a letter directly to the reporting firms, advised Ian Lyngklip, an attorney at Lyngklip & Associates Consumer Law Center in the metropolitan Detroit area.

Make sure you include the appropriate identification, like your driver’s license, as well as proof of your address, such as a bank or utility statement. You can black out any financial information, he said.

For other mistakes, you’ll have to dispute them with each credit reporting company so that they are corrected. Clearly explain in writing what needs to be fixed and why — and provide the account number. (Here’s the FTC’s sample letter.)

Be sure to include your complete name and address, as well as the credit reporting firm’s dispute form, if it has one, and a copy of the credit report with the disputed item circled or highlighted. It’s also important to supply copies of documents that support your claim, such as credit card or bank statements, and keep records of what you send.

Notify the business, as well, and send it the same information. (Here’s the FTC’s sample letter.)

The FTC recommends sending all materials by certified mail so there is a paper trail. The credit reporting companies have about 30 days to investigate your claim. They will also forward your evidence to the business that reported the information, and it must investigate and report back.

The credit reporting company has to give you the results in writing and a free copy of your credit report if the dispute results in a change. If your dispute is not resolved, you can ask that a statement of the dispute be included in your file and in future reports.

If you lose the dispute, you can file again, but be sure to include additional information, Consumer Reports recommends. Simply resubmitting could automatically get the dispute denied.

You can file a complaint with the Consumer Financial Protection Bureau’s website if your second attempt doesn’t work, Consumer Reports advised. If the problem is severe, consider hiring an attorney who specializes in the field. You can find one through the National Association of Consumer Advocates’ website.

At the end of the day, disputing your credit report is not an easy process.

“In reality, it is really, really, really hard to fix your credit report,” said Ira Rheingold, executive director of the National Association of Consumer Advocates.

That’s because the credit reporting system wasn’t built for the benefit of consumers. It was built for the companies that use it, he explained.

“There is nothing about our credit reporting system that makes it easy for consumers, friendly to consumers or helpful to consumers,” Rheingold said.

Posted in Buying a Home
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 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


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 ( 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