Updated: Aug 31, 2020
Week #34 (August 16th-August 23rd)
Can it get any hotter?! Ugh. August stands to be the best August on record as far as highest recorded Sellers market EVER in the state of Arizona. This pre-dates us to the 'boom' era.
It however is not just about Supply vs Demand. Let's look at Unemployment, Forbearance rates and Affordability.
Elliott D. Pollack & Company released today, 'in Arizona, initial claims for unemployment insurance rose modestly but the state continues to do much better than the nation as a whole. There was a slowdown in employment as should have been expected after two strong months combined with the reclosure of a few parts of the economy in July. The state still outperformed most other states in terms of employment through the first seven months of 2020. And Greater Phoenix remains the best performing major employment market in the country for the same time period.'
The 'talk' of naysayers are still hoping the Arizona market will see a drop in prices due to the homeowners taking advantage of the forbearance programs offered earlier this year. The forbearance rate for mortgage backed by Fannie Mae and Freddie Mac have already started to drop to 4.94% in the first week of August. According to the Mortgage Bankers Association, this is the first time it's been below 5% since April. This is an indicating that many of the homeowners that took advantage of this offering 'just in case' are starting to resume their payments. With the extensions set to expire next month, we should see another wave of removals in late September/October.
With the wealthy flee from the other states and the new job still being created in the greater Phoenix area, our affordability rating to still doing better than the national average. This won't last forever, that's a given. When it does start to drop, it will turn some Buyers away but that alone will not cause our market to see a decline in values.
As you can see, in order to have a market decline of any amount, a LOT has to happen. Although demand has a lot to do with it, this can be changed by many varying factors. Interest rates, job transfers/creations, speculation, Wall Street crash, etc. The other half of the equation is not so easily changed.
Supply cannot change overnight. In fact it takes years from land acquisition to residents moving in. So while our population has grown 26% in 14 years, our surplus of units have only increased by 16%. Someone clearly did not do the math correctly and here is where we are. So back in 2005 with a population of 3,914,212 we had 9,000 Active listings. We have a million more people that live here today and only 4,000 more properties available. It's not rocket science.
Wall Street is also gaining momentum again and although this would normally mean interest rates would go up, NOTHING about this year is normal. This does however mean that IBuyer funding is most likely gaining traction again and it also explains why we have an unusually high volume of over $1 million transactions for this time of year. NOTHING ABOUT 2020 IS NORMAL!
Let's face it guys, the Arizona Real Estate market is not going to take a dump. It's just not. Not in the foreseeable future. And in the meantime while you just keep waiting because you are so sure, prices are rising and at some point, interest rates will as well.
I wish I had had this data last week when I was speaking with a couple about buying a home. I found them the PERFECT home. They had the money to lock in the purchase with my creative (and realistic) offers, The husband says to me 'we won't be offering full price because it was built in the 80's'. Long sigh........... Not kidding.
You want to know what's going on? Here you go! You will NOT get this data from anywhere else. Very very few of us in the real estate industry subscribe to this information and for those of us that do, it is not shared.
Having this kind of data and knowing how to use it for your client's advantage will absolutely make a difference how much time which equals how much money you will waste trying to do this on your own or with an agent that is telling you to write an offer way too high.
Sheryl (Shey) Willis, CNE
GOARIZONA REAL ESTATE
Maricopa County Real Estate Special Commissioner
Zillow Premier Agent
Redfin Partner Agent
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Sheryl Willis, Go Chandler and eXp Realty does not engage in or condone activities which illegally discriminate on the basis of race, color, religion, sex, age, national origin, disability, familial status or any other protected classification under federal or state law.