Metro Realty- Arizona Real Estate Market Report
Here are the basics – the ARMLS numbers for
January 1, 2021 compared with January 1, 2020 for all areas & types
Market Summary for the Beginning of 2021
Here are the basics for the Arizona Real Estate Market Report- the ARMLS numbers for January 1, 2021 compared with January 1, 2020 for all areas & types:
- Active Listings (excluding UCB & CCBS): 6,055 versus 12,141 last year – down 50.1% – and down 18.0% from 7,388 last month
- Active Listings (including UCB & CCBS): 9,788 versus 17,577 last year – down 44.3% – and down 21.6% compared with 12,481 last month
- Pending Listings: 6,135 versus 4,662 last year – up 31.6% – but down 16.5% from 7,347 last month
- Under Contract Listings (including Pending, CCBS & UCB): 9,868 versus 7,539 last year – up 30.9% – but down 20.7% from 12,440 last month
- Monthly Sales: 9,989 versus 7,788 last year – up 28.3% – and up 8.9% from 9,175 last month
- Monthly Average Sales Price per Sq. Ft.: $211.62 versus $179.97 last year – up 17.6% – and up 1.8% from $207.84 last month
- Monthly Median Sales Price: $332,000 versus $289,500 last year – up 14.7% – and up 0.6% from $330,000 last month
“Buyers cannot be blamed if they in despair about the lack of supply.” Dennis Kolodin, CCIM
We have less than half the number of active listings without a contract that we had a year ago. This time last year we described the lack of supply as shocking, so what do we call the current situation?
We actually saw more new listings arrive during 2020 than we did during 2019, but only 1.4% more. The annual sales rate increased by 6% so the extra supply proved thoroughly inadequate in the face of the demand.
Prices have accelerated due to the huge imbalance between supply and demand, but as yet we have only seen part of that reaction.
Sales prices are a trailing indicator and lag behind the leading indicators by up to 15 months. We can therefore expect to see prices move even higher during the next 12 to 15 months with appreciation rates possibly rising over 20%.
Those who think the increases in mortgage delinquency are going to to halt these rise are wishful thinking. The level of delinquency is nothing like as bad as it was during the 2006 to 2008 crisis and the level of delinquency has improved for the last 6 consecutive months.
Any extra supply coming onto the market, due to home owner financial distress, is likely to be snatched up quickly by desperate buyers.
Few of the homes with delinquent loans are likely to make it to foreclosure. They can be quickly sold prior to foreclosure to pay off any loans and the record levels of home equity will leave the vast majority of sellers in the black even if they can no longer afford their mortgage payment.
It is the strong home equity levels that will motivate distressed buyers to sell up rather than walk away. In 2007 prices started to crumble due to huge excess supply, meaning many homes went underwater quickly and homeowners could see no advantage from avoiding foreclosure. The current situation is opposite, not similar.
“January is usually the strongest month of the year for new listings” Tina Tambour, Cromford Report
If we are going to see any relief for buyers, it should arrive during the next 4 weeks. If it does not, then the peak selling season of February through May is likely to be limited by what little is available. This may put a cap on any growth in unit sales, but it will not put much restraint on dollar volume as prices rise to compensate.
Existing protections in place for homeowners during times of financial hardship have come to the forefront in 2020.
While both renters and homeowners alike were struck with unemployment and loss of income this year, homeowners, in particular, were provided with more immediate relief and a pathway to recovery than their renting counterparts.
Case in point, there are few experts in the field predicting a foreclosure crisis for homeowners; however, there are many housing experts concerned about an eviction crisis for renters after the eviction moratorium ends December 31st.
Under normal circumstances in Arizona, a homeowner typically has to miss multiple monthly payments before the lender files a Notice of Trustee Sale, which then provides another 90 days for the homeowner to remediate the situation prior to foreclosure.
However, a renter can be at risk of eviction within a few shorts weeks after missing a single rent payment depending on their landlord’s disposition and rental agreement.
The CARES Act extended another layer of protection for homeowners through forbearance, allowing them to postpone their payments in 3-month increments for up to a year without an effect on their credit.
Many lenders have already put in place refinance options after forbearance for homeowners who have accumulated thousands of dollars in unpaid mortgage payments.
There is no such plan for renters after the eviction moratorium. Their rents will be due in full and if they haven’t received rental assistance or sufficient unemployment benefits to cover the amount owed, they will be facing eviction and their credit will be affected.
So for those questioning whether or not purchasing a home is a good financial decision, the answer is yes. The value of owning a home is not just in its market value, but in stabilizing monthly housing costs during a period of rising rents and the comfort of more protection during times of financial and job insecurity.
“Losing one’s home, whether rented or owned, is one of the most stressful things a human being can endure.” Catherine del Rey, Property Manager Metro Realty
If you are one of the many homeowners facing the end of a forbearance period sometime in the next 3-4 months, you have at least 5 options to remediate your situation.
1) STAY IN YOUR HOME and consult your retirement plan administrator about tapping into your retirement account without penalty until December 31st to cover your unpaid payments
2) STAY IN YOUR HOME and consult a lender about refinancing your unpaid payments into a new loan
3) MOVE OUT and rent your home for more than your mortgage payment to cover missed payments or replenish your retirement account
4) MOVE OUT and consult a lender about acquiring a new loan on a more affordable home
5) MOVE OUT and sell your home for more than your mortgage balance, walk away with your equity and credit intact to purchase another day.
None of these options were viable solutions for homeowners facing the 2008 housing crash 12 years ago.
These options are why there is little risk of a foreclosure crisis and price crash in 2021. Because population growth has consistently outpaced housing growth every year over the past 10 years, rents and values are projected to continue rising through 2021 in Greater Phoenix unless builders are able and willing to ramp up production at ludicrous speed.
They are doing their best, but even 25,549 permits issued and 19,889 sales closed on brand new single-family homes through October this year hasn’t proven to be enough to satisfy the level of demand for housing that has descended on Greater Phoenix. Sellers need not worry about their home values declining anytime soon.