Congratulations to my 3rd Quarter Buyers/Sellers - 2020

Congratulations to These Amazing Buyers who Closed on Their Homes 

During a Pandemic!

With the shortage of homes in the Phoenix market, losing a contract to a stubborn seller is discouraging. This was quite a ride for Dr. Pierce Lewien as he was under contract on a great house when the seller refused to close. We found another home and closed just in time for his residency to begin. Now he and his mom are getting settled into their new home in the South Mountain area and he is busy training to be an awesome physician. Congratulations Dr. Lewien.

Brittany and Jaymes Randall were referred to me by past clients and family members. They bought their new home in Scottsdale just in time for the arrival of their second child, Robby. Now big brother Jay has a wonderful new home to show his baby brother and the family have lots more room! Here’s to a new adventure, Randall family!

 

Tim Straus and Amber Grundman were lucky enough to view a home just as it came onto the market and everyone scrambled to submit the best cash offer to the owner/agent. Everything fell in place and 30 days later Amber and Tim began their new adventure in their Chandler home with their four dogs! Congratulation Tim and Amber!

Arizona Real Estate Market Update for September 2020

Wow! 17% Spike in Contracts over $600K in August

34% of Homes Closed Over Asking Price

For Buyers:

The first few weeks of August saw a surprising 17% spike in listings under contract over $600K. This is highly unusual as typically contract activity declines in the 2nd half of the year, especially on the high end; but this is the year 2020 and it’s been full of surprises. What is causing this spike in buyer demand in the luxury market? Luxury sales are partially influenced by stock market performance and corporate profits. August was a good month for the stock market, but the 2nd quarter was not good for corporate profits at all. In fact, they fell to levels we haven’t seen in a decade.  The answer may lie in what’s been dubbed “wealth flight”.  Some states like California are considering increases in income taxes, corporate taxes and a new “wealth tax” in the wake of the pandemic. As a result, the threat of new taxes on already hurting balance sheets is enough for companies and their employees to make the decision to move. This, coupled with the work-from-home movement, is fueling demand in Metro Phoenix where taxes and the cost of housing are comparatively more affordable than other cities.  For buyers waiting for prices to decline, there is no indication of that happening soon despite apocalyptic predictions of another foreclosure wave; at least not while the Valley has a net increase in population moving to the area.  A reasonable expectation over the next year is that prices will continue to rise sharply in the short-term, then possibly rise slower if affordability rates begin to suffer.  The only beam of hope for buyers right now is a boost in new construction. 

For Sellers:

For at least 12 years, builders have been reluctant to ramp up production of new housing supply to accommodate population growth; which is understandable considering they were burned severely when the housing market crashed in 2008. This reluctance has led the market to our current shortage of homes for sale and a frenzy of competition for existing resale homes.  However, last July saw over 3,000 single family permits filed; the largest number filed in a month since March 2007. This should provide some much needed relief for buyers and some added competition for sellers in the coming months. While exciting, this increase in new home permits is not alarming.  The biggest month recorded was July 2004 with 6,291 permits filed.  
That said, 35% of homes closed through the Arizona Regional MLS in August sold over asking price. As incredible as that sounds, this is not the first time Greater Phoenix has seen this measure spike. In fact, 2005, 2009 and 2012 all saw higher percentages; each peak was short-lived over the course of just 2-3 months before sharply dropping again.  This is because as more sellers test market limits and ask for higher and higher prices, their likelihood of selling over asking price drops significantly. 

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2020 Cromford Associates LLC and Tamboer Consulting LLC

July Breaks Records in 2020

65% of Homes Affordable in Greater Phoenix

For Buyers:

It’s a jungle out there for buyers, but despite recent appreciation rates the HOI* measure for Greater Phoenix increased to 64.8 for the 2nd Quarter 2020; the previous measure was 63.0. This means that a household making the current median family income of $72,300 per year could afford 64.8% of what sold in the 2nd Quarter of 2020.  By comparison, the HOI measure for the United States was 59.6. 
Historically, a normal range for this measure is between 60-75. During the “bubble” years of excessive appreciation between 2005-2006, the HOI plummeted from 60.1 to 26.6. Typically if it falls below 60, the market should start to see a drop in demand.  With the most recent increase however, Greater Phoenix is still within normal range and experiencing demand 20% above normal for this time of year.
What makes this market significantly different from the infamous bubble and crash is the relation between resale housing growth and population growth. In the early 2000’s, housing was growing faster than the population and creating a glut. This glut went unnoticed due to excessive speculator (i.e. “false”) demand fueled by loose lending practices. When loans tightened up, the glut came roaring into focus as vacant inventory soared to over double the normal levels.  However since 2006, the population has grown faster than housing.  It has taken 14 years, but this population growth fueled by job growth has finally consumed the glut of re-sale housing created during the bubble years and now the market is facing a shortage of homes for sale.
This type of market and appreciation is not sustainable over time, however it’s here now and properties purchased today are expected to continue appreciating over the next 6-12 months.

For Sellers:

So much for the “Summer Slowdown”, July had a record number of closings go through the Arizona Regional MLS; surpassing every July as far back as 2001.  July also broke records in dollar volume with $3.9 Billion sold. The best July ever recorded prior was in 2005 at $2.9 Billion. The monthly appreciation rate finalized 12.5% higher than 2019 and was the 4th highest appreciation rate for July going back to 2001.  
One third of homes closed were over asking price and only 15% involved any sort of seller-paid closing cost assistance; down from a high of 27% last May.  Half of all sellers who accepted contracts in the first week of August did so with 7 days or less on the market.
Contracts on luxury homes over $1M are up an incredible 93% over last year at this time. Between $500K-$1M, contracts are up 64%. Between $300K-$500K, they’re up 39%. Between $250K-$300K, up 15%.  If you need to sell, this is the time to do it.

*The HOI Index stands for “Home Opportunity Index” and is published quarterly by the National Association of Home Builders and Wells Fargo. It measures the percentage of homes deemed affordable in an area based on lending guidelines, interest rates, median income levels and median price. The most recent report was released on August 8th, 2020.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2020 Cromford Associates LLC and Tamboer Consulting LLC

Congratulations to my 2nd Quarter Buyers & Sellers

Covid 19 Did Not Slow Us Down! 

Congratulations, Pam Hait. Our families have known each other for over 40 years and I am so excited to have been a part of this new chapter in her life. She sold her amazing Blane Drake home in Paradise Valley and moved into a charming patio home at Scottsdale House. With the help of her team of contractors and designers she has made the home truly hers. Pam and her pups will have many years of happiness in their new home!

Four years ago, Elizabeth & Matt Graves moved here for Matt’s residency in OBGYN at Banner University Medical Center. Now they have moved back home to Oklahoma where they will start the next chapter of their lives. It is always a pleasure to work with repeat clients who truly became friends over the 4 years that they were in Phoenix. I wish Matt and Elizabeth the best of luck in all their adventures. 

Congratulations Kaylee de Tranaltes and David Casper who recently bought their first home. Shortly thereafter they began their medical residencies at Banner University Medical Center and in October they will be married. What a great 2020 despite all that is going on in AZ and the world. New home, new jobs, and soon a new marriage!

Tara & Jake Bachofer recently bought their first home together just before starting their residencies at Banner University Medical Center. They were able to purchase a remodeled home in Historic Phoenix not far from Veteran’s Memorial Colosseum. With the long hours they will spend in the hospital, a short commute will be nice for them. Congratulations Tara & Jake.

Heidi & Scott Morton were referred by past clients as they were relocated to Utah for Scott’s job. Their timing to sell their home was perfect; it sold within 24 hours above asking price! Now they are settling into their new home in Utah where the temperatures are much cooler. I may be scheduling a visit sometime soon! 

Bobby Hallett and Christine Bull were eager to vacate their rental property in Scottsdale and buy their first home together. After losing one house to multiple offers, they found a terrific home right around the corner and moved quickly to make an offer. It is said that things always happen for a reason and they ended up with a better house for them. Congratulations Bobby & Christine! 

Belinda McBride had an amazing mid-century home in the historic Campus Vista Phoenix neighborhood. She made some updates to the home but honored the character of this 1940s build. This home had 2 offers before it hit the market but when COVID struck and things changed. After negotiating 3 times on this home, the third buyer was the winner! Now a new family is making it their own and Belinda knows the home is in good hands. 

Michelle & Ben Davis were ready to move their family out of their rental and into their first home together. Married not too long ago and bringing two kids into the mix, it was time for them to build a home together. We started looking in Ahwatukee where they found a home, went under contract and then found it needed too many repairs. On to the next home which they found in N. Phoenix, a great location for the two of them who both work at St. Joseph’s Hospital. Now they are making their first home together and enjoying the next chapter in their lives. Congratulations Michelle & Ben.

Analyst: Phoenix housing market seems immune to Covid-19 impact

Leading the nation once again in home price gains, Phoenix appears to be immune to Covid-19.

At 8.2%, Phoenix reported the highest year-over-year gains during March, according to the S&P CoreLogic Case-Shiller Indices, at a time when the national year-over-year gain was 4.4%.

Tina Tamboer, who keeps a pulse on home sale contracts that have been signed as senior housing analyst for The Cromford Report, said April numbers show the Phoenix market already has rebounded. I asked her about what other factors are impacting the Valley’s housing outlook.

Is Phoenix home price growth immune to Covid-19? Housing values don’t respond to viruses typically, but that doesn’t mean they’re immune to Covid-19. Housing values respond negatively to prolonged vacancies. Government responses to the pandemic in terms of mandates and financial aid can both hurt and help real estate values in that regard.

What would minimize vacancies and retain home values? A massive death rate; more residents moving out of the metropolitan area versus moving in; excessive financial strains (medical or job-related) that would cause multiples of two households merging into one, thus leaving a vacant home for sale or rent; a high percentage of homes dependent on tourist demand/travel, which creates vacancies in the wake of travel restrictions and major event cancellations.

What do you see for the Valley’s housing market? I expect the Case-Shiller Index will report a slightly weaker appreciation rate for greater Phoenix over the next couple of months, mainly due to weak luxury market sales in April and May. However, low demand would have to be prolonged and sellers would need to get desperate in order to have a strong negative influence on price. That hasn’t happened. In fact, low counts of new listings tells us that many sellers are keeping their homes off the market until the storm blows over.

This article was written by Angela Gonzales, Senior Report at The Business Journal. June 8, 2020.

Arizona Real Estate Market Update - May 2020

Pandemic Effect: Closed MLS Sales Down 31%

Look Who’s Back: Weekly Contracts Up 40% in 4 Weeks

For Buyers:

Greater Phoenix contract activity dropped 39% over the course of 6 weeks  between March and mid-April.  The effects of those declines are now being reported over a month later as a 31% decline in closed sales.  This is not surprising, you can’t close what was never opened.  But that’s already old news, what is not getting reported yet is the 40% increase in accepted contracts over the past 4 weeks.  This is key information for buyers right now, especially if they’re on the fence waiting for the market to “crash”.  This 4-week increase in buyer demand will not be widely reported for 6 more weeks because these contracts still need to close. 

One mistake approved buyers make is waiting for closing reports before acting. By the time a property closes escrow and a sales price is publicly recorded, the condition that transaction was created under may have passed.  The opportunity for buyers lies in knowing how many contracts are being accepted right now in their price point and area.  They also need to know the average list price at contract to gauge where they are this week compared to 10 weeks ago.  This information can only be obtained through a REALTOR®.

They will discover a significant increase in contract activity across all price points in Greater Phoenix, but the average list price per square foot is only down on contracts written over $500K.  All other price points below $500K are seeing the average list price per square foot either higher than or equivalent to where it was 10 weeks ago in February.  This does not indicate an impending doom for home values.

Buyers hoping for cheap homes should not retreat in despair, however.  Mortgage rates have declined to an average of 3.26% according to Freddie Mac; last year at this time mortgage rates were 4.1%.  So while the median sales price rose 8.9% over last year, the principal and interest payment on a $300K, 30-year, fixed-rate mortgage went from $1,450/month to $1,307/month.  That’s down $143, a 10% decline over the course of a year.  The biggest mistake buyers make is sitting around waiting for sale prices to decline while their potential mortgage payment plummets.  Low mortgage rates are not something to ignore or take for granted as they can change quickly for better or worse.

For Sellers:

The increase in contract activity is great news for sellers.  However, there are fewer cash buyers offering top dollar for homes in “as-is condition” compared to 10 weeks ago; meaning increased pressure on sellers to do repairs and offer concessions to normal buyers in order to sell their home for their desired price.  This is reflected in the percentage of homes closing with seller-assisted closing costs, which increased from 18% to 25% over the past 4 weeks.  

The market over $500K is recovering slower than the other price ranges after dropping 58% in weekly contracts due to travel restrictions and the stock market crash from late February through March.  While contract activity rose 65% over the past 4 weeks, it’s still down 30% from its peak 10 weeks ago.  The irony is that one would expect a massive number of price reductions after such a dramatic drop in demand, but that was not the case.  Instead, sellers over $500K simply picked up their ball and left the field.  The highest percentage of cancelled listings were seen in the luxury market, which reduced supply and mitigated the loss in demand.  As a result, sales prices over $500K have remained stable thus far and are up just 0.9% from this time last year. 

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2020 Cromford Associates LLC and Tamboer Consulting LLC

Arizona Real Estate Market Update - April 2020

Pandemic Puts Housing in a “Pinch”

COVID-19 Aftermath: Good News for Normal Buyers

For Buyers:

The kickoff of 2020 was developing into a nightmare for normal buyers who just wanted to find a place to live.  Extreme competition for homes between wholesalers, cash buyers, vacation rental investors and traditional buyers depleted supply and created an environment consisting of multiple offers, appraisal waivers and an increasing number of sales over asking price. The Greater Phoenix housing market was on the precipice of seeing price appreciation accelerate at an alarming rate and had analysts wondering what could possibly slow it down.  Well, they have their answer, an act of nature. The COVID-19 pandemic came in like a wrecking ball in March shutting down tourism and crashing the stock market single-handedly over the course of a few weeks.  Hedge funds and iBuyers (funded by Wall Street) bowed out of purchases and vacation rental buyers put their plans on hold.  This is providing much needed relief to normal home buyers, if only they could leave their house. Stay-at-home orders to stem the impact of the pandemic has “pinched the hose” on what is arguably one of the hottest housing markets in the country.  This is causing a build-up of pent up demand that will undoubtedly return with some gusto when travel restrictions are lifted and a level of stability returns. Do not expect prices in Greater Phoenix to drop like they did in 2008, however. Back then when investors pulled out of the market, prices were so high that families making the median income could only afford 27% of what was selling.  This time around as investors once again pull out of the marketplace, families making the median income can afford 68% of what’s selling with today’s incomes and interest rates.  This is well within normal range and puts regular home buyers in a better position to pick up the pieces left by Wall Street and vacation rental investors. 

For Sellers:

Lock downs and travel restrictions across the country are causing buyers who need to relocate to Arizona, either for a job or to retire, to put those plans on hold for now.  The effects of COVID-19 span the job market, stock market, corporate profits, and exchange rates. This has had the highest impact on high-end luxury market buyers.  Not only are these buyers restricted from leaving their home cities at the moment, they have instability in their portfolios as well.  Under these circumstances it should not come as a surprise to see that weekly contract activity over $500K has slowed down by 64% since their peak on February 24th while price points under $500K have only seen a 30-40% slow down.
Sale prices are not declining at the moment, but seller expectations are adjusting.  Upticks in weekly price reductions tell us that sellers are beginning to ease up on pushing market value.  Sellers are also beginning to realize that it will take longer to sell their home under these conditions.  Weeks ago, some listings were receiving multiple offers within a matter of hours, but that’s not a reasonable expectation now.  Active listings that would’ve flown off the market 4 weeks ago could be on the market for weeks, maybe even months at this rate.  Information, communication and strategy will be important during the course of the pandemic response.  It is situations like these where professional REALTORS® get to show the value of their experience and service.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2020 Cromford Associates LLC and Tamboer Consulting LLC

Congratulations to My First Quarter Buyers & Sellers

With continued declining inventory in greater Phoenix, each successful closing is a true victory! Here are the couples celebrating with Team Glassman!

Congratulations to my long-time friends, Jennifer & Charlie Smith! The Smiths enjoyed their home at 5502 E. Mariposa St. in Arcadia for 13 years. They raised two children and now it is time for the next chapter - DOWNSIZE! Jennifer & Charlie are now enjoying a relaxing life of simplicity right in the heart of downtown Scottsdale. I am so grateful that I continue to be a part of their journey. 

I am thrilled for Jason & Colette Jackson who moved into their first home together in New River! Jason & Colette have been friends and colleagues for several years - they own the best glass and window company - Jackson Glass! Now living in a house of their own and creating memories with their adorable pup, they are loving life! I learned so much about selling a manufactured home and I am ready for the next one! Congratulations. 

What a ride it has been, Brian, Alyssa & Max Vance! With Max who just turned 1 and another on the way, they were troopers as we searched for their home. The process was a little bumpy but we stayed focused with the team and got it done. Now the Vance Family is settling into their new home and neighborhood just in time for baby #2. And, I got a new Assistant/TC in the process - Alyssa, welcome to Team Glassman! 

I met John & Nick Hurst at an open house and a few months later they reached out. My colleague Dave Pries and I worked with them and they quickly found the home of their dreams. It will be a couple of months before they move into their gorgeous Central Phoenix home. I look forward to having them in the neighborhood and as soon as we can we will celebrate at a great local hangout. 

Congratulations Sean & Jessica Morgan. Through patience and perseverance, Sean and Jessica found a fantastic home in Arcadia Lite. It is an older home that needs some TLC but the Morgans are ready to get to work! This is a true story of buying a home with “great bones” to make it what they want over time. I am glad they persevered and closed on this beautiful home. 

Arizona real estate market update as it relates to COVID-19 (Novel Coron...

Here is my Arizona Real Estate Market Update and how it is being affected by COVID-19 (Novel Coronavirus). The market stays strong!

Please let me know if you have any questions and remember...I am never too busy for your referrals!

#TeamGlassman

Arizona Real Estate Market Update - February 2020

MLS Luxury Sales Over $1M Up 52% in January

Supply Between $200K-$250K Down 60%

For Buyers:

While supply is down in all price points, it’s felt the most between $200K-$250K. Supply in this price range is nearly 60% lower than this time last year and a quarter of sales in the last 3 months have recorded over asking price.

Seller-paid closing cost concessions are also down.  Nearly 22% of all sales in the 1st Quarter to date have included some form of seller-paid or assisted closing costs.  That’s the lowest percentage recorded in nearly 5 years.

For Sellers:

Supply continues to drop as the market heats up with the seasonal rush of Buyers.  Typically we would see supply rising at this time of year as January is a strong month for new listings to hit the market.  However this year new listings year-to-date are down 17% from last year and January 2020 had the lowest number of new listings recorded going all the way back to 2001.  Combine this with a 21% increase in sales volume and the 4th highest January recorded for MLS sales, and it’s no surprise that supply is plummeting. 

The luxury market continues to go gangbusters in 2020.  Sales over $1 Million in 2019 outperformed 2018 by 10%, which makes it the #1 year for in Greater Phoenix in this price range.  January closings were up 52% in this price and listings under contract are up 43%.  

With all this demand, one would think price appreciation would be rising significantly however that hasn’t happened yet. The average sales price per square foot between $1M-$2M has only appreciated 1% while those between $2M-$3M have appreciated 0.2% and those over $3M have increased 6%.  The current appreciation rate per square foot is between 8-9% for Greater Phoenix as a whole.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2020 Cromford Associates LLC and Tamboer Consulting LLC

January 2020 - 1st Market Update of the Century!

Prices are Expected to Rise so Buy Now!

Sellers Get Ready for Multiple Offers!

For Buyers:

The urgency for buyers cannot be stressed enough; real estate prices are not projected to decline in the Greater Phoenix area in 2020.  There is not one measure from any angle that supports that theory.  Not only will they not decline, they will not stop rising this year at the current levels of supply and demand.


On January 9th, active supply was counted at just over 12,000 listings for all of Greater Phoenix.  This is down 32% from this time last year and excruciatingly low.  To put it in perspective, a “normal” level of inventory should be at least 28,000 - 30,000 active listings in the MLS for a metropolis the size of Maricopa and Pinal County.  The last time inventory was recorded this low was in 2005 at 9,000 listings with a population of 3.8M.  Now Greater Phoenix has 4.8M people with less than 1% of existing housing available for sale.  With monthly sales up 17% over last year, fueled by population growth, job growth, income growth and low interest rates in the area, sellers have few reasons to sell below market value.  It’s not logical to expect prices to soften in this environment.

Buyers who have been waiting for sales prices to decline before they purchase have nearly missed the boat.  This is because while they were watching prices rise, the payments for those same homes declined for a year with declining mortgage rates.  However, when mortgage rates stabilized 6 months ago, hovering around an average of 3.75%, payments started to creep up again.

In short, if someone wants to purchase a home and they have the means, then they should lock into one.  They should expect competing offers, expect to lose some opportunities, and expect to do some upgrades.  They should also expect to live in their new home for at least 5 years to build up enough equity to mitigate the risk of ups and downs in the future.

  

For Sellers:

This is an exciting time for those who need to sell.  Anyone who owns property has probably been contacted multiple times by multiple means throughout the year by people wanting to buy their home.  While sellers are under much less pressure to perform repairs and upgrades in order to sell their home, it doesn’t mean that they will sell it as quickly or for as much as those that are move-in ready.  But, it will sell in this market.  Those who are considering selling to an internet investor buyer (aka iBuyers who offer some up-front certainty and convenience in the selling process), should know that they still have negotiating power in the transaction and have the option to be represented by a Realtor if they choose.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2020 Cromford Associates LLC and Tamboer Consulting LLC