Little Risk of Foreclosure Crisis

Homeowners have options to avoid a 2008 housing crash

The following commentary provided by The Cromford Report, Arizona’s most respected source on residential real estate. Provided as a proud member. Graphic shows Phoenix Metro residential real estate market Dec 8, 2020, as compared to Dec 8 2019: Active Listings down 48%; Listings under contract up 35%; Median Sales Price up 16.5%

Phoenix Metro residential real estate market Dec 8, 2020 as compared to Dec 8 2019: Active Listings down 48%; Listings under contract up 35%; Median Sales Price up 16.5%
For Buyers

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.

For Sellers

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.

About the Author:

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Why Live in Carefree Arizona?

No Property Tax is just the beginning of reasons to live in Carefree

One of the most popular destinations in North Scottsdale

Carefree is a rural residential town of approximately 3,700 people, residing in 1,900 homes, slightly more than 8 square miles in area, one of the most popular destinations in North Scottsdale. In addition, it is just an hour drive from downtown Phoenix and Sky Harbor International Airport. It resides in the center of the golf Mecca of the world, and borders the well known night life of Cave Creek.

Carefree is well known for its quaint “downtown” where the streets “Ho” and “Hum” converge for a photo opp! Here you can attend Art Fairs, Wine Tasting and Farmers Markets every weekend from October – April.  

Sonoran Desert

Residents adore the natural beauty of the Sonoran Desert, the clean air, light traffic, local resorts and year-round outdoor activities including hiking, biking and riding. The most well-known landmarks in Carefree is Black Mountain. This part of north Scottsdale is also close to Bartlett Lake and Tonto National Forest for an endless variety of boating, trail riding and camping.

Home Prices in Scottsdale

Home prices are on the higher end of metro-Phoenix cities in Maricopa County. Crime is in the lowest 25% of the nation. The elevation of Carefree is over 1,200 feet higher than Phoenix-Scottsdale city centers, and residents claim there is a 10 degree differential, a sweet place to be in the summer months. In addition, Carefree has a deep aquafer and has been able to avoid the water issues which have plagued various parts of North Scottsdale as developers raced to join in the growth here over the last few decades. In addition, Carefree has no local property tax.

Ask our residents what made them move to Carefree and many will mention the natural beauty of the Sonoran Desert, the clean air, less traffic and ideal for people who treasure peace and tranquility in their surroundings. Once living in Carefree, residents stay because of the people and the outdoor lifestyle available to them. Carefree residents are active and involved in a broad cross-section of activities. Ranging from young families to retired professionals, they are all living their lives to the fullest. 

Cave Creek is well known for it's bars

For the latest on Arizona Real Estate Statistics, check back monthly www.HotFromPhoenix.com

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Luxury Home Sales Increase in Arizona

Luxury Home Sales in metro Phoenix – Scottsdale set records despite COVID.

Luxury Homes sales are following the Stock Market into new territories

Arizona Real Estate Market Report Update

See full report with charts & graphs compiled by the Cromford Report. LINK

About the Author: Denise van den Bossche is celebrating 35 years representing owners and buyers of Real Estate in Maricopa County. A Legacy LEED® AP, Senior Real Estate Specialist (www.SRES-AZ.com), DMX, ePro, Distressed Properties & Foreclosure Specialist and GUILD Luxury Home Marketing Specialist certified by the Luxury Home Marketing Institute. To request a no-obligation market report, home evaluation, or consumer guide on your specific needs, contact Denise at 602.980.0737 or email  Denise@AZMultipleListingService.com.  Denise’s husband Patrick is President of Realty Executives International, with 500 offices throughout North America.

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Hot From Phoenix: 3rd Quarter Housing Hits Historic Highs

Phoenix metro housing hits historic highs during a worldwide pandemic.

When the pandemic hit full throttle in March 2020, we had an unknown potential for devastation worldwide. However, the 3rd quarter 2020 ended up being the 2nd greatest housing market in Metro-Phoenix history. Full Report.

On October 27, the U.S. National Home Price NSA Index declared that Phoenix once again topped the nation in home price growth, with year-over-year price increases of 9.9% in August (the S&P CoreLogic Case-Shiller). That compares with a 5.7% annual gain in August nationwide. And our supply of inventory has remained below two months since mid-year, hitting an all-time low of 1.26 months supply in July. Full monthly market video update here.

The Cromford Report Infographic October 2020

Maricopa County’s hot housing market is not due to a lack of listings. It’s due to market demand. We gained 30,340 brand new listings in the 3rd quarter, had 27,746 sales, which leaves just 8,203 remaining listings. That means 2020’s 3rd Quarter was the 2nd best in Greater Phoenix history for closings.

This falls just 436 sales short of that scary period of 2005, where you got seriously hurt if not on the right side of the equation.

This Halloween, you should go as a home buyer. To my office. So I can help you buy a house.

If that’s not impressive enough, there are another 13,502 properties currently under contract and scheduled to close in the next 30-45 days; up 36% from this time last year.

BUT YOU HAVE TO ACT QUICKLY

With this information we can conclude that there is plenty for sale, but many listings are simply not in Active status longer than 24 hours in order to be counted. Getting the supply count to rise right now is like trying to fill a bathtub when the drain is wide open.

Over half of all listings that went under contract in the 3rd Quarter were Active for only 9 days or less prior to contract.

As exhausting and stressful as it is, supply and demand measures indicate prices in Greater Phoenix will continue to rise well into 2021. So dealing with today’s stress is still a good opportunity for a buyer. That is, as long as they know how to best negotiate, and how to avoid the risks.

MANY ARE TAKING RISKS

To compete in this market, we’re seeing buyers & sellers taking risks that may come back to haunt them:  One tactic we often see are buyers submitting personal letters … but did you know that both the seller and the agent may be at risk of a federal fair housing violation which can carry up to a $16,000 penalty for the first violation. Ignorance is no excuse for not understanding protected class issues in real estate. Other common situations are buyers waiving some of their rights to win a bidding war. This can be a costly error that should not be done without experienced advisement.

For  more on the current market, including charts and graphs, check out this month’s 2 minute market update (link).  

For Buyers

Appreciation has accelerated significantly since June of this year. The median sale price is up 18% since last October, but in some cases prices over the last short 4 month period are up an amazing 12%. While that’s exciting for sellers, many worry they will be left homeless after a quick sale. As a result, some Realtors® are recommending use of a seller contingency addendum which states that any accepted contract will be contingent on the seller finding a home themselves prior to close. It is a difficult strategy that varies situation to situation.

Compared to last year, sellers are asking 9 to 20% more for their homes in price ranges under $1M, and 3-8% for price ranges over $1M. The highest percentage of sales over asking price in the last 30 days are occurring between $200K-$400K with a measure of 34-45%.

For Sellers:

While sellers may look at this as a reason to ask unrealistic prices, inflation of prices is still not the majority of sales. Most properties are still closing at or below asking price.

Statistics taken from the monthly commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report. van den Bossche is a proud subscriber of The Cromford Report.

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2020 Housing Market has No Similarities to 2008

Supply and Demand are completely opposite from the last big housing recession

Supply & Demand in the Phoenix Metro Housing Market September 2020
Today’s above normal demand and below normal supply are opposite of 2008.

The adverse relationship between Supply and Demand in the U.S. Housing Market today is opposite as compared to the conditions back in 2008. There are no similarities in today’s market to those 15 years ago. In 2005-2008 we had over 100% more homes than normal, and today we have a 63% shortage. Back then we had negative demand, while today we have bidding wars, especially in homes under $400,000.

Today’s buyer is different too

Today’s buyer is looking for a home to live in, to work in, and perhaps to start a family. That was not the buyer of 15 years ago, when investors bought homes sight unseen for rental potential. Low interest rates and housing affordability are enticing first time home buyers, renters, and millennials. Homebuilders, re-entering the market with trepidation post-2009, had not anticipated this just a few short years ago.

The “New Normal” needs a larger home

The Covid-19 pandemic has increased demand significantly. “Live, Work, Play” means more time is spent at home as offices and schools close for much longer than originally anticipated. In addition, households are growing larger as elderly relatives and adult children and grandchildren are blended into the household. Homeowners are using the low interest rates to pay the same monthly nut for a much larger home. Priorities have shifted as families shelter together to meet social distancing guidelines.

What to look for when expecting a housing market correction: When appreciation slows. p.s. The market is not shifting yet

September 24, 2020 Full Market Report

See this month’s market report as reported from The Cromford Report, Arizona’s most respected source, located on the campus of Arizona State University. STATISTICS CLICK HERE

About the Author: Denise van den Bossche has been a licensed Agent and homeowner for over 35 years in the Metro-Phoenix Scottsdale Valley of the Sun. Legacy LEED® AP, designated SRES, DMX, ePro, EcoBroker and co-founder of Seniors Advisors Advising Seniors®, a consortium of experts to surround and support families facing aging or chronic illness. To request a no-obligation market report, home evaluation, or consumer guide on your specific needs, contact Denise at 602.980.0737 or email  Denise@AZMultipleListingService.com.  Denise’s husband Patrick is President of Realty Executives International, with 500 offices throughout North America.

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August 2020 continues a Housing Market Frenzy

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

June 2020 Employment Report Released August 20 from the Arizona Commerce Authority

June 2020 Employment figures released

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Election Year Effect on Interest Rates

The strength of the housing market in the U.S. continues to benefit the economy, with no indication of an impending crash like we saw in 2008. Demand for homes are partially due to low interest rates. Will rates be effected by the election? This graph demonstrates that election years did not have much effect on rates.

This graph demonstrates that election years did not have much effect on rates.
Election Year typically doesn’t effect interest rates. Chart provided by The Cromford Report

Note that those years that were effected had underlying causes that were unrelated to the elections: In 1980, if you’ll remember, Greenspan had much pressure to raise rates. the other biggest election year of 2016, Mortgage backed securities shifted significantly due to law changes.

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Sick buildings compromise healthy people

woman wearing mask
Are you Compromising Your Health by Sheltering in a Sick Building?

What is a healthy building, and why should that be important to you? Sick buildings compromise healthy people. Most of us are aware that hospital stays can and do cause illness unrelated to the reason the patient came for treatment. This frequently results in devastating issues for those with compromised immune systems. This can be even more critical when searching for a retirement community.

And indoor air quality and proper ventilation are just the beginning of a healthy environment.

LEED® certification was partially in response to “Sick Building Syndrome.”

Denise van den Bossche, Legacy LEED® Accredited Professional

Leadership in Energy & Environmental Design® (LEED®)

LEED® is the most stringent of all certifications for both commercial and residential structures. Achievement of the LEED Accredited Professional® (LEED® AP) designation, is to qualify by experience, as well as pass one of the most difficult professional business exams.

LEED stands for Leadership in Energy and Environmental Design®, a designation managed by the U.S. Green Building Council. Far more stringent than any other designation, credential or “green” design, the vast majority of professionals who have achieved LEED AP status are licensed practicing Architects and professional designers. Keep in mind that sick buildings compromise healthy people.

For Seniors, housing selection can mean life or death

Most people do not hire an architect to accompany us while we explore housing options for our loved ones, there are many factors involving building health that you should consider. You need to know the questions to ask and the issues to look for when it is your turn to select accommodations for a loved one in need. Make sure you work with someone familiar with issues unique to those over 50 years old. A NAR® designated Senior Real Estate Specialist® (SRES) is a good place to start.

About the Author: Denise van den Bossche has been a licensed Agent and homeowner for over 35 years in the Metro-Phoenix Scottsdale Valley of the Sun. Legacy LEED® AP, designated SRES, DMX, ePro, EcoBroker and co-founder of Seniors Advisors Advising Seniors®, a consortium of experts to surround and support families facing aging or chronic illness. To request a no-obligation market report, home evaluation, or consumer guide on your specific needs, contact Denise at 602.980.0737 or email  Denise@AZMultipleListingService.com.  Denise’s husband Patrick is President of Realty Executives International, with 500 offices throughout North America.

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Phoenix Home Appreciation Remains Hot

Arizona home prices are among the nation’s fastest-rising

Arizona scored the second highest state for home price appreciation according to the recent Federal Housing Finance Agency House Price Index data release on 8/25/2020. While home appreciation national average was a robust 5.4, Arizona home prices appreciated 9.1% in the second quarter 2020. Idaho was the highest at 10.8 percent and all states had positive one-year changes based on the 2019 comparative quarter. Phoenix Home Appreciation expected to remain Hot into the fall months as Maricopa County continues to attract families, seasonal homeowners and retirees.

Home Values
Truth or Myth: What does it really cost?

Phoenix continued to have the highest home appreciation gains for the 13th consecutive month in the S&P CoreLogic Case-Shiller Index with an over-the-year increase of 9.0 percent for June 2020. Seattle and Tampa followed Phoenix with 6.5 percent and 5.9 percent increases, respectively. Phoenix Home Appreciation Remains Hot.

Local Market Update

It is more than the weather that’s HotFromPhoenix: Watch my monthly market update with the charts and graphs here. Charts provided by The Cromford Report, Arizona’s most trusted source of residential market statistics. Charts cover Phoenix Home Appreciation, Listing Shortage, Buyer Demand and Historical Low Interest Rates.

Golden Nest Egg for Retirement
For Seniors, Home Appreciation adds years to retirement income

About the Author: Denise van den Bossche has been a licensed Agent and homeowner for over 35 years in the Metro-Phoenix Scottsdale Valley of the Sun. Legacy LEED® AP, designated SRES, DMX, ePro, EcoBroker and co-founder of Seniors Advisors Advising Seniors®, a consortium of experts to surround and support families facing aging or chronic illness. To request a no-obligation market report, home evaluation, or consumer guide on your specific needs, contact Denise at 602.980.0737 or email  Denise@AZMultipleListingService.com.  Denise’s husband Patrick is President of Realty Executives International, with 500 offices throughout North America.

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August 2020 Phoenix Metro Real Estate Update

From Cromford Associates, on the campus of Arizona State University, Arizona’s most respected source, this month’s Real Estate Market Update.

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.

Conclusion:

*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.

About the Author: Denise van den Bossche has been a licensed Agent and homeowner for over 35 years in the Metro Phoenix Valley. To CONTACT Denise, please call 602.980.0737 or EMAIL:  Denise@AZMultipleListingService.com. Her husband Patrick is President of Realty Executives International, so if you need help buying or selling homes anywhere in the U.S. or Canada, please call, email or text!

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