Navigating uncharted territory without a compass is challenging at best. Nothing about this year’s real estate activity fits into the usual cyclical patterns. Data companies are updating their projections seemingly daily.
Projections are based on trends and it takes at least 3 weeks to see an emerging trend. Before the trends, there is consumer sentiment. Home has never been more important. Today we live, work, play, and teach at home. This is why real estate is the shining star in the midst of so much bad news.
With a 58% increase in new starts from June to July, multi-family new builds made up the majority of the 22.6% new housing starts in July over June. The new builds are the only thing keeping prices from skyrocketing out of control. (Bisnow)
In July, single family starts were up 7.4% year over year. (Elliot Eisenberg)
New single-family sales are were up in July 36.3% year over year. (US Census Bureau & HUD)
Resale closings in July were up 24.7% from June which were up 20.7% from May. July’s closings were up 8.7% year over year. (NAR)
After 101 straight months of price increases the national median sales price is $304,100; the highest ever and an 8.5% increase over July 2019. (NAR)
The median listing price increased 10.1% year over year for week ending August 15. (Realtor.com)
People are buying larger houses. In July sales of houses with a square footage range of 3,000 – 5,000 are up 21.2%. (Redfin) Reasons for the increased space:
21% dedicated office space to work from home.
21% outdoor/recreation space.
7% home-schooling space.
During Q2 2020 San Francisco is the only city in the country without an increase in prices. (FHFA house price index)
FOOD FOR THOUGHT-- “Although housing prices have consistently moved higher when the favorable mortgage rates are factored in, an overall home purchase was more affordable in 2020’s second quarter compared to one year ago.” ~DR. LAWRENCE YUN, CHIEF ECONOMIST FOR NAR
Enough about National Markets-- Here is what is predicted to happen on the home front! The AZ Market:
Local economist Elliott Pollack believes that the Phoenix metro housing market will remain strong. Between the strength of our job market, affordable prices, stability, and good weather people will continue to move here from other parts of the country.
Supply: Inventory remains low but is not dropping at incredible rates. As of yesterday, our inventory is 64.4% below normal. Active listings excluding under contract accepting backups (UCB) are at 8,000 (we should have 25,000) down 40% year over year and down over 4% month over month.
Southeast Valley New Listings: This a bi-weekly comparison of new listings in 2019 and 2020 for Tempe, Mesa, Chandler, Gilbert, Apache Junction, and Queen Creek. 2019 followed the typical annual cycle showing more activity in the first half of the year. 2020 is not following any typical patterns. Which makes it impossible to know what the orange line will do next.
Demand: Pending sales up 16% year over year. This is significant given the low inventory. Our demand is nearly 22% above normal. The demand continues to rise but at a slow rate.
Sales & Prices: Phoenix metro area closed sales are up 3.2% month over month and up 15% year over year. The median sales price is $320,500, up 14.5% year over year. Healthy appreciation is 3% annually.
Southeast Valley New Listings, Pendings, and Closings: This week over week comparison for Tempe, Mesa, Chandler, Gilbert, Apache Junction, and Queen Creek since March 15 shows the listing progress we have made. It remains to be seen whether or not last week’s dip in new listings is a trend or an anomaly. Demand continues to increase slightly, absorbing the new listings quickly.
Elliott Pollack estimates that as many as 30-35% of business will permanently close due to COVID.
US debt is $14.3 trillion. The total annual US GDP is about $20 trillion. (Federal Reserve Bank of New York)
70% or $9.8 trillion in mortgages
$1.54 trillion in student loans
$1.3 trillion in car loans
$820 billion in credit cards
$380 billion in revolving lines of credit
$400 billion in miscellaneous
Okay- so what does all this data mean to you? 5 notable thoughts!!
- Right now getting a loan is about as cheap as you will ever see it.
- If you are thinking the home you have right now will not meet your needs within 5 years, then NOW is the time to sell.
- If you are thinking of Buying a home within the next 3 years-- again NOW is the time to do it!
- If you own a home and want to take advantage of these AMAZING interest rates, Do a REFI-- it could lower your payment and add some cash to your pocket.
- Elections USUALLY have a slight effect on the real estate market-- but as you have seen 2020 has been an exceptional year, so at the end of the day Live the Best Life You Can and do what you love--
Remember 2012 is around the corner and We are going to get this this, yuck 2020 year! Please call or Text me if you want to talk about a specific situation or you need to buy or sell a home-- I am always here for you!
Special Thanks to Sarah Perkins-- :)