Q: Is a Wave of Foreclosures Set to Crush Our Housing Market?

I don't foresee a wave of foreclosures crushing our market. Here’s why.

With the housing market strengthening every day and more Americans returning to work, our housing sector is recovering from the pandemic faster than what was expected. However, many people are still asking the question: Will we see a wave of foreclosures given the current crisis?

Thankfully, research shows that the number of foreclosures is expected to be much lower than what the country experienced during the last recession. According to Black Knight, Inc., the number of mortgages in active forbearance has been leveling off over the past month. Of the original 4,208,000 families granted forbearance, only 2,000,588 homeowners got an extension. This shows that people are paying their mortgages again. Either that, or they never tried lengthening their payments in the first place. They may have applied for forbearance out of caution, but they never acted on it. 

The housing market is in a better position than many think, and much of this is due to the fact that today’s homeowners have more equity than in years past. According to John Burns Real Estate Consulting, over 42% of all homes are owned free and clear. This means they’re not tied to a mortgage. The other 58% average roughly $177,000 in equity. This figure is keeping many homeowners afloat. 

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   A perfect storm for a wave of foreclosures is not in the housing market forecast.

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While ATTOM Data Solutions indicates that there’s a potential for foreclosures to increase throughout the county, it’s important to understand why they won’t rock the housing market this time around. As of right now, the active quarterly foreclosure number stands at 74,860. That’s over 7.5 times lower than the number of foreclosures we saw in 2009. Even if the number of quarterly foreclosures doubles, they’ll only reach a normalized range, historically speaking. 

Equity is growing, jobs are returning, and the economy is slowly recovering. A perfect storm for a wave of foreclosures is not in the housing market forecast. While our hearts are with anyone who ends up in a foreclosure situation as a result of this crisis, we do know the homeowners have more options than they did 10 years ago. For some, this may mean selling their house and downsizing without equity, which is a far better outcome than foreclosure. 

As always, if you have questions about this or any real estate topic or are thinking of buying or selling a home soon, don’t hesitate to reach out to me. I’m happy to help.

Q: What Do the Experts Say About Future Home Prices?

Here’s what you can expect from our real estate market moving forward. 

The worldwide pandemic and economic recession have had a tremendous effect on the nation. There’s a lot of uncertainty when it comes to predicting consumer behavior, which is nearly impossible anyway. By extension, forecasting home prices has become difficult as well. Normally, there’s a simple formula to determine future pieces: supply and demand. 

Right now, demand for homes exceeds supply. Mortgage applications are at an all-time high, and inventory is at an all-time low, which normally indicates strong appreciation, but we went into a three-month reset, so we’re catching up to what would’ve happened during that time. Some experts aren’t convinced the current rush of home purchases is sustainable. The pandemic and other challenges impacting the industry have created a wide range of thoughts regarding the future of home prices. 

Cited below for your convenience are timestamps that will direct you to various points in the video. Feel free to watch it in its entirety, or use these timestamps to browse specific points at your leisure: 

1:48—Expert analysts and their predictions for home prices

2:54—The outlook for this summer 

3:17—The impact of unemployment 

4:13—Why we’re not in for a full recession ala 2008 

5:10—The journey ahead 

5:41—Wrapping things up 

As always, if you have questions about this or any real estate topic or are thinking of buying or selling a home soon, don’t hesitate to reach out to me. I’m happy to help.

How Mortgage Rates Are Affecting the Market

The average mortgage rate is at a seven-year high. Is this what’s behind the shift we’re seeing in the market?

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The 30-year fixed mortgage rate currently stands at around 4.77%. That's near a seven-year high, and almost 1% higher than just a year ago. This is the result of a steady rise starting last September and ending this May. What impact is this having on the real estate market? It's certainly true that affordability is down. In fact, one estimate from June found that home affordability is at a 10-year low. This is translating into fewer home sales, fewer viewings, and fewer mortgage applications. However, I don't believe that the shifts in the mortgage rate is the primary mover of the changes we're seeing in the real estate market. In fact, even at its current level, the mortgage rate is still historically low. Instead, the big reason for the changes in the real estate market is the ongoing growth in prices. Over the past several years, home prices have gone up at close to twice the rate of inflation, and have far outstripped the growth of incomes. 

Over the past several years, home prices have increased at twice the rate of inflation.

The price increases, in turn, have been caused by a lack of inventory, which has been shrinking for the past three years. In my opinion, it’s this lack of inventory (and the resulting hike in prices) that explains most of the effects on the real estate market that I listed above. If you're looking to sell, you should still have no trouble doing so. Demand continues to outstrip supply, and even with dropping affordability, it's very likely that you would find a buyer quickly and at a top price. If you're looking to buy, the picture is more complex, because it's so hard to predict what the mortgage rate might do in the near term. One thing we do know is that the severe lack of inventory is unlikely to change any time soon. As always, if you have questions about the Greater Phoenix real estate market, whether you're buying or selling, you can give me a call or send me an email. I'm here to help.

Is Phoenix Entering a Buyer’s Market?

After being in a seller’s market for quite some time now, it looks like a shift is on the horizon. Here’s what you can expect.

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After several years of continuous price gains, the real estate market seems to be reaching its price cap. In June, the last month for which we have complete numbers, 14% of all listings saw a price cut. That's up from a low of 11.7% at the end of 2016. In the same month, housing demand fell 9.6%, the largest decline in over two years. Mortgage applications to purchase a home have decreased as well. A few things are at play here. One is rising mortgage rates, which have been steadily climbing for much of this year. Another is an overall decrease in affordability, resulting from a combination of the growth in home prices and mortgage rates. If this is the start of a buyer's market, it's unlikely to be just a momentary blip. One sign of this is that homebuilder sentiment has recently fallen to the lowest point in almost a year. In other words, homebuilders are losing confidence in their business due to the aforementioned affordability concerns.  

This is certainly good news if you’re looking to buy a home.

So what does this mean for you? Well, it's certainly good news if you're looking to buy, because it means you will have more choice at more affordable prices. On the other hand, if you've been thinking of selling, this might mean that it’s time to act. Listing your home now would give you the best odds of achieving a top price before the change in the market occurs. Remember that all real estate is local. There are big differences even within the (area) area, and prices can change from block to block. If you want more specific information about the Phoenix market, or you're mulling over the idea of buying or selling a home, give me a call or send me an email. I'm here to help.

Heroes for Students Is What Our Kids Need

There are many great Phoenix Area homes for sale. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at 602-252-4191 for a FREE home buying or selling consultation to answer any of your real estate questions.

Today we are joined by Richie Ressel, the co-founder of Heroes for Students, a local non-profit organization working to inspire and empower children in Phoenix. First we’ll tell you a little about Richie and his background, and how his organization is working to brighten our future.

Richie has been in education for 5 years and was a teacher in the classroom for three of them while pursuing his master’s degree in elementary education. He noticed a big divide between the community and his classroom, so he wanted to bridge that gap. He saw his students weren’t benefitting from the community, so that’s when he decided to start bringing in guest speakers to his classroom. 

One particular guest speaker he brought in was a bi-lingual female doctor. Richie recalls a young girl being so inspired by this speaker and her message, that she ended up raising over $1000 for children with cancer.

Seeing this kind of inspiration occur while continuing to see the gap between the students and the community widen, Richie and his co-founder decided to put together an organization that would have a database of guest speakers for people who want to rally around their local schools. So far, they have been able to get over 100 guest speakers in classrooms, impacting over 500 students.

In addition to working on bringing more guest speakers into the classroom, they are also planning some community events as well. Richie wants to close that gap between the high-performing and low-performing schools by inspiring and empowering his students to take advantage of the opportunities presented to them. It’s not just about what they learn in the classroom, it’s about what they learn outside of it as well.

If you have any questions for Richie about Heroes for Students, feel free to give him a call at (760)703-3404 or visit the organization’s website online here. If you have any real estate questions, you can obviously contact us and we will be with you shortly.

Arizona 2030: Building a Better Arizona

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There are many great Phoenix Area homes for sale. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at 602-252-4191 for a FREE home buying or selling consultation to answer any of your real estate questions.

Today I have the honor and the privilege to be sitting with Andre St. Pierre. He is a graduate of the Valley Leadership class, and Arizona 2030 was a project that he started in order to complete the class.

His team had lots of different issues and ideas that they wanted to solve, so Arizona 2030 (www.Arizona2030.org) gave them a platform for them to solve their individual problems while also allowing people to pursue their other goals.

Community organizations, nonprofit organizations, businesses, and members of the community can all come together and tackle these goals together. They have partnered with the Center for the Future of Arizona in order to merge mutual ideas and accomplish shared goals.

Some of the goals set forth by Arizona 2030 include:

• Connecting organizations, businesses, and individuals who are working toward similar objectives.
• Providing an online platform for organizations to share their vision, short and long-term strategies, and opportunities for others to engage.
• Sharing creative goals and new ideas to inspire Arizonans.
• Providing resources to democratize access to information, knowledge banks, and human capital.
• Creating an online venue to foster community dialogues, civic engagement, and economic development.
• Continuously evolve and expand to provide new ways to track your pledge progress and engage with the community.
• Becoming a statewide resource for all Arizonans committed to creating the Arizona we want.

Arizona 2030 is a non-partisan organization that aims to make Arizona stand out as a place that people want to live and grow.

If you would like to learn more about Arizona 2030, you can visit www.Arizona2030.org.

We encourage you to investigate this wonderful organization and take the pledge!
 
Thanks for tuning in!

Have You Heard of the Arizona Commission of the Arts?

There are many great Phoenix Area homes for sale. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at 602-252-4191 for a FREE home buying or selling consultation to answer any of your real estate questions.

Today I have the honor and the pleasure to be speaking with Robert Booker, the Executive Director of the Arizona Commission of the Arts. He's going to be filling us in on the purpose and mission of the organization. 

After graduating from Augustana College in South Dakota, Robert had the chance to work for the South Dakota Art Council. Art councils were established in the mid-60's, and every state has one. They are funded by the national endowment for the arts. The Arizona Commission of the Arts provides resources for non-profit arts projects. 

Their mission is a simple one: they want everyone in Arizona to experience and participate in the arts. Their focus is on working with non-profit art companies to make them healthy, as well as helping to further the careers of local artists. 

The arts industry in Arizona generates $500 million a year. This does not include ticket prices for events, and that is why art is a significant factor in the economic recovery. When a small town has an art show, the restaurants fill up and the hotels sell out. Art really does drive other businesses.

Another important reason for the arts is that they educate children to succeed in the 21st century workplace, which values creativity over many other skills. Art education has been proven to enhance other learning, and so Robert thinks it's vital that people both learn about and experience more art. 

If you'd like to learn more about the arts movement in Arizona, you can reach Robert Booker at (602) 771-6501 or go to www.azarts.gov. 

As always, if you need assistance with Phoenix real estate, please don't hesitate to contact my team. We're always willing to help you!

Phoenix Area Real Estate Market Update

There are many great Phoenix Area homes for sale. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at 602-252-4191 for a FREE home buying or selling consultation to answer any of your real estate questions.

Today we're going to take a look at current market conditions for the greater Phoenix area. We've seen the market finally return to normal, with sellers and buyers are on equal footing. One thing to be aware of is the overflow of investor property, which means some home prices are adjusted downward. However, if you price your home correctly, you should be able to sell it at top dollar. 

Having a larger inventory makes it difficult to sell your home because of the competition among other homeowners. However, we've been tracking the market over the last six months and have found that inventory, in relation to sales, has been pretty consistent. It appears we have a stabilized, balanced market - almost to the point we were at in 2003.

So, what does all this mean for you?

For buyers, now is the ideal time to purchase a home. Interest rates are still at an all-time low. We expect them to remain low until the end of the year, but aren't sure how much longer they'll last after that. Additionally, rates on 30-year fixed-rate mortgages are under 4.5%, meaning you can buy a lot more house for your money. For sellers, you can expect a lot of people to check out your property because of low interest rates. Also, because the market is balanced, if your home is priced right and ready to sell, you will likely be able to sell for top value.

As the numbers indicate, we've just about recovered from the implosion of the housing market that occurred in 2008. We're not sure how much longer market conditions will remain favorable, so give us a call or send us an email - we'd love to help you take advantage of our healthy market.