Eric Chernick Real Estate

04/21/2020

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 homebuyers, 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.

Don’t 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 homebuyers 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’s 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

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

STOP!
Be sure to call if you have any questions about this report or about how the market is performing.
Would you like to know what is happening in your neighborhood?
Would you like to know the value of your home?
Do you need help deciding whether to sell or not or would you like to know if now is the right time to buy?
I would be very happy to get you that information.
Just reply to this email and let me know.

09/18/2019

More good news for buyers. If you're on the fence about buying now would be a good time to take a look at your options.

Contact me for a free consultation.

The quarter-percentage-point cut will lower borrowing costs for households and businesses. That could give a lift to the stock market but may not help the economy much amid the trade war.

07/23/2019

***Phoenix Area Market Report***

For Buyers:
New listings activated in June were down 10.0% compared to last June and overall supply has dropped 9.5% in 4 weeks, putting it below last year’s count for the first time all year. Buyers have gotten used to very little supply under $200K but now they’re feeling it hard between $200K-$250K, where new listings were down a whopping 15.1%. Trying to fill the gap, brand new townhome/condo sales have been strongest between $200K-$250K with a median size of 1,362sf. The top two builders that have sold the highest number of condos in this price range this year are Lennar in Gilbert and DR Horton in Mesa. Other competing developers building condos between $200K-$250K include Bela Flor in Mesa and Maracay in Goodyear. In Mesa, new condos in this price range have been extremely competitive with resale with an average price per square foot of $155.70 versus $157.47 for resale.

For Sellers:
Listings in escrow are up 7.4% and have soared nearly 19% over last year between $250K and $600K. Homeowners with property valued under $250K are inundated with offers from investors as flip sales* have rebounded strongly over the past few months. Making up for lost time after being down 4.2% in the first quarter, successful flip sales have now outperformed 2018 by 4.8%. The median sale price for a flipped home in May was $245K, up 8.4%, and the average size sold was 1,710sf. The median gross gain for a traditional flip investor was $53K between their acquisition and sale price. iBuyer companies such as OpenDoor, OfferPad and Zillow showed a median gross gain of just $9,900, however that doesn’t account for significant service charges to the sellers during escrow.

*A flip sale is defined in this case as the sale of property within 6 months of acquiring it.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2019 Cromford Associates LLC and Tamboer Consulting LLC

STOP!
Be sure to call if you have any questions about this report
or about how the market is performing.

Would you like to know what is happening in your neighborhood?
Would you like to know the value of your home?
Do you need help deciding whether to sell or not or would you like to know if now is the right time to buy?

I would be very happy to get you that information.

05/29/2019

Real Estate Market Report for May 2019. Contact me with any questions. I'm never too busy for your referrals! :)

For Buyers:
The median rent paid on single-family rentals through the Arizona Regional MLS is currently $1,625 per month, which is comparable to what the mortgage payment would be on a median-priced $270,000 home with 4% down at today’s interest rate (including approximate taxes, homeowner’s insurance and mortgage insurance). If a buyer were to purchase that home today, within 5 years they would have nearly $35,000 in equity just from making their mortgage payment, not including any appreciation in value. If prices were to rise at a modest 2.1% per year (the average long-term rate of inflation) within that same 5 years, then they would have an additional $43,000 in equity just from appreciation. This scenario would result in $78,000 in total equity within 5 years and by year 3 they would be able to remove any mortgage insurance from their payment, which would save another $200 per month approximately.

For Sellers:
Low interest rates are continuing to fuel buyer demand and there are now 2.5% more listings under contract today than there were last year at this time and 3.7% more sales. All in all, an impressive rebound as interest rates have remained below 4.2%, keeping affordability stable for the time being. Increased demand in the 2nd quarter has resulted in strengthening the weakening seller market after a full 7 months of decline. May is typically the highest month for listings under contract and buyer activity is expected to decline from here through December as it typically does every year. Don’t think you’ve missed the boat if you need to list however. On average since 2001, about 52% of all sales happen in the first half of the year and 48% in the second.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2019 Cromford Associates LLC and Tamboer Consulting LLC

STOP!
Be sure to call if you have any questions about this report
or about how the market is performing.

Would you like to know what is happening in your neighborhood?
Would you like to know the value of your home?
Do you need help deciding whether to sell or not or would you like to know if now is the right time to buy?

I would be very happy to get you that information.

05/21/2019

Interesting new plans for downtown Gilbert

Gilbert approved a plan to grow its popular downtown area with a boutique hotel, housing, parking structures, office and retail space and a park.

04/26/2019

Want to get in the best shape of your life, make friends, and have fun all while learning great self-defense skills? Then check out this quick interview I did with Brazilian Jiu Jitsu Black Belt, and owner of Roots Brazilian Jiu Jitsu in Gilbert, AZ, Gerson Atoigue, one of my Local Business Favorites.

04/10/2019

Listings Under Contract Up 19% in 5 Weeks!

For Buyers:
Buyers got a break last month as 30-year mortgage rates dropped significantly from an average of 4.41% to 4.08%, which is the lowest they have been since January 2018. On a $267,000 home (the median sales price in Greater Phoenix) the drop equated to nearly $50 per month in savings on principle and interest, which was enough to get many buyers off the couch and looking for homes. This rate drop combined with an increased conventional loan limit up to $484K and a 32% increase in weekly seller price reductions meant that price ranges between $200K all the way up to $800K saw a combined 19% increase in contracts written over the last 5 weeks. Contract activity is expected to increase at this time of year anyway due to seasonality, but last year over the same 5 weeks it only increased 8.6%. For buyers who are still waiting for prices to begin declining, their wait just got longer.

For Sellers:
The drop in mortgage rates could not have come at a better time for sellers. Up until 6 weeks ago the negotiating advantage sellers have been enjoying for years in Greater Phoenix had weakened to the point where the market was on track to enter balance within a matter of months and price appreciation would have begun to slow even more. However by April 4th the average 30-year mortgage rate (as reported by Freddie Mac) had dropped to a 15-month low. This spurred buyer activity and resulted in Listings Under Contract, which were 10.2% below 2018 last month, to sharply increase and surpass 2018’s April count by 0.8%. Currently sales volume is down 9.6% from last April, however when these contracts close escrow over the next 4-6 weeks May and June should fare much better. Don’t get too excited though, the seller market is still much weaker than last year. Affordability and demand were helped by this interest rate drop but could quickly be negated as prices continue to rise. Sellers still need to be mindful of their asking price to get under contract before buyer activity seasonally begins to decline between May and the end of the year.

Commentary written by Tina Tamboer, Senior Real Estate Analyst with The Cromford Report
©2017 Cromford Associates LLC and Tamboer Consulting LLC

STOP!

Be sure to call if you have any questions about this report or about how the market is performing.

Would you like to know what is happening in your neighborhood?

Would you like to know the value of your home?

Do you need help deciding whether to sell or not or would you like to know if now is the right time to buy?

I would be very happy to get you that information.
Just message me and let me know.

02/22/2019

Market changes are in the air! READ ON:

For Buyers:
A weak 4th quarter for sales in 2018 has resulted in 11,874 price reductions in the first 5 weeks of 2019. That’s 24% higher than this same time last year. Price reductions on listings between $200K-$500K specifically are up 40%. The most notable price range with a 42% increase is $200K-$250K. This may come as a surprise to some because this price range is below the median sales price of $263K. However, this area is currently a battleground of competition between traditional sellers, flip investors and new construction as inventory is up 26% and contracts are down 10%. Flip investors acquire and sell over 50% of their inventory in this price range. New home builders increased their sales by 22% in this range last year. Traditional sellers are now under more pressure to improve the condition of their home and provide incentives for buyers in order to compete.

For Sellers:
This isn’t a good time for sellers to get caught up in timing the market so as to sell their home at the ideal “peak of price”. While it’s understandable for sellers not to want to leave any money on the table, the reality is that price peaks don’t happen in seller markets. They occur in balanced markets. Balanced markets are fine to sell in, but they’re not as fun or profitable for sellers as they expect; especially if their property is hard to sell due to condition or location. As the seller market continues to weaken, it’s more important than ever for sellers to list their property while they still have the advantage of low competition, price it competitively and don’t spit on the first contract. Buyer activity, while lower, will continue to accelerate through May. This is GO time.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2019 Cromford Associates LLC and Tamboer Consulting LLC

STOP!
Be sure to call if you have any questions about this report
or about how the market is performing.

Would you like to know what is happening in your neighborhood?
Would you like to know the value of your home?
Do you need help deciding whether to sell or not or would you like to know if now is the right time to buy?

I would be very happy to get you that information.

07/24/2018

Phoenix area market snapshot!