Housing Market Bubble, Forbearance, and Market stats May 2021

By
Real Estate Agent with Value Added Service, 602-620-2699 SA5376460000

Why are we having a housing shortage?  After all, we have experienced a pandemic.  Shouldn't people have been waiting around with inventory rising, making it a lot easier?  

 

One aspect of housing inventory is age groups.  Millennials (aged 25 - 40 years) are now the largest population segment of buyers in today's market.    On the other hand, baby boomers are aging in place, not selling their homes, further contributing to fewer homes for sale.  Baby boomers may have excellent interest rates so why pay to sell and move when they've achieved low mortgages, if they have them. 

Looking at our leading chart above, it's easy to see that housing starts have not kept up with population. Folks didn't stop having babies just because we endured a housing crisis! 

 

What about new homes?  How about unemployment?  What about foreclosures? How about forbearance?  All of these are factors in supply and demand.  Then why do we have a shortage? 

 

For starters, let's look historically at active listings in general.  This chart reflects Active plus homes Under Contract Accepting Back up Offers AND Contingent Contracts taking Back Up Offers.   Those last 2 statuses currently include over 40% of the total number of 9700 listing total below.  The chart below is dated 4/15/21, so numbers below are more current than the last update for this chart.

 

This chart reflects a clear historical flow of Active, UCB & CCBS listings.

So today (5/14/21) for instance there are 5081 Active listings in all of Maricopa County, AND there are 4681 UCB & CCBS listings, an extra high number in this sellers market.  Normaly that number might be 20-30% on top of the Active listing count.  I'd LOVE to share a chart without those numbers as dollars to donuts those will close and if they fall out, they'll be right back under contract with the curent demand. 

Reports are provided courtesy of subscription to the Cromford Report DO NOT COPY.  

 

Active Listings in Phoenix, Arizona May 2021

Home affordability is an issue as the rising demand and cost to build increase home prices for existing and new construction. Note that this chart is using a 1500 - 2000 square foot home in the Greater Phoenix area. 

Since the Pandemic, those working from home has risen dramatically.  A lot of home buyers are now seeking an extra bedroom or office since they won't be going back to work. 

 

As reported by Mosaic, Arizona has an increase demand of 26% year over year for new homes.

 

There has been a lot of press over rising construction costs.  Lumber has not kept up with demand thanks to the pandemic when mills stopped production,  which has raised prices exponentially.  Check out this article from the National Association of Home Builders for clear reporting.

 

Affordable Homes 2021

The Cromford Market Index is a market indicator forecasting market predictions while comparable sales for instance reflect historical sales.  A balanced market is shown as 100 so anything under 100 is a buyers' market while numbers over 100 reflect a sellers market.  As you can see the number for March, 2011 is over 500! 

 

Cromford Market Index May 2021

Cromford Supply vs. Demand index reflects all sales derived from the Arizona Regional MLS.  The Cromford Supply Index reflects a short term value.  Values over 100 reflect higher supply than normal. 

The Demand index reflects pending and closed sales during a 4 year period.  Values over a 100 index reflect more demand than usual.   The wide gap reflected here both in 2005 and 2021 show the demand difference.  Prices will continue to rise even if the Cromford Index declines as demand has dropped.  

 

Cromford Market Index vs. Demand May 2021

 

Notices of Trustees sale are issued when a homeowner misses 3 mortgage payments in Arizona.  The notice basically says that the homeowner has 90 additional days to pay up or go to foreclosure.  With this non-judicial process of 6 months of missed mortgage payments, Arizona rebounds quickly like other Western states so that inventory does not languish.  Compared to March, 2009 when 10,558 homes had received a notice of default, the current 75 homeowners is a fraction of a percent as compared to the previous real estate market. *

Notices of Trustees Sales May 2021

Would inventory increase if those in forbearance walked away from their homes?  A lot of sources nationally are reporting on this but in Phoenix those numbers would be absorbed quickly if you look at demand above.  Arizona is NOT listed as one of the top states for those in forbearance. 

Check out this article (October 2020) for those states with high forbearance numbers.

Forbearance by State May 2021

The breakdown in numbers from the Mortgage Bankers Association reflects how homeowners are exiting forbearance as reported below May 4, 2021.  The average number of homes in trouble averages 7,128 homes per state.  Every state has a different number of homeowners in trouble, obviously, but even the numbers are lower than most think.  

 

Exiting Forbearance in Arizona

 

ARIZONA IS ONE OF THE FASTEST ECONOMIES IN THE US.   There are many contributing factors, but for certain the Greater Phoenix Economic Council has been a driving force for jobs and companies moving to Arizona. 

According to sources,  Phoenix is rapidly becoming the "Silicon Desert" with 107 companies making Inc's 5000 list! 

Phoenix has received the most net gain of homeowners moving to any one state according to this article in AZ Big Media.  Sources confirm that all sectors of real estate, except office condos, are seeing growth. 

The increasing industrial market and semi-conductor sector have risen dramatically according to this article originally reported by the Phoenix Business Journal. 

 

So the answer is no!  We aren't going to see a bubble or a repeat performance of 2008-2011!  

 

If you're looking to buy or sell a home in the Phoenix area, use a knowledgable agent who understand market conditions. 

 

Posted by

Search the Arizona Regional MLS

Search for Homes

      

 

HomeSmart Elite Group                                  

8388 E Hartford Dr., Suite 100

Scottsdale, AZ 85255                                                         

(602) 620-2699   DIRECT

www.AZGreenRealty.com

www.GotGreen.info                  facebook   Google + twitter   youtube   linkedin   pinterest   

 

Comments (7)

John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Hello Jan Green very good detailed report housing market bubble, forbearance, and market stats.

May 14, 2021 03:46 PM
Jan Green

Thank you John Pusa !  We get so many of these questions that I thought it wise to share from my weekly Economic meeting.  Thanks for stopping by and commenting!

May 15, 2021 01:03 PM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Jan- no housing bubble at all.  These statistics prove it.

May 14, 2021 05:07 PM
Jan Green

Thank you Grant Schneider !  Best to educate than voice my own opinion! Thank you for checking out my blog and commenting!

May 15, 2021 01:03 PM
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Hi Jan,
What a great breakdown and explanation of the current housing market situation.  The rising and unpredictable cost of building materials certainly is not helping the application for new building permits, is it? 

May 15, 2021 07:07 AM
Jan Green

You're so right Carol Williams !  It's critically important for people to have facts before making decisions.  Thank you for reading and commenting!

May 15, 2021 01:04 PM
Rocky Dickerson
Realty One Group - Las Vegas, NV
Superior Service!

Good morning Jan! WOW what an excellent post reminding people like me facts that I had forgotten. Thank you!

May 15, 2021 08:09 AM
Jan Green

Thank you Rocky Dickerson !  I'm sure you have similar information about the housing market. History will not repeat itself in our housing markets.  Have a great day!

May 15, 2021 01:04 PM
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Intelligence, thoughtful, and well-presented. Much like you. Great post. 

                                                         

May 15, 2021 01:02 PM
Jan Green

Ahh, thank you for that Debb Janes EcoBroker and Bernie Stea JD !  

May 18, 2021 07:50 AM
Anna Banana Kruchten CRS, CRB, Phoenix Broker
HomeSmart Real Estate BR030809000 - Phoenix, AZ
602-380-4886

Well done Jan!  Cromford always sums up the facts well and I so appreciate you getting them out there.  So much buzz going on in our market about a 'bubble' and that's what I get asked about quite often.  Easy to share what's really happening with all of them and they appreciate it and relax too.

May 16, 2021 04:24 PM
Jan Green

Thank you Anna Banana Kruchten CRS, CRB, Phoenix Broker ! I so appreciate your feedback.  Answering these questions is critical right now with so much uncertainty and a crazy housing market!

May 18, 2021 07:51 AM
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Great post Jan Green! I'm afraid some think the bubble is about to burst but I don't see that at all, in any market. 

May 18, 2021 03:43 PM