Some Highlights

• If you want to sell your house, consider doing it this summer. The days are longer, the weather is warmer, and it’s a great time for sellers.
• If your needs have changed, now’s the time to capitalize on the low inventory and multiple offers in today’s sellers’ market.
• Let’s connect today if you’re ready to sell your house and move to a home that meets your changing needs.

Use these tips to make your best offer in today’s sellers’ market. Let’s connect so I can help you buy that home you’ve been wanting. Contact The Drew Team at (480) 256-2868 or visit www.FindMyHomeInAZ.com for more great resources. You can also meet the whole team, Robin & Steven Drew, Robin McAvoy, Casey Hurlburt, Tom Walton and our amazing Admin Nancy Horn. #realestatetips #realestateadvice #realestatetipsandadvice #drewteam #reachyourgoals #findmyhome

There’s been some concern lately that the housing market is headed for a crash. And given some of the affordability challenges in the housing market, along with a lot of recession talk in the media, it’s easy enough to understand why that worry has come up.

But the data clearly shows today’s market is very different than it was before the housing crash in 2008. Rest assured, this isn’t a repeat of what happened back then. Here’s why.

It’s Harder To Get a Loan Now

It was much easier to get a home loan during the lead-up to the 2008 housing crisis than it is today. Back then, banks had different lending standards, making it easy for just about anyone to qualify for a home loan or refinance an existing one. As a result, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices.

Things are different today as purchasers face increasingly higher standards from mortgage companies. The graph below uses data from the Mortgage Bankers Association (MBA) to show this difference. The lower the number, the harder it is to get a mortgage. The higher the number, the easier it is.

Unemployment Recovered Faster This Time

While the pandemic caused unemployment to spike over the last couple of years, the jobless rate has already recovered back to pre-pandemic levels (see the blue line in the graph below). Things were different during the Great Recession as a large number of people stayed unemployed for a much longer period of time (see the red in the graph below):

Here’s how the quick job recovery this time helps the housing market. Because so many people are employed today, there’s less risk of homeowners facing hardship and defaulting on their loans. This helps put today’s housing market on stronger footing and reduces the risk of more foreclosures coming onto the market.

There Are Far Fewer Homes for Sale Today

There were also too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Today, there’s a shortage of inventory available overall, primarily due to years of underbuilding homes.

The graph below uses data from the National Association of Realtors (NAR) and the Federal Reserve to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just a 2.6-months’ supply. There just isn’t enough inventory on the market for home prices to come crashing down like they did in 2008.

Equity Levels Are Near Record Highs

That low inventory of homes for sale helped keep upward pressure on home prices over the course of the pandemic. As a result, homeowners today have near-record amounts of equity (see graph below):

And, that equity puts them in a much stronger position compared to the Great Recession. Molly Boesel, Principal Economist at CoreLogic, explains: 

“Most homeowners are well positioned to weather a shallow recession. More than a decade of home price increases has given homeowners record amounts of equity, which protects them from foreclosure should they fall behind on their mortgage payments.”

Bottom Line

The graphs above should ease any fears you may have that today’s housing market is headed for a crash. The most current data clearly shows that today’s market is nothing like it was last time.

In this brief real estate market update there are some big questions...

Is good credit being penalized on new mortgages? (sort of)

Is there a 40 year mortgage option? (not really)

Can you save lives by golfing? (surprise here)

And, what is happening in the real estate market? (it is up first in the video).

1. Market Update, the numbers that tell us what is happening in central AZ real estate:  

Homes for Sale Now     =  12,600

Homes Under Contract =  10,439

Closed last 30 days      =  6,700

What that means is that across the Valley homes are selling in an AVERAGE of 60-90 days, however it does vary by area, town and neighborhood.   As an example, in the San Tan area it is more towards the 90 day average.   Across the valley it is stable and we are still running low on inventory of homes for sale as compared to the last decade.  The volatility in interest rates have slowed some buyers which is why we remain in a fairly neutral position.  In other words neither the buyer nor the seller really has a significant advantage in this market.  For information about YOUR neighborhood please contact us so we can get you specific data!

2.  Is there now a penalty for good credit on new mortgages?

The more accurate way to view the changes that will be taking effect in home mortgages come May 1st is this:   The benefit to those with the best credit scores has been reduced while the penalty to those with lesser scores has been reduced BUT it is still an advantage to have better credit.    From an article in USA Today: 

"Starting May 1, upfront fees for loans backed by Fannie Mae and Freddie Mac will be adjusted because of changes in the Loan Level Price Adjustments (LLPAs), the fees that vary from borrower to borrower based on their credit scores, downpaymenets, types of home, and more. The changes relate to credit scores and downpayment sizes.  

For example, if you have a score of 659 and are borrowing 75% of the home's value, you'll pay a fee equal to 1.5% of the loan balance.  Before these changes, you would have paid a 2.75% fee.  On a hypothetical $300,000 loan, that's a difference of $3,750 in closing costs. (savings)

On the other end, if you have a credit score of 740 or higher, you would have paid a 0.25% fee on a loan for 75% of your home value before May 1. After that date, you could pay as much as 0.375%.

See the full article here.

Have specific questions regarding these changes?  Let's connect so we can get you answers!

3.  Is there a 40 Year Mortgage now available?

Sort of...    if you are making a home purchase there is no option for a 40 year loan.  However, for those that find themselves in a changing situation where they can no longer pay their mortgage there is now now possibility with FHA loans to do something similar to a loan modification. The intent of keeping people in their home.  For a new purchase there is no 40 year option.

4.  Can you Save Lives by Playing Golf?

Absolutely, when doing so supports organizations like Phoenix Children's Hospital and The Veterans Club at Encanterra!

Once again this year we have the privilege of being banner sponsors at Jaxton's Heart Warrior golf tournament.  This tournament was founded by our amazing past clients who have a son with heart issues who has been treated by Phoenix Children's Hospital.  Today the Hansens and their friends are paying forward the opportunity for other children to receive the outstanding care that was given to their son Jaxton! They do this thru a yearly fund raising golf tournament!  See more at Jaxton's Hear Warrior Inc.

We will be updating you on Jaxton's Heart Warrior tournament and The Veteran's Club tournament next month!  

If you have any questions about the market update, mortgage changes or the ways we give back in the community please reach out so we can help reach your goals!

The Drew Team's Robin & Steven Drew, Robin McAvoy, Casey Hurlburt, Tom Walton and our amazing admin Nancy Horn are always ready to serve you!

The housing market’s been going through a lot of change lately, and there’s been uncertainty surrounding what will happen this spring. You may be wondering if more homes will go on the market, what’s next with home prices and mortgage rates, or what the best advice is for someone in your position right now.

Here’s what industry experts are saying right now about the spring housing market and what it means for you:

Selma Hepp, Chief Economist, CoreLogic:

“We see more competition among buyers . . . Housing supply also tends to grow during the spring months. And this is also the time of year when relatively more migration happens, as people graduate and move elsewhere looking for jobs.”

Greg McBride, Chief Financial Analyst, Bankrate:

“I don’t expect big moves in prices in the span of a month, but like the flower buds of spring, the housing market is showing signs of improvement. A pick up in activity with inventory still low does bode well for home prices.”

Rick Sharga, Founder and CEO, CJ Patrick Company:

“If you can find a home you love and can afford at today’s prices, don’t wait. Home prices in most of the country are unlikely to crash, and mortgage rates will only come down very gradually if they decline at all this year.” 

Jeff Tucker, Senior Economist, Zillow:

“The market is still much friendlier this spring for buyers who can overcome affordability hurdles, but buyers are going to see more competition than they might expect because there are not many homes on the market to go around. New listings are increasing, which they almost always do this time of year, but not nearly as quickly as usual.”

Bottom Line

If you’re thinking about selling your house, this spring’s a great time to do so while inventory is still so low. And if you’re in a good position to buy, lean on your team of expert advisors for the best advice. Whatever your plans, let’s connect to make sure you’re able to navigate the spring housing market with confidence.

Some Highlights

• Buying a home is a major way to build wealth and gain financial stability.
• That’s why, across different income levels, the largest part of most homeowners’ net worth is their equity.
• Let’s connect today so you can start investing in homeownership.

If you’re thinking about buying a home, you want to know the decision will be a good one. And for many, that means thinking about what home prices are projected to do in the coming years and how that could impact your investment.

This year, we aren’t seeing home prices fall dramatically. As the year goes on, however, some markets may go up in value while others may lose value. That’s why it’s helpful to keep the long-term view in mind. Experts project a return to a steadier rate of price appreciation in the years that follow.

Home Price Appreciation in the Years Ahead

Over 100 economists, investment strategists, and housing market analysts were polled by Pulsenomics in their latest quarterly Home Price Expectation Survey (HPES). The report indicates what they believe will happen with home prices over the next five years. As the graph below shows, after mild depreciation this year, these experts forecast home prices will return to more normal levels of appreciation through 2027.

The big takeaway is experts aren’t forecasting a drastic fall in home prices nationally, even though some markets will see home price appreciation while others may depreciate. And when they look further out, they see steady price appreciation in the long run. That’s a great example of why homeownership wins over time.

What Does This Mean for You?

Once you buy a home, price appreciation raises your home’s value, and that grows your household wealth. Here’s how a typical home’s value could change over the next few years using the expert price appreciation projections from the survey mentioned above (see graph below):

In this example, if you bought a $400,000 home at the beginning of this year and factor in the forecast from the HPES, you could accumulate over $54,000 in household wealth over the next five years. So, if you’re wondering if buying a home is a sound decision, keep in mind what a strong wealth-building tool it is long term.

Bottom Line

According to the experts, while we may see slight depreciation this year throughout the whole country, however in AZ it is a stronger economy and overall home prices are expected to grow over the next five years. If you’re ready to become a homeowner, know that buying today can set you up for long-term success as home values (and your own net worth) are projected to grow. Let’s connect to begin the homebuying process today.