Gilbert Sun News Real Estate - 02.21.2021

REAL ESTATE

GILBERT SUN NEWS | FEBRUARY 21, 2021

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Unprecedented low supply strains housing market

BY PAUL MARYNIAK GSN Executive Editor

The inventory of homes for sale in the Valley has reached the lowest levels in modern history, real estate experts say.

And that means that while the few homes that are on the market are drawing multiple offers – sometimes scores of them for one house – anxious buyers will soon be casting their eyes far from the center of the Phoenix Metro.

During Land Advisors Organization’s annual presentation last month that assessed the state of the Phoenix real estate scene, two experts saw no end to the home buying frenzy or the accelerating upward trend in prices.

Melanie Nemetz

And Jeff Palacios Jr., director of research for John Burns Real Estate Consulting, and Land Advisors CEO Greg Vogel, indicated homebuyers may have to look as far away as Casa Grande, the Lake Pleasant area and Florence.

None of this comes as a surprise to the Cromford Report, which also closely watches housing trends in the Valley and recently observed, “The supply situation is the worst we have ever recorded.”

“It is difficult to describe the state of the housing market in Greater Phoenix these days,” it said. “Just quoting the raw facts makes many people feel you are exaggerating wildly. There are those who seem to believe it cannot really be true when so many people are strug-

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gling with their daily lives, battling the worst pandemic we have seen for many decades.”

“Variations in demand are almost insignificant,” it continued. “This is because the supply of re-sale homes is so poor it crashes below all-time record lows almost every week.”

Cromford said the ratio between homes under contract and homes for sale without a contract is so out of whack that “we have never before had to invent a description” for it.

It noted that as of Feb. 1, listings were

56.7 percent below total listings a year earlier, the median sales price jumped nearly 17 percent and the average price per square foot climbed over 19 percent.

That will be good news for homeowners in a way.

Cromford said, “The annual appreciation rate has already surpassed 19 percent and could easily reach 30 percent by the time we are well into the second quarter.”

It noted last week, “The speed of ap-

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REAL ESTATE

GILBERT SUN NEWS | FEBRUARY 21, 2021

Gilbert’s tight housing market can be navigated

BY MINDY JONES NEVAREZ GSN Guest Writer

T

he month of love always seems to be a turning point in a new year. Often, you are one month into your new year’s resolutions and have either fallen off the wagon or recommitted at least once or twice and are starting to see success.

The middle of the month also marks the time where it becomes less and less socially appropriate to wish people a happy new year and many families start to plan their spring and summer vacations.

In the residential real estate space, February typically marks the beginning of the “season” for buying and selling Arizona homes. While there is no “dead zone” for real estate in Arizona, summer

is actually a great time to purchase – as is winter, where luxury properties typically shine.

February is when we start to see the steady incline of inventory from folks who waited until after the new year to get their home on the market and buyers who waited until after the holidays to get serious about their search.

With the upcoming tax deadline and many W2s already received, buyers and sellers are often leveraging their refund to help with home related expenses. The weather is nice, the birds are chirping, and so begins your typical season of rising inventory, rising home prices, and rising sales.

But wait, haven’t we already been seeing rising home prices and rising sales?

For many years, the average price per square foot across all listings and all price ranges in the Valley was just under $200.

Keep in mind, that doesn’t mean we haven’t seen single digit appreciation year

over year in the Valley. It only means that there was a healthy mix of property types and appreciation rates that ultimately kept the average pretty steady.

Last October, we crossed the $200-square-foot mark, quickly rising to $210/sf and at the beginning of this month rose up to $220/sf – a 16 percent increase in just six months.

In order for prices to start trending down, we would need to see something significant change in the market – buying patterns significantly decreasing, sellers listing at a significantly faster pace, builders to building at a pre-market crash rate.

But none of these things are happening.

In Gilbert, we’ve sunk down to just five days worth of supply – a tenth of what we had just two years ago. With only 79 listings available on the market and homes selling at more than 100 percent of their list price, it’s no surprise that we’re inching towards the #1 spot for appreciation in the Valley.

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We’ve got about 10 percent more of the available inventory wrapped up in new home communities than normal, less inventory available at prices under $500K as opposed to those houses between $500K-$1M, AND a local desire for homes over $1M as Gilbert secures its position as one of the top five cities in Arizona for home sales over $1M in 2020.

With inventory down 61 percent and a median sales price that is rising by double digits, it is a good time to buy and sell.

What is the likelihood that you’ll have another opportunity to not only get 20%+ appreciation on the home you are selling in a year’s time and buy one with a similar expected outlook, allowing you to speed up the pace at which you become financially “eligible” to move again if needed?

We’re seeing folks who made quick decisions at the start of COVID-19 and,

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see MINDY page RE3

REAL ESTATE

GILBERT SUN NEWS | FEBRUARY 21, 2021

MINDY from page re2

whether they’ve had a change of mind, heart or circumstance, they are entering back into the market because they CAN. We’re obviously seeing a demand for more home offices, larger backyards, and high-speed internet as well as a decrease in the importance of proximity to work and amenities – and a greater interest in suburban and rural areas.

We get the question a lot: “I’m sold on the idea of selling but how do I buy in this kind of a market?”

When the MLS is quickly becoming Zillow in terms of availability and clarity of the market opportunity, we’re turning to our roots of match-making buyers and sellers. It’s a beautiful space to be working in and one that allows for the true negotiations to center around terms, flexibility and timeline.

Price is, of course, pushing boundaries but with the vast amount of equity many of our clients are seeing in their home, that’s not the only benefit of finding the right buyer. We’ve helped clients who only want to have showings for a weekend, some even less and others who

want us to find the buyer that meets their needs without ever putting the house on the MLS. There are 100 different ways to sell your home right now and about as many to coordinate your move – lease back, short term rental, long term rental, equity access, and more.

The key is to partner with someone who can present all of the solutions and tailor the ultimate plan to your goal. Over the past 10 years, we’ve seen the gap between housing units built and the demand for housing in the Southeast Valley explode – a problem that will not have a 2021 solution.

As affordability continues to be challenged by rising prices and rising interest rates, it is absolutely the time to claim a piece of real estate while you still can.

Mindy Jones Nevarez, a Gilbert Realtor and owner of the Amy Jones Group at Keller Williams Integrity First, can be reached at 480-250-3857, Mindy@AmyJonesGroup. com or AmyJonesGroup.com

Gilbert Real Estate Snapshot Provided by the Amy Jones Group Your Local Real Estate Team

(480) 250-3857 | www.amyjonesgroup.com

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Tri Pointe offers townhouse community in Gilbert GSN NEWS STAFF

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ri Pointe Homes, a major Valley homebuilder that had gone under the name Maracay, has opened 251 townhome sites in The Towns at Annecy in Gilbert.

Customers are encouraged to join the priority list to schedule a private tour of the four model homes or they can go to its website and shop online.

The development is located near Williams Field Road and Val Vista Drive, near another Tri Pointe community –the detached and semi-detached condominiums that comprise The Lakes at Annecy.

“The Towns at Annecy offers homebuyers so many connections, from the carefully crafted floor plans and flexible living space options to the quality amenities and convenient, walkable appeal,” said Tri Pointe Homes Division President James Attwood.

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The attached, two-story townhomes, which have Spanish and Italian architecture, start in the high-$200,000s and come with four different floor plans ranging from 1,194 to 1,921 square feet.

Customizable flex layouts consist of two or three bedrooms, two to 2.5 bathrooms and two-bay garages.

They are set amid multiple lakes and water features and connected by lighted walking paths and the community includes a pool, playground, basketball court, park and greenbelt.

The Towns at Annecy also is close to the Loop 202 SanTan Freeway and the 272-acre Gilbert Regional Park.

The townhomes will be designed and independently certified to exceed local energy codes and will be enhanced with money saving, energy-efficient features throughout, Tri Pointe said. Each home

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2,300+ SOLD HOMES

• Average Days on Market: 28 days Down from 29 Days Last Month

• Active Listings: 78 Down from 108 Listings Last Month

• Monthly Sales: 303 Down from 414 Sales Last Month

• Listings Under Contract: 392 Up from 367 Listings Under Contract Last Month

• Average Sales Price: $474,177 Down from $488,971 Last Month

• Monthly Supply of Inventory: 0.3 Same as 0.3 Monthly Supply Last Month

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REAL ESTATE

GILBERT SUN NEWS | FEBRUARY 21, 2021

This chart shows the history of home development in the Valley over the last 50 years with areas in purple being the areas where most development is expected in the next couple years.

(Land Advisors Organization)

Several of the master planned communities identified on this map will be built out in a year, Land Advisors Organization said.

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preciation is about to step higher, not lower. It will not take much for appreciation rates to exceed 30 percent and possibly 40 percent over the next few months.”

“New home builders are trying as hard as they can to create more supply, but there are many physical, financial and legal limits to how quickly they can do this,” Cromford also said. “These additional homes are sure to be priced well above the current level.”

Palacios said “the ridiculously strong” housing market in the Valley is evidenced by the fact that home sales in 2020 were 80 percent higher than the norm for the years 2014-2019.

Indeed, he advised homebuilders sales were so strong that “it is going to be tough to get your growth this year” and said that any overall sales growth, primarily for new homes, will not occur before the second half of 2021.

And new-home communities will be getting bigger from the start – and extending the boundaries of the major Phoenix market well beyond what they look like today.

“You’ve got to think about community count growth, but then you also have to think about how communities are going to be bigger than they were a year ago,” he said.

Palacios said that prices and demand not only will be driven by a seemingly no early end to “crazy cheap money” in

The areas in red are considered the next hot spots for home construction and master planned community development.

(Land Advisors Organization)

the form of low mortgage rates but also by the unrelenting influx of out-of-state residents and the growing trend toward working at home.

“I’ve talked a lot about work from home,” he said. “It is going to be trigger. It is triggering a massive catalyst for housing demand. …So, affordability will get stretched beyond what you think is the norm.”

Vogel said it’s not just home sales market that has entered into new territory but land sales as well, saying he sees the

market going “from a chronic shortage that we were experiencing for several years into a panic that’s leading to rapid appreciation.”

“Even when we look at the 500,000-$2-million price range, we’ve gone from 283 days down by 90 to 26 days,” he said of the time houses are staying on the market before coming under contract.

“We have outsized appreciation,” Vogel said. “I think this is too much. We are going to have a real hard time adding

enough supply to curtail this but this can get quickly unaffordable.”

Vogel noted that the number of building permits soared last year primarily in the West Valley and Pinal County, as available land in the East Valley has all but vanished except for huge tracts of State Trust Land in far east Mesa.

He noted that the current inventory of finished lots in the Phoenix Metro market totals about 13,000 after 28,700

see MARKETpage RE5

GILBERT SUN NEWS | FEBRUARY 21, 2021

REAL ESTATE

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Corcoran adds new Realtor in Gilbert

First-time homebuyers face ‘rude awakening’

GSN NEWS STAFF

GSN NEWS SERVICES

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eidi Spielman has joined Corcoran Platinum Living’s Gilbert office.

Corcoran is an independent luxury real estate brokerage with five offices and over 150 agents across Arizona.

Spielman has been a Realtor for eight years and “prides herself on delivering warm, individualized support, seeking out innovative solutions, anticipating problems and protecting her clients at all costs,” Corcoran co-owner Michelle Macklin said.

“I joined Corcoran Platinum Living because they are part of a global network that can get my clients’ homes in front of potential buyers whether they are in Arizona, California, New York, or across the globe,” said Spielman. “Jay Macklin’s coaching is well known for taking agents to the next level.”

Spielman has received numerous

awards for her professional achievements and is a member of the Southeast Valley Regional Association of Realtors, Arizona Association of Realtors and the National Association of Realtors. Spielman also is trained in the needs and challenges of military members.

Information: platinumliving.com

building permits were issued in 2020.

“It’s a little bit frightening related to the supply that is being burned off,” he said. “The builders bought 21,000 lots this past year. Some of those are larger supplies that will last several years, but there’s clearly a deep shortage and the shortage is not only looming but growing.”

He said builders and developers “have

to buy land differently than they did in the years prior, where they were able to buy morsels or be able to digest 60 lots and have an option on another 60.

“They need to buy big platforms and we’re seeing that occur very often at this point. It is not unusual for a builder to come in and buy 300 to 600 units. That was not occurring even just pre-COVID,” Vogel said.

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Heidi Spielman

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tarry-eyed first-time home buyers are getting a rude awakening to the realities of today’s high-stakes home-buying market, Realtor.com reports.

“The coronavirus pandemic supercharged the housing market, as buyers urgently seeking more space flooded the market, lured by low mortgage rates,” it said last week.

“That’s on top of the usual dynamics of household expansion: Many millennials hit 30 and wanted homes that could accommodate a growing family,” it continued.

“Amid a historic shortage of properties for sale, the result has been bidding wars and record-high prices. It’s enough to make a first-time buyer’s head spin.”

Just under half of first-time buyers and more than a third of prospective buyers were either outbid on their dream home or discovered they couldn’t afford it, according to a recent realtor.com housing survey.

Roughly a fifth of these buyers made five or more offers on different properties before having one accepted.

“The market has been extremely competitive,” said realtor.com Senior Economist George Ratiu. “There is a critical shortage of homes for sale, which has caused multiple bids to become the norm across the country.”

“For first-time buyers, especially, this environment means having your financing and budgeting together is paramount,” he added.

But it’s not all bad news. About 47 percent of first-time buyers found their budgets were larger than they had thought, according to the survey. That’s largely due to mortgage rates, which averaged just 2.73 percent for a 30-year fixed-rate loan in the week ending Jan. 28, according to Freddie Mac. However, 21 percent of first-time buyers learned their money wouldn’t stretch as far as they had hoped.

Even those in a better financial position still had to compromise on what they wanted in a home – and where it’s located.

About a fifth were forced to look in cheaper neighborhoods. Another fifth had to spend more than they had originally planned, and nearly the same number had to forgo some of the home features on their wish lists.

These included things like a garage, a big backyard, a finished basement and a pool.

To save up for a down payment, many also had to make sacrifices. Half of recent first-time homeowners saved up in less than three years by setting aside a portion of their paycheck each month, cutting out discretionary spending on the fun stuff, and depositing windfalls like tax refunds and bonuses in the bank.

Just over half also turned to their family and friends for help.

“First-time buyers tend to be younger.

This generation has higher student debt than any prior generation,” said Ratiu. “Not surprisingly, family help with providing down payment assistance plays a big role in today’s market.”

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REAL ESTATE

GILBERT SUN NEWS | FEBRUARY 21, 2021

Eviction ban no panacea for delinquent tenants

BY BEN GOTTLIEB GSN Guest Writer

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he courageous investors who plunged into the deep end of the stock market swimming pool in March of 2020 have basked in delight and euphoria these past 10 months as their household net worth rose dramatically due to a rising stock market.

This is also especially true for those affiliated or invested with companies like Zoom, Peloton, Big Tech, Netflix – to name just a few – that were uniquely positioned to benefit from the post-COVID-19 economy.

For others not so fortunate, however.

The past 10 months have wrought significant and ongoing emotional and financial distress – waiting precariously for the next executive order or stimulus check to arrive just to get by and meet monthly ex-

penses or avoid being dispossessed from the home in which they reside.

Experts refer to this phenomenon as a “K-Shaped Recovery,” which has gripped the post-COVID-19 economy, significantly exacerbating economic disparity among different divisions, sectors, and demographics of the U.S. economy.

This phenomenon is on full display in the real estate market, where thanks in part to record low interest rates many households are benefiting from purchasing their first home, upgrading their home or refinancing their existing mortgage.

Others are unemployed and are at risk of being removed from their home to eviction or foreclosure.

The numbers are too large to ignore.

Recent data produced by Zillow reveals that millions of renters in the U.S. are not employed and are at risk of losing their homes once the federal eviction moratorium expires.

In the Phoenix metro area, numerous

renters cannot afford rent even with stimulus checks and unemployment payments.

This presents a unique problem both for the unemployed tenants as well as the landlords renting out the property.

From the tenant perspective, if the federal eviction moratorium expires at the end of March 2021 and is not extended – an unlikely scenario based on recent history – you can count on an avalanche of eviction lawyers lining up in lockstep on the courthouse steps on April 1.

If the moratorium is not extended, these tenants won’t be honoring or celebrating April Fool’s Day. Instead, the joke will be on them as they will be focusing on finding replacement housing.

On its face, the federal eviction moratorium appears to protect landlords who are not getting paid by tenants because the order does not relieve any obligation that a tenant owes under the lease.

In reality, however, real estate experts are leery of a landlord’s ability to collect

on a significant judgment against a tenant who has not paid rent in several months.

If a tenant qualifies under the federal eviction moratorium, the reason is that the tenant cannot afford to pay rent due to a loss or reduction in income. If a tenant cannot afford to pay rent, it is unlikely that same tenant can satisfy a large court judgment.

Thus, if and when the federal eviction moratorium expires, not only will many tenants be forced to move, but landlords will be forced to reckon with the reality that they may never be made whole on the months no rent was paid.

It is also important to note that the federal eviction moratorium does not protect all renters.

The tenant must sign a declaration, which can be found on the CDC website.

The declaration form provides that the tenant cannot afford rent, has sought governmental assistance, and is likely to be deemed homeless if evicted.

Many landlords are still proceeding with eviction lawsuits, raising arguments about the truthfulness of the declaration signed by the tenant.

In other cases, landlords are proceeding with eviction actions for cases that do not relate to non-payment of rent – i.e., the tenant damaged the property or engaged in criminal activity.

Ben Gottlieb is a partner in MacQueen & Gottlieb, PLC, the state’s leading real estate law firm. Information: 602-5332840.

ANNECY from page re3

will also include wi-fi connectivity to control many features.

In 2014, Maracay merged with five regional homebuilding brands to form TRI Pointe Group, one of the largest homebuilders in the nation.

Last year those and the other regional brands united under the Tri Pointe Homes as a single company that debuted with developments in Goodyear and southeast Mesa.

Information about the Towns of Annecy: tripointehomes.com.

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GILBERT SUN NEWS | FEBRUARY 21, 2021

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