Corporate Investors Taking Over

There has been a very significant increase in the number of listings under contract between $400K and $500K.

The red line is 2021, the green is 2020 and yellow is 2019. The date is in DD/MM/YYYY format because I captured it from my screen in the UK and Tableau automatically adjusts dates for the user's location.

This situation is similar for $500K to $800K but not quite so striking.

Outside the price range $300K to $800K there is no increase and the red line is far below the green one.

I believe the primary cause is the buying spree that the iBuyers are indulging in, but they are not the only buyers competing for homes in this price range, which now dominates the market.

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You've probably seen the press around BlackRock and other institutional bulk home purchases. For example, this excerpt from a recent article:

'In the first quarter of 2021, 15% of U.S. homes sold were purchased by corporate investors — not families looking to achieve their American dream. While they’re competing with middle-class Americans for the homes, the average American has virtually no chance of winning a home over an investment firm, which may pay 20% to 50% over asking price, in cash, sometimes scooping up entire neighborhoods at once so they can turn them into rentals.'

Reminds us of the Orwellian great reset - 'you will own nothing and you will be happy.' Doesn't sound like the 'great reset' will be good for our industry! 

And we should probably stop there.

Looking at the price ranges above the $400-500K range we still see the same trend, namely, Listings Under Contract in 2021 YTD significantly outperforming 2020 and 2019.

Same is true over $1M:

And over $2M:

While there is the legitimate question of institution buyers squeezing out first time buyers and the subsequent consequence of appreciation in terms of affordability, the local housing market continues to be very robust across the board, albeit the $400-500K takes the prize in this monsoon moment.

And the decline (slowly) continues...

The appreciation rate is tumbling quickly now that inventory is growing. The appreciation can be measured in many different ways, but based on the monthly average $/SF, the appreciation rate for all areas & types within the ARMLS database is now below 30%, having peaked at over 39% at the end of May. Obviously, the rate based on the annual average $/SF is slower to react and is now leveling off near its peak at 24.4%.

Both measures of appreciation are likely to fall further over the rest of 2021, though they are unlikely to get back down to what we could consider normal during the next 4 months. Normal would be something less than 5%. We last saw that in 2016.

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The Cromford Snapshots make for a good summary visual across time and multiple parameters:

The month-over-month red arrow down indicates the trend favors buyers. 

Conversely the green arrow up favors sellers.

For additional perspective, here's what long term Annual Appreciation looks like in the Valley:

Annual Appreciation by Price Range is yet another perspective that points to how it's a mistake to broad brush or generalize Appreciation metrics. 

All gets a bit confusing doesn't it?

 As REALTORS® we love to share stats - cut and paste - a relatively easy way to share content; stay top of mind. 

However, explaining what they mean...not so easy. 

This is why I like our bank-grade, proprietary Collateral Analytics Intelligence Reports. 

They allow you to drill down to the market segment - city, zip code, even subdivision level with a concise year-over-year snapshot across the most meaningful criteria.

KISS: If we want to keep it simple AND accurate to the market segment of interest for my buyer(s) or seller(s), the Collateral Analytics Intelligence Reports are your ticket, with no restrictions in whatever medium you choose to distribute. 

Again, easy to generate; bank grade; proprietary!

Here's a sample for Flagstaff / Forest Highlands:

Another sample for Oro Valley / 85737:

A final sample for Arcadia (85018):