The Census Bureau has provided the single-family permit counts for September and they are showing a new downward trend. Only 2,325 permits were issued in Maricopa and Pinal counties during September, which is the lowest monthly total since May 2020.
It is also down 25% from September last year.
It would appear that the home builders are unable to meet demand because of shortages of component products and labor. This partly explains why they have been so reluctant to take orders. If they take orders for homes they are unable to build they are in danger of setting prices far too low as well as disappointing their customers.
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Cue the violins - Zillow has announced that it has terminated its Zillow Offers iBuying business.
It turns out that buying houses at a high price and selling them for less money is not such a great business model..
Above sourced from the Cromford Daily Observation.
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Supply chain issues are hitting everyone and every industry. We see the consequences in higher prices at the grocery store and more broadly, the availability of everything from new cars to home building and home improvement components. And no relief on sight. As an affirmative aside, my eldest son works for a company that manages major ports around the world, including Long Beach. His team is in the middle of it trying to figure out ways to improve the tangle of logistical bottlenecks. He says it is going to get much worse before it gets better. He would know.
There's a buy now message!
Ironically, once again, the consequences of pandemic and geopolitical events have graced our local resale housing industry.
Talking points:
Supply: We've reported it was going to take a decade for new home construction to pick up the residential home supply gap. That was earlier this year.
Now the implications of the above suggest a continued squeeze on the supply side.
Demand: Arizona will likely continue to see population gains, as a prime relocation option, with the attractor-factor of the sunny Arizona lifestyle and more horizontal than vertical growth e.g. more space in golf-centric communities.
Here is the 'bank grade' 5-year Forecast from my personal Collateral Analytics account, where you can generate projections down to the zip code:
Samples from select cities: Note the vertical red line is 'today'. To the right of the vertical red line along the horizontal axis are the projections for the next 5-years. It's not a crystal ball, but you do have the bragging rights to 'bank grade' information:
Phoenix:
Glendale:
See a pattern here?
Main takeaway - more of the same in most markets for at least the next 2 years. Up north the less population-dense markets project astronomical growth out for at least the next 5 years!
To explain the genesis of this information -
When we say 'bank grade' it's because Collateral Analytics is a preferred tool Wall Street banks use for risk management - specifically, to assess the viability of Real Estate portfolios being sold in the secondary mortgage market.
Collateral Analytics is considered 'top-of-class', hence 'bank grade', as compared to say a 'consumer grade' tool like the Zillow Zestimate!
My response to the Zestimate 'congratulations on doing your homework. You're using a consumer grade tool, with a lot of disqualifiers when you read the small print. We have a bank grade valuation tool to assist in our analysis I'm happy to share with you.'
Boom!
To explain the term CBSA (you see in the title of each report) and the rationale for the forecast:
The Core Based Statistical Area (CBSA) and Zip Code Forecast chart shows the historical and forecast median single family prices for the user selected zip code and surrounding metro. The price forecasts are based on models developed by Collateral Analytics and are driven primarily by employment growth and home price affordability which are the two most important factors in housing markets. |
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