Extremely Low Supply – Very High Demand – Loose Lending … where have we seen this before?

Loose Lips Sink Ships … Loose Lending Sinks Economies

For investors, this is NOT an alert to get busy selling your properties here.

This is an alert to all Maricopa County residential real estate owners about the extraordinary current conditions … and issues you need to continue to be aware of.

Maricopa County housing price appreciation over that last couple of years has been exceptionally high but this is due to the basic economics of Supply-and-Demand, as subsequently discussed … NOT … yet … because of totally irrational investor buying as in 2005 and 2006.

But loose lending got us there before … and it could again!

Concerning Loose Lending … This issue applies nationally – NOT just to Arizona
For me, this is the most concerning issue.
The essential part of the Dodd-Frank law
… requiring a step-by-step process designed to ensure that the borrower could repay the loan
… has been stripped away over the last 18 months
Two to four times per week, I get emails similar to that show here from  different lendersStated Income email
… the highlighting in the add is part of the ad, not something I did.

the focus in the ads is the minimal amount of evidence of financial capacity the lender requires

… as before, the loan people want to make every loan they can and collect the bonus check.

Later consequences???  “What consequences?” … they respond.

Because of lack of volume, residential lending companies are going out of business here. No doubt, those remaining are going to be ever increasingly aggressive.

NOT good news!

Concerning Supply
ARMLS total for-sale listings is under 16,000 … less than 2 months of sales.
When the listings by builders of new homes is taken out, because many (most?) have not been built yet, the number of ARMLS listings available for occupancy is just above 14,000
Either number is the lowest percent of Maricopa County homes since I started paying attention in 1993.

Concerning Demand

According to the US Census, 6,137 (73650/12) people per month were added to Maricopa County in 2016. I haven’t seen any later numbers but I I’ve seen nothing indicating it’s lessened.
I saw a big headline in the AZ Republic the other day that 10,000+ apartments were to be completed in Maricopa County this year
… as if that was a big deal. LOL … at an average of two people per apartment, that would take care of about three months of move-ins. How about the other 50,000+ newbies?
New-home builders are cranking up ASAP, but the numbers don’t come close to the need.
The result is an ever-decreasing number of residences to choose from.

 

 

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