First of all, the sky is NOT falling! I wanted to take a few moments and explain what we are seeing throughout the Metro Phoenix Real Estate Market. This is as of the end of the first week of April, 2020.
Let’s recap what we saw in the 1st quarter of this year… INSANITY! There was no ‘holiday lull’ at the end of 2019, which meant we were already off and rolling come New Years. Relocation here has been strong from all over the country… lots of new and existing businesses growing, in a multitude of workforce sectors. As mentioned in the past, Maricopa County has remained the fastest growing county in terms of population. Overall affordability, weather, quality of life and business all factor in. Interest rates were real low up until mid March, which helped push buyers. That coupled with extremely low inventory meant sharp price increases fueled by bidding wars and multiple offer situations.
Then COVID uncertainty arose along with “stay at home” orders and many businesses closing down temporarily. In many ways, it feels a whole lot longer, but this all really kicked off about a month ago, March 11th. The dominoes really started to fall from there.
How has this all impacted Real Estate? Let’s dive into some statistics:
- Since March 1st, rental supply is up 16.8% – hard to track, but some due to AIRBNB & VRBO /Short-Term Rentals now sitting empty while people are not traveling.
- Rental rates are holding steady and really have been pretty consistent over the past 12-months.
- We have been averaging about 300 listings moving into a “TOM” (temporarily off market) status per week, but mostly above the $500K price point. (keyword is ‘temporary’ – most all will come back)
- Are we seeing a bunch of Price Reductions? NO – 1,100 less this week than during the same time last year, in fact.
- Under $500,000, the average sales price in our market is now at $164/Sq Ft.
- Overall transaction volume has decreased, which is to be expected… but that won’t be permanent. We anticipate a busier than usual summer.
- Total Inventory has increased 27% over the past 3-weeks.
- In the last 3-weeks, inventory under $300K is up over 50% yet still 30% less than it was last year same time (think about that).
- Thus far, 27.5% of April closings have been above list price.
- Total State Employment – 10.8% is in the Leisure / Hospitality category. Hardest hit, but not a huge percentage of the workforce.
What can we take away from this moving forward?
- This is basically a Market Reset… a good opportunity to breathe and prepare for a potentially busy summer. Many economists are comparing this to a kink in a hose and once that kink clears…
- If this causes inventory re-balances some, that is GOOD news for Buyers. With so many people needing to buy contingent upon sale of their existing home, this will help them feel more confident in making a move, which in turn creates more inventory during the cycle.
- COVID has largely taken Wall Street out of our market… that’s a good thing!
- Be aware of talk regarding “COVID Adjustments” on appraisals… DUMB and not justified.
- Jumbo & DPA (down payment assistance) financing programs that have suspended funding will likely be coming back later this year.
- Total State Employment – 10.8% is in the “Leisure / Hospitality” category. Hardest hit sector, but not a huge percentage of the total workforce. Very much more of a diversified economy here locally than when the crash of 2008-2010 came through.
- Buyers should be primed to make a run throughout the rest of this year with a little more selection, less competition from Cash Investors/iBuyers and favorable interest rates.
- With the iBuyers and corporate investment companies pulling out how and when they did, traditional real estate was left to pick up the slack. Hopefully the mass public knows we are here through good AND BAD times… not just the good, like some others.
- EXPERIENCE is key during times like this… we’ve been through these types of cycles before. With 70+ years of FULL-TIME & LOCAL Experience behind us, you can count on reliable information and a steady voice.
In summary, we are seeing some re-balancing in the market, but the lower end price points (where most activity occurs) remain strong with multiple offer situations still occurring, just not every time. Instead of 11 offers, there are 3-4. The luxury market is where many have decided to wait and see what happens, which is common for that segment during times like these. Every situation is individualized so please never hesitate with any questions. We are HERE FOR YOU!
