Latest Update on the Phoenix Real Estate Market

[Melanie Johnston]

Don't expect metro Phoenix housing market crash due to COVID-19

That's the headline in this morning's Arizona Republic from real estate reporter Catherine Reagor.

As she says, "Metro Phoenix fares better in economic downturns not led by the real estate market, but that doesn’t mean the Valley’s housing market will be unscathed by the COVID-19 crisis. Listings have climbed 20% in the past few weeks, which could indicate that homeowners struggling financially are hoping to get out from under mortgages or short-term rental owners who don't have customers want to sell."

Reagor also quotes Tina Tamboer of the Cromford Report, perhaps our most respected market data analyst, who reports that the number of homes for sale is still 32% below the same time last year.

Here'a a chart from a presentation Tamboer shared with Cromford subscribers:

You can see that we were SO FAR BELOW last year's inventory, that the upticks in inventory are welcomed by buyers who now have more homes to choose from.

Latest housing data and trends

Preliminary reports show home sales and prices climbed in March, though both are lagging indicators because the deals were struck at least a month ago, before the coronavirus shutdowns began.

I've added more details to these highlights:

· iBuyers, such as Zillow Offers, Opendoor and Offerpad (who we locally call ZOO), stopped making cash offers, citing health concerns. Some even cancelled contracts in progress, if they were able to. This was great news to local cash investors who have been shut out by the large advertising budgets of the big behemoth cash buyers. In the meantime, wholesalers report they are scrambling to update their buyers' lists, with some reporting that 30% of their buyers have "disappeared" thanks to stock market losses and general trepidation. So if you are interested in getting on those revised lists, let me know and I'll connect with the top wholesalers who I believe have good reputations.

· "Potential buyers are still looking at Valley homes for sale because virtual tour views are jumping." We agents have gotten creative in trying to replace the traditional open house. In addition to virtual tours, we are using RSVP Open Houses. Basically you sign up for a time slot during an open house so you will have the home to yourself. I will be holding an RSVP Open House next weekend for a condo listing I have coming on the market in Old Town Scottsdale (walking distance to Scottsdale Fashion Square). Check out the PreOpenHouse app to learn more about these options in Metro Phoenix.

· "More Airbnb or short-term rental owners who don’t have customers now are trying to sell homes in the Valley, though the exact number is tough to track, Tamboer said."  I have watched a number of new listings hit the market that are clearly well-kept STRs. Recently I listed a 4 bedroom/3 bath home near Old Town Scottsdale (with a resort-style backyard) that grossed $103,000 last year.

· "Demand for new homes is falling and will continue to drop into this year’s third quarter, according to Belfiore Real Estate Consulting. 'We anticipate this fall-off to be temporary, with the market leveling off in the fourth quarter and bursting upward into the first quarter 2021,' Jim Belfiore said. 'Heading into mid-March, the new home market was better than during any period in the last 15 years.'”

What to watch in housing

I've heard Tina Tamboer speak in private forums three times this week. And her message is clear: If home prices are going to fall, the first step in that direction would be seeing sellers drop their listing prices. "That hasn't happened," she said.

According to Reagor's article: "A housing market crash led the economy into the Great Recession in 2008. Speculators and subprime loans backed by Wall Street led to a 50% spike in metro Phoenix home prices during 2005 and 2006, and then a record number of foreclosures from 2008 to 2012. Phoenix-area home prices climbed steadily between 7% and 10% during the past few years, and foreclosures in February were at the lowest level since 2005. Housing analysts don’t see any similarities between the housing market crash and now."

For you BP members following the Metro Phoenix market, I will continue to receive updates from Tina Tamboer, and will share them in this forum.

And if you have questions for her, let me know and I can get them answered by the oracle herself during her next industry presentation.

Melanie