The Phoenix Housing Market Update for March, 2020 includes some statistics into early April, but is a good representation of real estate market activity.
With the current pandemic, these reports will show activity as to what's for sale, sales prices, cash buyers, how long it currently takes to sell a home (on average), the total number of sales and where prices are going. Make sure to read the commentary at the end of the report.
All of these reports are by subscription of the Cromford Report. Please don't share or violate copyright laws.
As of today, 4/8/2020, there are 2726 cases of COVID-19 in the Maricopa Countya rea of Phoenix with 4.5 million people has 1559 cases. Please visit the CDC site linked to Arizona to verify the daily count.
This chart reflects new listings as they hit the market monthly. As you can see, our active listings are still lower year over year from 2019. This report is one to watch for new listings as showings are down due to social distancing and other reasons related to COVID-19.
For the month of March, it took an average of 54 days to sell a house in Maricopa County. Starting off in April, the number of days it takes to sell a house in the Phoenix Metro area is 48 days. It will be interesting to see how this number changes moving forward since showings during this virus are down significantly.
Of significance is the large number of cash purchases that doesn't show signs of stopping! Of the total number of sales, over 20% are purchased with cash. Rising prices have slowed some of those buyer purchases, but the number has remained steady during the last six years.
The peak for homes under contract in 2019 occurred on 4/27/19 with 12,478 homes under contract. Currently, the peak this year is for March 14 with 12,011 homes. This number is expected to decline as some hold off on housing activity due to social distancing. Our Canadian snowbirds may yet still be in Canada as borders are closed, which MIGHT be hindering purchases and sales. Some who might have been planning to sell MIGHT be holding off. Every peak on this chart occurred during the month of April so we are expecting the number of listings under contract to decline. Homes need to be priced right, clean, and move-in ready. This is not the time to over-price a listing, but that depends on the price range.
The Monthly Median Price in Phoenix continues to rise and is currently $305,000. This number is a 12% increase year over year in price. Nice increase.
Sales for March, 2020 are 10% higher than March, 2019. As we move forward it will be interesting to see where we land. Foreclosures continue to remain low with 467 for the month of March.
There were 805 short sales for March, 2020; 805 households have missed 3 or more mortgage payments and have been issued a Notice of Default. There were 955 short sales in March, 2019, reflecting a 16% drop in short sale notices year over year for March.
Following the market changes with these reports is a good way to be informed and stasy ahead of what's happening. Reports like this are historical in nature; however, Under Contract Price Per Square Foot is a good indicator of where prices are going since those homes haven't closed yet.
Under contract price per square foot dipped March 13th, but there have been declines in this number before, especially since this is an average and includes all price ranges. How far this decline will go is a good question. Watching this number and the other indicators helps to define buyer sentiment.
The following is a direct quote from the Cromford Reportt's creator, Michael Orr as of April 7:
"April 7 - New residential listing counts took a jump between March 19 and April 3, but are now dropping back sharply and today the weekly count of new listings is down over 12% compared with the same period in 2019. This is not surprising as the pandemic saps seller motivation almost as much as it dampens buyer enthusiasm. This new trend in new listings means supply is still inadequate to meet demand even though demand has been artificially crushed by the COVID-19 outbreak and the measures taken to control it. The implication is that prices are still not seeing any prospect of experiencing any downward pressure in the near or medium term.
History shows that home prices only fall when their is a glut of homes available and sellers have to compete with each other to move them. A fall in demand, however severe, is not sufficient to drive prices lower. There has to be an excess in supply relative to that demand. We saw this between 2006 and 2009 for the entire market and for the luxury market between 2015 and 2017. You may see a few builders offer incentives to close contracts, but it would be surprising if they cut list prices or lot premiums in the current market conditions.
The same trend is not true of rental listings which continue to grow healthily. They are up nearly 35% from 2019 for the last 4 weeks. It will still take a long time before this trend results in enough rentals to meet demand. However the current situation means that rents are likely to rise less quickly than they would have done before corona virus.
Each year we see a fall in average $/SF for re-sales between late May and late September but this is a result of the sales mix containing far fewer high-end homes. This is likely to be an even stronger trend in 2020 because the luxury market has seen many homes taken off the market and what extra supply has arrived has been strongly biased towards the affordable end. The mix of what is for sale is therefore biased towards the lower $/SF which will result in lower averages in the closed figures. The fall in average $/SF during the hottest months does not mean home values are falling any more than it did in the years 2000 through 2019. You should take this into account when reading all the sales price numbers for the next 6 months."
Again, please do not plagiarize or copy this material as it is by subscription. Please contact me if you have specific questions!