It’s been 10 long weeks since we officially got “locked down” in Phoenix, now with restrictions being eased and in many cases lifted all together, we are left with the aftermath of unemployment, mortgages in forbearance, unpaid bills and to top it off, bad hair. After listening to many reports on the economy both national and local as well as religiously reading the Cromford Report,* I believe I have some good news to share and a rosier outlook, at least for the time being.
There is a lot of talk about a V-shaped recovery for the market- and that can be said for stocks, homes, GDP, etc. The V-shaped recovery in terms of real estate and our local market in Phoenix Metro can be broken down into pretty simple parts.
I. When the pandemic shut everyone down, we saw an abnormal amount of contract cancellations across the board, but especially in the luxury sector (over $900k). People panicked, worried about their long term investments and if the pandemic would be a major factor in housing prices long term. This has a domino effect on consumer confidence and soon we saw 30%+ cancellations of contracts in Phoenix.
II. Week 1-3 of April there were some bad looking graphs out there, things were going down fast- the # of contracts making it to closing, demand had fallen as buyers waited it out, inventory for a short time began to rise which had a leveling affect on prices. This was the sharp down of the “V.”
III. Week 4 of April, as the stock market seemed to be in a bit of a rebound, we too started to see an uptick in activity. Listings that had been waiting to hit the market started appearing, buyer demand started to recover- especially in the under $500k range. We were wrapping our heads around the pandemic and realizing we could take pre-cautions (masks, gloves, hand washing and minimal outings) but still do life.
IV. May week 1-2 as restrictions began being lifted, we saw a surge in activity, pent up demand from buyers drove the other side of the “V” and sellers started listing again.
Now, with the oversimplification of the above 4 step V-shape recovery, there are so many nuances within price points, price per square foot, zip codes, etc.- but the overall analysis is that we are on an upswing carried by demand and prices are staying steady and looking like they will rise.
(Above: House listed 5/15, Under Contract 5/17 with multiple offers over asking)
Demand has multiple parts to it as well. As I mentioned in the opening paragraph- people are unemployed- so what gives? How is there demand when people are out of work? Well, demand is not only coming from our local market. Demand is coming from California, Oregon, Washington, Chicago, New York, etc. There are still projections of 200 people moving to the valley a day. With the pandemic having such a mental affect as well as financial, Arizona’s appeal is looking better and better. With over 300 days of sunshine, affordable living and space (that’s the key) my projections is we will be welcoming many more residents than planned.
In conclusion, as a message to buyers out there on the fence, now is the time to jump off the fence, run to the pool and dive right in. Rates are still historically low (I have a buyer locked in to a 2.75% FHA 30 year fixed, as of last week!) and prices are looking to hold and increase as per usual at this time of year. Home prices are up in Phoenix 6.8% over last year! A message to seller’s out there, you still got it, we are still in a seller’s market in most price points and in most locations, you are still looking good in terms of equity and as mentioned before, there is a lot of demand.
(Above: from our very first story Finding Schreiber)
Last, to address the bad hair…might I suggest a great hat? Not only will you prolong your next salon visit, but you will also have the added benefit of built in SPF. Stay safe and healthy out there and please contact me with any questions or for help with your real estate needs.