A month after COVID-19, Market Update
Que'pasta my good friend! :)
How's the week treating you so far? I hope things are feeling normal for you. My stupid ass cleared a 6'-6" wall yesterday and couldn't see the ground very well due to the brush cover... So I landed oddly on my foot.. Fearing I broke something I took it easy for 30 minutes or so.. then, there was no way back home without jumping over the wall again.
All that being said, I'm nursing, what I hope, a severely bruised heel pad.. and not a hairline/stress fracture in the ball part of the heel bone... lame! I've got my special "Cuervo" Friday shirt on and am going to take it easy this weekend. Fingers crossed! I've got GÜD jobs this coming week and I really don't want to be limping around to pull it off...
Aside from that pitty party! ha! A few weeks ago I gave an update about how the market was faring just before the Arizona lockdown due to COVID-19. At the time there wasn't enough tangible data to qualify the impact. After reading that update I was eager to see what a month later would look like. That being said, I checked out our local MLS data junkies, The Cromford Report, and wanted to see what and how this COVID-19 shook out after a month.
Their wisdom is here below:
Pandemic Puts Housing in a “Pinch” COVID-19 Aftermath: Good News for Normal Buyers
The kickoff of 2020 was developing into a nightmare for normal buyers who just wanted to find a place to live. Extreme competition for homes between wholesalers, cash buyers, vacation rental investors and traditional buyers depleted supply and created an environment consisting of multiple offers, appraisal waivers and an increasing number of sales over asking price. The Greater Phoenix housing market was on the precipice of seeing price appreciation accelerate at an alarming rate and had analysts wondering what could possibly slow it down. Well, they have their answer, an act of nature. The COVID-19 pandemic came in like a wrecking ball in March shutting down tourism and crashing the stock market single-handedly over the course of a few weeks. Hedge funds and iBuyers (funded by Wall Street) bowed out of purchases and vacation rental buyers put their plans on hold. This is providing much needed relief to normal home buyers, if only they could leave their house. Stay-at-home orders to stem the impact of the pandemic has “pinched the hose” on what is arguably one of the hottest housing markets in the country. This is causing a build-up of pent up demand that will undoubtedly return with some gusto when travel restrictions are lifted and a level of stability returns. Do not expect prices in Greater Phoenix to drop like they did in 2008, however. Back then when investors pulled out of the market, prices were so high that families making the median income could only afford 27% of what was selling. This time around as investors once again pull out of the marketplace, families making the median income can afford 68% of what’s selling with today’s incomes and interest rates. This is well within normal range and puts regular home buyers in a better position to pick up the pieces left by Wall Street and vacation rental investors.
Lock downs and travel restrictions across the country are causing buyers who need to relocate to Arizona, either for a job or to retire, to put those plans on hold for now. The effects of COVID-19 span the job market, stock market, corporate profits, and exchange rates. This has had the highest impact on high-end luxury market buyers. Not only are these buyers restricted from leaving their home cities at the moment, they have instability in their portfolios as well. Under these circumstances it should not come as a surprise to see that weekly contract activity over $500K has slowed down by 64% since their peak on February 24th while price points under $500K have only seen a 30-40% slow down. Sale prices are not declining at the moment, but seller expectations are adjusting. Upticks in weekly price reductions tell us that sellers are beginning to ease up on pushing market value. Sellers are also beginning to realize that it will take longer to sell their home under these conditions. Weeks ago, some listings were receiving multiple offers within a matter of hours, but that’s not a reasonable expectation now. Active listings that would’ve flown off the market 4 weeks ago could be on the market for weeks, maybe even months at this rate. Information, communication and strategy will be important during the course of the pandemic response. It is situations like these where professional REALTORS® get to show the value of their experience and service.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2020 Cromford Associates LLC and Tamboer Consulting LLC
For me, I can't watch the talking faces on TV... especially during these crazy times. Their tactics are fear based.. they make money off of advertising, selling fear makes that even easier.
If you read the RedFins, Realtor.com's & Zillow, there's some expert on there also talking about this and that's... Those sites are designed to make money off of real estate agents for lead generating purposes only... they are designed to draw in traffic solely to sell back to Realtors as leads... again, I don't trust them..
All of that feels like a team of guys trapped in a fox hole being pounded on by the enemy... all the while the upper uninformed brass, in their safe locations are making calls that don't make sense.
he Cromfrod Report on the other hand is a consulting company paid by real estate agents FOR real estate agents - period. Its purpose is to educate practicing Relators and share back with clients - not fish or lead generate for new clients. They are in the dirt with us.
That being said, I have far and above more faith in their factual based perspective. It appears positive and loaded with realistic content. I think we're still not out of the weeds as things are still unfolding. For now, it's more uncertain, but it's not a punishing outcome like back in 2008.
I hope that brings some comfort to you in this odd time. As always, Chas and I are here for you if you need a buddy :)
This week's AWESOME picture comes from our best home inspector ever! He took it and posted it on his Instagram page. I was hella hooked and asked if he'd share! After expressing why I was so excited, he graciously emailed it to me. :)
Have a grateful weekend!! :)
We're here if you need anything :)
-Josh & Chas