Que-pasta my good buddy? :)
With all the ruckus and uncertainty out there, this Covid 19 stuff picked during the best time of year to show up. The sun is out, it's damn nice outside, birds be signing, and it's just hella nice out there. With the lockdowns and not lockdowns, however you'd like to look at it, the activity outside is amazing to me. It's as if someone kicked over a rock and a shit load of ants came pouring out. From what I can see, everyone is happy and waving. So given the uncertainty out there, that is at least really nice to see :)
As this bug has manifested itself into damn near every half conversation we have nowadays, it's top of mind with everyone. While things continue to evolve mine and Chas's real estate business has slowed down some. Large in part, I believe, people are more concerned if there is going to be milk or eggs at the store, or the better, toilet paper. Out of respect for the people, we don't want to talk about how we can get them ready to buy or plan an open house for our sellers with all this going on.
Having said that, the handyman business is quite busy. After long talks with Chas, long thoughts in the mind and conversations with others, as much as I'd like to put things in park for a while, I can't. It's becoming clear that the role my handyman business has evolved to is what they're calling an essential business.. for me at least, the engagements that I've had with customers, it feels very important. So until then, I'll still be getting after it.
I digress though...
In checking in on a lot of our real estate clients, friends, to ask how they're holding up with life, unprovokingly, I've been asked a lot about home prices/values as it relates to our current situation. Not to mention, many of my handyman clients know I'm also a practicing real estate agent and while fixing their shower or installing a TV, they ask me the same question.
How is all this Covid stuff affecting real estate?
Being vulnerably transparent... I don't know... It's very hard to say.
When I'm wanting info on our market, I look at the facts. The one place I have found comfort in the details is the Cromford Report. A band of talented people who are intertwined deeply with the Arizona Multiple Listing Service (MLS) where they use ALL of that data and to create logical explanations of what's happening real estate wise.
That being said, our Phoenix area market is hot and moving. Leading up to the Covid 19 stuff, we were gaining traction in a way not seen in a while. It was going to be awesome serving people... then Covid came in and literally shit on everything everyone was doing... from an employment standpoint, many have been affected, many have not been affected... employment has a huge deal with people buying, or comfort in sellers selling... to buyers who can buy... [that statement couldn't be lamer] HAHAH!
The best analogy I can give to our market is this:
If I tossed a pot of boiling water on you, you'd be scawled and burned to hell and back.... and really mad at me.
If I tossed a pot of really hot, not boiling water on you.... you'd still be scawled and burned to hell and back... and still mad at me.
The evolution of this bug is still very unknown. America is also gaining more data and more cases of this Covid 19 compared to the rest of the world. That being said, there's still a bunch of unknowns.
What I have below are two articles written 20 days apart...
Hell, if I could go back 20 days ago, I would likely have more TP and hand sanitizer than we do now.. I hope with that understanding you gather the difference in what I'm going to share. 20 days ago the America was aware of Covid, fast forward 20 days now today, it's far more in our face...
So goes these two articles... it summarizes it beautifully.. the market is less hot than it was weeks ago, but it's still damn hot.. but we are cooling off some, but to what extent, how long.. don't know.
I share with you trustworthy thoughts from the Cromford Report:
March 7, 2020:
Officially a Frenzy: 11% More Contracts Than Listings For Sale Contracts Over $1M up 60% Over Last Year For Buyers: Not even the COVID-19 corona virus can slow down the Greater Phoenix housing market. For every 100 active listings in the Arizona Regional MLS there are 111 that are already under contract. Greater Phoenix is officially a frenzy and it’s only March. We can expect to see this continue at least through May without relief as buyer demand is typically highest in the Spring. It’s even more dramatic in the Southeast Valley, West Valley and North Phoenix and all areas where prices land between $175K-$300K. For a stark example, on March 7th in Glendale there were 3 properties for sale between $175K-$200K and 25 under contract. In Chandler there were 3 properties active between $200K-$250K and 37 under contract. In the North Phoenix Moon Valley area there were 8 properties for sale between $250K-$300K and 30 under contract. There is a reason why people continue to pounce on what’s available for sale. The average price for a 1,500-2,000sf home is now $331K and continues to rise. That may seem alarming considering it was $324K at the peak in 2006, but contrary to popular belief it’s more affordable today because of the interest rates. In April 2006, with an average of 6.51% the monthly principle and interest payment on a 30-year fixed loan with 10% down was $1,854. Today at an average of 3.45% the same home is $1,331, a savings of $523. More recently, over the last 16 months despite prices having risen 9.4% for median-sized homes the monthly payment dropped by approximately $112/month. For Sellers: There’s not much more to say to sellers under $500k, frankly their homes may be sold before we’re done saying it. The stark gap between supply and demand doesn’t ease up until budgets go over $600K. Sellers in areas such as North Scottsdale, Paradise Valley, the Camelback Corridor and Downtown Phoenix still have plenty of competition to contend with, but well-priced, updated, move-in ready homes will still see heightened buyer interest. The luxury market is doing exceptionally well, however sellers should not expect the stampedes seen in the rest of the market. There are 522 properties under contract over $1M, up a whopping 60% over last year at this time. However there are still 1,657 competing properties for sale in this price range and those that sold in February averaged 5-6 months on the market. Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2020 Cromford Associates LLC and Tamboer Consulting LLC ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Now.. that report comes out every month at the same time... 6th or 7th ish.. They also have what's called daily observations.. wonderfully helpful, especially given what we're dealing with:
March 27, 2020:
[my thoughts here]
NOTE!!... Cromford Market Index™ is a value that provides a short term forecast for the balance of the market. It is derived from the trends in pending, active and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market...
Look at the top 17 cities... all WAY north of 100... huge indication of the sellers market we're in.
[end my thoughts]
The supertanker that is the housing market is still changing direction as fast as it can, which is to say, slowly. We now have 7 cities with CMI values that are lower than a month ago. However we also have 10 that are higher and the average change is +2.6%. Take the 3 lowest priced cities (Maricopa, Buckeye and Avondale) out of that list and the average change is +0.1%.
For the last week, the market is cooling with supply increasing and demand in decline in most but not all areas. However it is dropping from a very hot temperature and will take quite a while to reach normal room temperature (a CMI of 100).
The impact of the COVID-19 pandemic looks more significant with every passing day and now seems to us like an event so momentous that the CMI could conceivably be driven back to 100 or even lower. At the moment we are in uncharted waters so any predictions are practically worthless. The CMI will give us a very good idea of which direction we are headed and how fast but forecasting how long that trend will continue is not possible with any confidence.
If we knew what the real extent of corona virus infection was, we could get a better handle on the future. However the USA has not tested enough people without symptoms to know if asymptomatic carriers are rare or common. A controlled test of a large randomly selected population is urgently required. If a large percentage have already been infected and felt no symptoms, that would be very good news. However the opposite would be very bad news. At the moment, everyone is merely guessing. Without a massive testing program the whole country is flying blind.
Yesterday the USA became the country with the largest number of confirmed COVID-19 cases in the world, exceeding both Italy and China. There is no sign of a slowdown in any of the COVID-19 numbers published to date. In fact most show alarming acceleration rates. The systematic testing is therefore critical. Meanwhile new supply is arriving quite fast, particularly for rentals and low to mid-priced re-sales:
New rental listings are up 8% year-to-date compared with 2019 and up 27% in the last 4 weeks compared to the same time last year
New residential listings are down 5% year-to-date but up 2% in the last 28 days and up 18% in the last week compared to the same periods last year
Single-family active listings are up 94% in Laveen, 55% in El Mirage, 18% in Queen Creek and 17% in Gilbert since the same time last month. This is a sharp turn-around from extreme shortages in February, though even with these increases, inventory remains very low by long term standards.
Both very positive articles, both also written in different times.
I am going to keep a close eye on this and will share it regularly. It will be interesting to hear their monthly updates after the first week of April.
Until then... if you have any questions, Chas and I are a safe place to ask them. At the end of the day we both are more concerned with you the person, your family, rather than your intentions of buying or selling. We are a safe place.
As uncertain as the future is, it's people that's going to get us through this. We are grateful to be able to share this with you and also be here for you should you need anything. The sun is out and the birds still shit on my car outside, and my dogs still know how to dig holes in my yard.. so things are normal there.. so I'm going to keep rocking a smiley face in the meantime.
Chas and I are just a call away. Have a grateful weekend friend :)