Arizona Market: The Phoenix metro area real estate market is hot. It was so hot coming into this pandemic that despite the cooling, it is nowhere close to cold. Prices are stable. Today’s buyers and sellers have a whole new set of requirements and standards. Market share is up for grabs.
Cromford Market Index (CMI): The CMI is the best leading indicator available. On March 20 the CMI was 241 and yesterday it was a 145.2 (balance is 100, above 100 is a seller’s market and below 100 is a buyer’s market. Prices do not drop until the CMI hits 90) In the weeks since April 19, the CMI’s rate of decline started slowing. The week ending on May 9 we had a significant slowing of the CMI drop. The CMI has dropped nearly 100 points since the March 20.
Supply: This week was the first week since mid-March we saw declining new listing counts; which were low to begin with. Active listings as of May 10th are down nearly 20% year over year. And we are running about 45% below normal inventory levels. The extremely low inventory is keeping house prices stable. On May 11 we had a true market frenzy with 53 new listings with 163 new pendings in the southeast valley. NAR’s chief economist Dr. Lawrence Yun is quoted saying, “Supply is extremely limited, and there are simply not as many homes for sale to meet the demand among potential buyers. More supply and more listings are needed to provide a faster recovery for the economy.” This couldn’t be truer for our market.
Demand: Physical showing requests also show the increasing buyer demand. After a 63% decrease in requests, we have already made up 48% of that loss and now are only down, as of yesterday, 15% from the peak on February 22. Pending listings are down nearly 21% year over year. One reason they are down so much is due to the low inventory. Buyers can’t buy houses that are not for sale. Over the past 4 weeks the $500,000+ market has seen a 65% increase in new pendings. Despite the increase, pendings are still down 30% from early March. Today super low mortgage interest rates are keeping housing affordable and are bringing out the once side-lined buyers.
New Listings & New Pendings: To measure seller confidence we look at new listing counts. To measure buyer demand we look at new pending counts. In the past 4 weeks we have had a 40% increase in new pendings. When new pendings outpace new listings, we have a market frenzy. Look at the week over week comparison for the southeast valley since March 15. It is clear the week of April 19 was the turning point in our market. (the drop in new inventory mentioned above took place after 5/9)
Price & Appreciation: The April monthly median sales price is up 8.9% year over year. Sales prices have remained stable due to the extremely low inventory. It is very unlikely buyers will see much, if any depreciation. Since price is a lagging indicator, May’s closings will tell a more complete story. Over the past 4 weeks seller concessions have increased from 18% to 25% of all closings. This will likely increase before we see significant price drops. Dr. Lawrence Yun is quoted saying, “More temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise.”
55+ Communities: The 55+ market is suffering a lot. Given that these buyers are the most at-risk group and they mostly come from out of state, this will likely be the last market segment to recover. Once travel restrictions are lifted and people are comfortable traveling, expect recovery to start immediately.
Forbearance/Payments: Mortgage loans in forbearance increased from 7.54% the last week of April to 7.91% during the first week of May. Only 0.25% of loans were in forbearance at the beginning of March. That is interesting and all BUTsimply inquiring about forbearance puts a borrower into forbearance. The borrower will not be able to obtain a new loan (refi or purchase) until they have 12 months of consecutive payments after being placed in forbearance. Look for this to change as this is very detrimental for those who never meant to be considered in forbearance.
Housing Relief: A new website was launched yesterday outlining mortgage/rent payment relief options created in the CARES Act. It is a joint effort by the Consumer Finance Protection Bureau (CFPB), Federal Housing Finance Agency (FHFA) and U.S. Department Housing and Urban Development (HUD). https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/
This info is also available at: https://theazmarket.com/2020/05/15/phoenix-area-real-estate-update-5-15-2020-2/