- The number of single-family houses sold was down 31% from 4 weeks ago.
- BUT the number of single-family houses hitting the market continued to fall and was down 58% from 4 weeks ago.
- Since both sales and new supply fell, the number of houses for sale hasn’t built up much and, in fact, total supply of single-family houses for sale is DOWN 26% from this time last year.
It looks like the number of houses that went under contract to buyers bottomed out in the first half of April. The number of accepted contracts was up about 20% last week compared to the previous week, according to The Cromford Report. I don’t expect the number of new contracts to reach February levels but they may be rebounding as people learn how to do business during the time of Corona.
Solds will be down for the next ~4 weeks, however, because of the low number of new accepted contracts we saw from the end of March until mid-April (down roughly 30% from February). If the current trend of more houses going under contract continues, we’ll start to see more successfully closed escrows in 3 or 4 weeks.
Who Comes Back into the Market First? Buyers or Sellers?
A lot of buyers and sellers are putting their home buying and house selling plans on hold for a “couple of months,” according to a survey done by the National Association of Realtors.
Of the real estate agents who responded, 44% said their buyer clients were delaying for a “couple of months,” and 55% said their seller clients were delaying for a “couple of months.” In addition, 22% of their buyer clients stopped looking altogether due to concerns about their jobs.
What Happens After Peak Covid-19?
Will sellers come back into the market before buyers? Will we see the number of houses for sale increase a lot faster than the number of houses sold?
I think so.
Buyers. Because the unemployment rate skyrocketed, some people who were looking to buy a home in March, won’t be able to get a mortgage to buy a home for a while. They won’t be able to jump back into the market after the Corona Crisis peaks.
Sellers. Sellers should be able to jump back into the market faster than buyers but unemployment will hit some potential sellers, too. Sellers who have lost their jobs, will no longer be able to get a mortgage to buy their next house so they’ll stay where they are for a while longer.
Overall, I expect the number of houses for sale to rise during and after the Coronavirus but because the number of houses for sale was so crazy low before the Coronavirus began, it will take months for the supply of homes for sale to even get to “normal.”
I don’t expect house prices to fall much in 2020. Today, I expect December prices to be similar to January prices in Phoenix. Las Vegas is another story.
This information can vary a lot in different parts of metro Phoenix. Your real estate agent can find the data for your specific city or zip code at The Cromford Report.
To see what’s happening beyond Phoenix, be sure and also subscribe to my other website, RealEstateDecoded.com.
Note. This post was written on May 2, 2020 but the graph will be continually updated.
2 Responses to The Market Stopped Getting Worse – Phoenix Real Estate & Covid-19
Makes sense. Would you agree though Real Estate in general is a lagging indicator? So, do you think maybe the June numbers will start to reflect the events of March/April?
Sales are definitely a lagging indicator. Home sales closing now went under contract 30 to 45 days ago and reflect the market back then. Housing is famous for having long and variable lags. Stuff – good and bad – doesn’t move the needle for months. I’ve seen a few places say that a change in interest rates can have an impact on sales for 3 years!
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