“So, I can stop worrying about ‘how far down’ and start focusing all my worrying on #2, ‘how long.'”
Conclusion
A month ago, I was a lot more weirded out about the coronavirus and the Phoenix real estate market than today. It was all unknown territory.
Back then we didn’t know, 1) how bad it would get, or 2) for how long.
Today, we know #1. Things got continuously worse from mid-March but it appears to have bottomed out in mid-April (hopefully). Things aren’t getting worse any more and in important ways they’re rebounding.
So, I can stop worrying about #1, “how far down” and start focusing all my worrying on #2, “how long.”
The Return of “Shadow Inventory?
I keep expecting the number of houses hitting the market to increase but it hasn’t happened yet. I wonder if a lot of those potential sellers who are on the sidelines right now (the shadow inventory?) will all come back into the market at the same time.
Will we eventually see a surge in new listings and the number of houses for sale? Seems likely. I’m trying to figure out if this potential surge will be big or small. Let me know what you think in the comments.
New Listings
Surprisingly, the number of single-family houses hitting the market is still falling. It’s down 13% from the previous week and down 30% from 4 weeks ago.
For Sale
The number of houses for sale is slightly LESS than the previous week and down 4% from 4 weeks ago.
Under Contract
The number of for-sale houses going under contract to buyers continues to rebound strongly. The number of houses going under contract last week was up 40% from 4 weeks ago!
I expect the total number of single-family houses under contract to start to increase this week or the week after.
Solds
The number of single-family houses sold was down 11% from 4 weeks ago. In the last week of April, we saw the typical boost in closings during the last week of the month.
I expect the number of solds to start to increase this week and to continue to increase for at least a few weeks.
Inventory
We only have 1.8 months of supply which is still crazy tight.
I can’t see prices falling until we’re above 6 months of supply.
Takeaway
Until new listings start increasing a lot, I can’t see how Phoenix house prices fall.
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 11, 2020 but the graph will be continually updated.
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5 Responses to Phase 2 – Coronavirus Real Estate Market
Thanks for the video!
John, Thanks for your thoughts, insights and analysis of the market. It’s very tough to know what will happen over the next few months, but even if there is a substantial increase in the number of listings I suspect that will be followed by an increase in demand. But maybe not, especially if the economy takes a further downturn. Then even more sellers could appear as more and more folks are strapped for cash. It’s a risk. Right now I don’t see this happening in the next few months as the stimulus package is providing a temporary backstop. Hopefully, we get some new therapeutics and then a vaccine so we build a confidence level that allows everyone to resume their lives. Like with you, for me it is an evolving story and we just have to keep following it to see which way it turns. Personally, I am confident we will be OK, but I am also realistic enough to know we are not out of the woods just yet. So it can go either way. Please keep sharing your insights on the market. It’s great stuff. Steve
Steve, It sounds like we’re on the same wavelength. And it’s hard to untangle the end of cycle stuff – remember all the talk of a recession in 2020 way back in 2019 when the yield curve inverted? – from all the Covid-19 disruptions.
And the huge government spending kind of lets the genie out of the bottle for future government spending programs. Will probably set a new economic trajectory.
What in-sight do you have for ,Surprise,Copper canyon ranch in particularly?
85379 is doing fine. Sold prices in April were similar to last April. The number of houses that went under contract bottomed out in mid-April and the latest week’s sales were more than twice that bottom week. The number of houses under contract to buyers is a lot less than last year but it’s been increasing fast the last 3 weeks. So far in April (through April 11), 51 single-family houses hit the market versus 52 last year. Also, 26 single-family houses have sold versus 32 last year. That’s for April. 85379 is moving in the right direction.
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