Arizona Housing will recover, slowly but surely. According to Cromford today, the higher priced homes in Arizona will probably see some further weakness, however the bulk of the market looks safe.
Buyers Will Take Advantage of Low Rates
“Once buyers realize this they are likely to return in larger numbers to try to capitalize on low interest rates. Whether this results in more sales is an open question because lenders are likely to be more careful about approving loans than they were before March. The pool of potential buyers has been negatively affected by the huge increase in unemployment so it would be very surprising if a rapid recovery were to take place. Far more likely is a long hard slog. I think we would mostly prefer a long hard slog uphill than a continued free fall downwards.” It may be the only chance a first time home buyer may have for many years. All indications, and not just Cromford, state that Arizona housing prices will continue inching upwards.
“A clear case can be made that the housing market will not be dramatically affected by the pandemic over the long term, no matter how severe the jolt may be in the short term. The underlying shortage of homes for sale remains intact and now the wave of Airbnb properties turning into long term rentals is dying down, there will also be a shortage of homes to rent. Even with the gloomiest of forecasts, Central Arizona has more demand for homes to live in than it has homes available. This is not 2006.” Simply put, it’s supply and demand. Supply is down, Demand is up. Maricopa continues to top the nation in relocations.
Nervous Sellers will Accept Low Offers, and regret it.
“Sellers who accept low-ball offers from buyers out of fear of the future are probably not making a sound decision and are likely to regret it. A significant fall in home values requires a glut of available homes relative to demand and that does not look at all likely based on today’s trend lines. Of course no-one can predict the future with certainty, but keeping a close watch on the number of active listings is not hard. If you look back at history, home values come under downward pressure when the number of active listings becomes excessive. This is what happened between 2006 and 2011 with most of the decline in values taking place during 2007 and 2008. During those years active listing counts were vastly higher than they are now.”
Paradise Valley may be entering a Buyer’s Market
For my Paradise Valley sellers, if you are planning to sell in the next year, there seems to be a great opportunity right now. Inventory is extremely low, and there is pent up demand from the first two months of Covid-19. In addition, the low rates are allowing buyers to look at a higher price points, so families looking for the long term are especially interested in neighborhoods near great schools. Although we cannot time the market, recent activity suggests now may be a great opportunity. At the time of this blog, Cromford was indicating that PV may be one of the first cities to enter a Buyer’s Market.
“The remaining cities look likely to remain seller’s markets despite the huge decline in their CMI. However the balance in negotiations will not be as favorable to sellers as it was during the first quarter of 2020. Among these cities, Scottsdale has the highest chance of entering a balanced market, but this is still looking unlikely at the moment.”
The Cromford® Market Index roller-coaster ride is getting to the bit where you realize you are not going to die after all.
Quotes above sourced from the Cromford Report May 14 2020 commentary, courtesy of Denise van den Bossche, subscriber.
Scottsdale and two other Metro-Phoenix Cities named best for job opportunities in 2020. More Here.
MORE ON THE ALMOST DAILY NEWS ON COVID 19’s effect on the Housing Market in the metro-Phoenix Valley Here.
About the Author: Denise van den Bossche has been a licensed Agent and homeowner for over 35 years in the Metro-Phoenix Scottsdale Valley of the Sun. A Legacy LEED® AP, designated SRES, DMX, ePro, EcoBroker and co-founder of Seniors Advisors Advising Seniors®, a consortium of experts to surround and support families facing aging or chronic illness. To request a no-obligation market report, home evaluation, or consumer guide on your specific needs, contact Denise at 602.980.0737 or email Denise@AZMultipleListingService.com. Denise’s husband Patrick is President of Realty Executives International, with 500 offices throughout North America.
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