Arizona Real Estate and Community News

May 6, 2020

May 2020 Market Update

May 2020 Market Update!

Market Summary for the Beginning of May

In summary, supply went up, demand came down, sales dropped sharply and prices weakened slightly, the latter because of large changes to the sales mix. The summer lull in luxury home transactions has come 2 months early in 2020.

The sudden rise in active listings without a contract ran out of steam during April and is now on a flat to slightly lower trajectory for May.

The sharp fall in contract activity has stabilized at a level some 20% to 25% below normal for the time of year. Closings tend to follow the same pattern as listings under contract, but offset into the future by 4 to 6 weeks, It is therefore no surprise that closed sales dropped around 20% compared with last month and abut 26% compared with April 2019.

Sales are still declining but are not far away from leveling out given that new contracts have now found a floor to stand on. May should see less volatility than April as supply and demand both start to stabilize.

We do not anticipate any fast return to normality, which would need sales to increase by 35% from where we are now. This would require a quick end to the pandemic which does not look likely. We are a long way from herd immunity and a vaccine that can be supplied in large enough quantities is not expected in the short term. This means the market must adapt to a new normal. This will be very different from the old normal and probably last for several quarters.

Sales pricing will look a little weak for the next 5 months (at least) because the market over $350,000 has seen a larger fall off in transactions than the market under $350,000. The sales prices do not reflect a fall in home values, however, which continue to be supported by the fact that the lower demand is still in excess of our meagre supply. Home prices are unlikely to fall without a glut of homes for sale, something that does not look likely at this point. Almost no foreclosures took place in May and many borrowers took advantage of the government imposed forbearance on lenders. The greatest risk to the market is in what happens to lenders and loan servicers over the next 12 months.

Here are the basics - the ARMLS numbers for May 1, 2020 compared with May 1, 2019 for all areas & types:

  • Active Listings (excluding UCB & CCBS): 14,051 versus 17,513 last year - down 19.8% - but up 6.4% from 13,211 last month
  • Active Listings (including UCB & CCBS): 17,867 versus 22,650 last year - down 21.1% - but up 3.6% compared with 17,238 last month
  • Pending Listings: 5,696 versus 7,326 last year - down 22.2% - and down 7.0% from 6,125 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 9,512 versus 12,463 last year - down 23.7% - and down 6.3% from 10,152 last month
  • Monthly Sales: 7,127 versus 9,659 last year - down 26.2% - and down 19.6% from 8,864 last month
  • Monthly Average Sales Price per Sq. Ft.: $184.24 versus $172.24 last year - up 7.0% - and down 1.3% from $186.59 last month
  • Monthly Median Sales Price: $299,999 versus $270,000 last year - up 11.1% - and down 0.3% from $301,000 last month


For Buyers:
The kickoff of 2020 was developing into a nightmare for normal buyers who just wanted to find a place to live.  Extreme competition for homes between wholesalers, cash buyers, vacation rental investors and traditional buyers depleted supply and created an environment consisting of multiple offers, appraisal waivers and an increasing number of sales over asking price. The Greater Phoenix housing market was on the precipice of seeing price appreciation accelerate at an alarming rate and had analysts wondering what could possibly slow it down.  Well, they have their answer, an act of nature. The COVID-19 pandemic came in like a wrecking ball in March shutting down tourism and crashing the stock market single-handedly over the course of a few weeks.  Hedge funds and iBuyers (funded by Wall Street) bowed out of purchases and vacation rental buyers put their plans on hold.  This is providing much needed relief to normal home buyers, if only they could leave their house. Stay-at-home orders to stem the impact of the pandemic has “pinched the hose” on what is arguably one of the hottest housing markets in the country.  This is causing a build-up of pent up demand that will undoubtedly return with some gusto when travel restrictions are lifted and a level of stability returns. Do not expect prices in Greater Phoenix to drop like they did in 2008, however. Back then when investors pulled out of the market, prices were so high that families making the median income could only afford 27% of what was selling.  This time around as investors once again pull out of the marketplace, families making the median income can afford 68% of what’s selling with today’s incomes and interest rates.  This is well within normal range and puts regular home buyers in a better position to pick up the pieces left by Wall Street and vacation rental investors. 


For Sellers:
Lock downs and travel restrictions across the country are causing buyers who need to relocate to Arizona, either for a job or to retire, to put those plans on hold for now.  The effects of COVID-19 span the job market, stock market, corporate profits, and exchange rates. This has had the highest impact on high-end luxury market buyers.  Not only are these buyers restricted from leaving their home cities at the moment, they have instability in their portfolios as well.  Under these circumstances it should not come as a surprise to see that weekly contract activity over $500K has slowed down by 64% since their peak on February 24th while price points under $500K have only seen a 30-40% slow down.
Sale prices are not declining at the moment, but seller expectations are adjusting.  Upticks in weekly price reductions tell us that sellers are beginning to ease up on pushing market value.  Sellers are also beginning to realize that it will take longer to sell their home under these conditions.  Weeks ago, some listings were receiving multiple offers within a matter of hours, but that’s not a reasonable expectation now.  Active listings that would’ve flown off the market 4 weeks ago could be on the market for weeks, maybe even months at this rate.  Information, communication and strategy will be important during the course of the pandemic response.  It is situations like these where professional REALTORS® get to show the value of their experience and service.


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Information provided courtesy The Cromford Report.

Posted in Community News
April 20, 2020

Gilbert 4-20-2020 Update

Here is a quick overview of the Gilbert Market....

  • New Listings: Still Increasing.

  • New Contracts... Down but still strong.

  • Market Balance... Changing, but still a strong sellers market.  (aka Cromford Index is 239. Neutral Market is 100.),

  • Contract Ratios:  "Hotter and Frenzied"

  • Pricing:  Upward pressure as long as Demand is higher than supply.


Please reference the below charts that support the Gilbert Market Overview!


New Listings


New Contracts: Down, but still strong.  Back On Market... Almost Unchanged.



Market Balance:  Sellers Market @ 239... (Neutral is 100)

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.


Heat Map:  Hotter and Frenzied!