The Valley’s home sale market dropped sharply in April. Here’s what’s coming next
Source: Phoenix Business Journal | Angela Gonzales
While home sales volume in metro Phoenix took a hit in April, the existing home sales market already has rebounded.
You read that correctly: Already rebounded.
Tina Tamboer, senior housing analyst for The Cromford Report, said home sales in the existing resale market were sharply lower in April, reflective of the six-week decline in accepted contracts following the stock market crash at the end of February.
Wall Street-backed investors who paid cash for homes — making it difficult for Phoenix-area homebuyers to compete — began to slow down their acquisitions when their financing began to dry up, Tamboer said.
Travel restrictions caused by stay-at-home orders and struggling investment portfolios put a damper on the luxury market and retirement communities, which were benefitting the most from inbound migration, she said.
What’s more, many owners of vacation rental homes, facing a dried up tourist season, listed their properties.
According to Arizona Regional MLS data, there were 2,696 contracts signed to buy resale homes the week of Feb. 23, Tamboer said.
Then the Covid-19 pandemic and stay-at-home orders caused everyone to hit the pause button. By April 5 — six weeks after the stock market crashed — 1,641 contracts were written, representing a 39.1% drop, Tamboer said.
Now the good news: Last week, 2,165 contracts were accepted, up 32% over a 3-week period.
“What’s interesting about that is half of them were under contract with their agent in 21 days or less, which meant homes were listed during the pandemic and they were under contract during the pandemic,” she said. “We’ve rebounded. We’re going in the right direction. So while we’re still down from February, we’re now only down 20% instead of 39%.”
Resale homes in short supply
Before the stock market crash in February and the Covid-19 pandemic in March, the metro Phoenix residential real estate market arguably was the hottest in the country.
Phoenix has been topping the nation in home price growth, according to the S&P CoreLogic Case-Shiller Indices.
Phoenix reported a 7.5% year-over-year gain from February 2019 to February 2020, ahead of Seattle’s 6% gain, Tampa’s 5.2% growth and Charlotte’s 5.2% year-over-year gains, according to that report issued at the end of April. Nationally, February’s year-over-year gain was 3.5%, up from 3.1% in the previous month.
Even though housing supply is 28% higher than it was seven weeks ago, metro Phoenix is still in short supply of resale homes, with 12,900 active listings.
“At this time of year, anywhere between 25,000 and 30,000 listings would be about right for this marketplace,” Tamboer said. “There is more demand than what we have for sale.”
The pandemic unexpectedly created a window of opportunity for normal buyers; increasing supply in the most affordable price ranges while cash investors took a temporary hiatus, she said.
A rebound of the resale market is good news for homeowners, she noted.
Said Tamboer, “It means annual home appreciation should remain positive.’