From April to May 2020, the supply-demand index continued to decline. It appears to have stabilized over the past week, but is still fluctuating. There is still very strong demand and low supply for entry level through move-up homes (product below $500,000). Listing volume is growing above that, but over the past couple of weeks, there appears to be more demand for “luxury” properties above $500,000, as properties under contract are increasing.
As we look at market activity, some looming questions remain, including: 1) how the number of current forbearances will impact the market, once the freeze on foreclosures is lifted; and 2) how the projected wave of additional layoffs will impact the market, as PPP funds dry up over the summer. While the Greater Phoenix area should fare better than many other cities, R.O.I. Properties expects the market to turn—and believes that there is still a unique opportunity for sellers while inventory levels remain lower…
- Active listings: New listings in April ended down 18.5% compared to last year and are down 27.5% so far in May. Buyers thinking of purchasing under $400K may want to act soon. Inventory between $250K–$400K is up 36% from March 14, but it’s steadily declining. Buyer hopes for higher supply and lower prices due to the COVID-19 outbreak are diminishing, for now. The highest weekly inventory was the week of April 18 at 13,302 listings, comparable to last October’s levels. Three major iBuyers (OpenDoor, OfferPad and Zillow) announced their return to the Phoenix housing market after a several month hiatus—and the Southeast Valley, South Phoenix, Laveen, Tolleson, the West Valley and North Phoenix are heating up again.
- Sales volume & price: April 2020 ended with an average sale price of $184.24/SF through the MLS, which is 7.0% higher than last April and 1.3% below March. Accepted contracts took quite a ride over the past 12 weeks, as the market plunged for 6 weeks and rebounded for 6 weeks in a near perfect V pattern. The best recovery story thus far is the $250K–$400K price point, which is now 12% higher in accepted weekly contracts than in February, prior to the Wall Street crash. Other notable recoveries have been recorded over $500K, with significant spikes last week in contract activity. This price range saw the largest drop in contracts within the first 6 weeks of the crisis; their absence is now being felt in the average sales price calculations, reflected in the 1.3% drop from March to April. However, the bump in new luxury contracts will be recorded as sales sometime over the next 4–6 weeks—and as they close escrow, we can expect the average sales price calculations to slowly begin rising again in July.