The Greater Phoenix area has enjoyed a strong seller’s market in residential real estate for the past few years. Tight supply and strong demand—thanks to a strong job market and state economy, and in-migration from California and elsewhere—have steadily driven prices skyward, and provided plenty of negotiating leverage for homeowners who want to sell. As you can guess, the turmoil of the COVID-19 pandemic has impacted residential real estate, just as it has everything else. If you are considering selling your house, we are still technically in a seller’s market—but if history proves to be a guide, you will want to act sooner rather than later if you want to capitalize on today’s prices.
Selling Your House in the COVID-19 Era
At R.O.I. Properties, our team keeps a close eye on certain metrics that can indicate the health of the Phoenix real estate market and where it is heading in the near future. Inventory levels have increased by about 30%, partly due to an influx of former vacation rentals hitting the market. We have also seen an increase in transactions in escrow that are “falling through” or “canceling.” From March 18th (around the time people began social distancing), until April 8th, the average, per-day fall-through/cancellation transaction volume is 73, compared to a rate of 1 per day during the same period last year. Inventory levels (housing stock/supply) are increasing as well, with 12,697 active listings as of April 8th, compared to 6,690 active listings one month ago.
Even so, there are a number of factors that are still in the favor of sellers, including:
- High comparable pricing. Appraisers and lenders both use historical sales as the basis for their decisions, and those are also the figures that buyers will be looking at. This advantage is likely to diminish steadily if not rapidly.
- Low mortgage rates. 30-year fixed mortgage rates remain near historic lows, offering buyers a window of opportunity to get as much house as possible for a minimum payment.
- Relatively low supply. Even with the increases in inventory levels, the Phoenix real estate market has fewer homes available than our historic average of about 23,000. Note that supply differs significantly within different price ranges, which will affect your sales approach.
- Serious buyers remain. Anyone who is active in the market to purchase now is unlikely to be a tire-kicker. Buyers who are out looking at properties are fulfilling a need to purchase.
Strategic Thoughts on Selling a Home Now
Phoenix residential real estate has not fully priced in the full impact of COVID-19 yet, but the clock is ticking. Smart and strategic marketing is paramount in conditions like we are currently experiencing. The usual strategies are not enough—you need to make sure you are attracting the attention of the serious, high-probability buyers noted above. In addition, social distancing is causing issues for customary tactics such as open houses and property showings. The final part is the deal-making aspect: Your home needs to be priced properly, and you need to vet buyers properly to ensure you make it to the closing table.
Whatever your reason for selling—whether you want to downsize, move, or capitalize upon your equity—we will likely see a dramatic change in the market over the next few months. Those challenges can be managed through a strategic approach in pricing, marketing, and negotiating, to achieve your overall financial and life goals.
If you are interested in getting an expert Realtor’s opinion on tactical pricing and marketing possibilities for your home, along with some strategic advice, please contact R.O.I. Properties at 602-319-1326, or [email protected]
We would be honored to be of service, and know that we can add value along the way!