🏡 Phoenix Market Summary – Mid-May 2020

🏡 Phoenix Market Summary – Mid-May 2020

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As a part of keeping you as informed and updated as possible on the real estate market here in Phoenix, we are doing our best to bring you valuable updates every other week. We hope these updates are giving you a little bit of clarity as to what is going, using local data instead of relying on national news headlines. Real estate is incredibly local, and market conditions can be drastically different from one state, county, or city to the next. We are seeing definitive signs of stability in the market, and as the dust is settling a path forward now looks much clearer.
The rush of new listings to market has cooled dramatically, indicating a normalization of both market conditions and consumer confidence. Under Contract Listings have roared back nearly to “pre-pandemic” levels, with buyers once again reassured of their job security due to many businesses opening back; this is an indication of strong sales numbers over the next month or so. Even with all the volatility we have seen over the last two months, most parts of the Phoenix housing market are indeed still in a seller’s market and look to be headed further in that direction once again. The fundamental drivers for growth remain intact, with major corporations relocating and expanding in Phoenix, and increased interest nation-wide in Arizona housing. 
Local & National Headlines
  • Taiwan Semi comes to Phoenix – Taiwan Semiconductor Manufacturing Co, one of Apple’s largest suppliers, has announced plans to construct an estimated $12 billion microchip plant in the Phoenix Valley. While the company has yet to select a final location, it is evaluating several sites. The plant will create roughly 1,600 new high-paying jobs, further boosting Phoenix’s status as a west-coast home for technology companies more from azcentral.com
  • Builder Confidence Finds Footing – Homebuilder confidence, tracked via the Housing Market Index, bounced back to 37 after its largest decline in history during may, going as low as 30 (an HMI reading of 50 indicates builders view current conditions favorably). Among regional rankings, Western and Southern States bounced back most impressively, to 44 and 42, respectively. “Low-interest rates are helping to sustain demand,” said NAHB Chird Economist Robert Dietz more from National Association of Homebuilders
  • Mortgage Applications Rise Again – Purchase applications rose for the fourth week straight, up nearly 11% from the prior reading, still 10% lower than this time last year. Last month’s reading was nearly 35% below May’s. On the flip side, refinance applications fell 3%, marking the fourth straight weeks of decreases in refinancing activity; refinances are up more than 50% from 2019 more from cnbc.com
  • Record-Low Mortgage Rates –  US mortgage rates hit all-time lows twice last week among increased buying of treasury bills by The Federal Reserve to raise cash for federal expenditures, namely coronavirus-related relief. The average rate for a top-tier conventional loan was around 3.125%, with most lenders in the 3.0%-3.25% range more from mortgagenewsdaily.com
  • 9% Forbearance for US Mortgages – in a survey of roughly 80% of the US mortgage market, the Mortgage Bankers Assoc. found that roughly 4.7 million US mortgages undergone some sort of payment modification as a result of coronavirus-related forbearance (approx. 9% of all US mortgages). Of the Government Sponsored Entity’s, Ginnie Mae held the more mortgages in forbearance at around 11.25% more from housingwire.com
  • Arizona Unemployment  – Yearly claims for unemployed persons in Arizona now total just under 700,000, with a surge of nearly 109,000 new claims in the week ending 5/16. Weekly applicants had fallen as lower than 33,000 in the week ending 5/9, indicating many of the new claims are duplicates. more from azcentral.com

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Local Market Data
Stats for May 17, 2020, compared with May 1, 2020:
  • Active Listings: 13,650 vs. 14,051 last month – down 2.85%
  • Pending/Under Contract: 6,447 vs. 5,696 last month – up 13.2%
  • Monthly Sales: 6,710 vs. 7,136 last month – down 6.0%
  • Monthly Avg. Sales $/Ft.: $180.55/ft vs. $184.19/ft last month – down 2.0%
  • Monthly Median Sales Price: $293,900 vs. $300,000 last month – down 2.23%
  • Days on Market: 68 days vs. 50 days last month – up 36%
$/Square Foot for Major Cities in Phoenix
  • Avondale – $139.51/ft vs. $136.07/ft on May 1 – up 2.53%
  • Buckeye – $136.99/ft vs. $142.65/ft on May 1 – down 3.97%
  • Chandler – $193.28/ft vs. $192.03/ft on May 1 – up 0.65%
  • Fountain Hills – $235.05/ft vs. $245.55/ft on May 1- down 4.28%
  • Gilbert – $180.90/ft vs. $178.66/ft on May 1 – up 1.25%
  • Glendale – $163.17/ft vs. $160.04/ft on May 1 – up 1.96%
  • Goodyear – $150.06/ft vs. $154.02/ft on May 1 – down 2.57%
  • Mesa – $172.38/ft vs. $175.87/ft on May 1 – down 1.98%
  • Paradise Valley – $438.38/ft vs. $442.45/ft on May 1 – down 0.92%
  • Peoria – $171.55/ft vs. $168.60/ft on May 1 – up 1.75%
  • Phoenix – $195.57/ft vs. $194.28/ft on May 1- up 0.66%
  • Queen Creek – $147.72/ft vs. $149.44/ft on May 1 – down 1.15%
  • Scottsdale – $287.35/ft vs. $297.36/ft on May 1 – up 2.16%
  • Surprise – $150.88/ft vs. $151.61/ft on May 1 – up 3.18%
  • Tempe – $204.09/ft vs. $201.02/ft on May 1 – up 2.31%
  • OVERALL MARKET: $197.79/ft vs. 199.31/ft on May 1 – down 0.56%
Breaking Down the Local Data
Active Listings
A floating theory currently circulating real estate circles is that the real wave of property selling will come after the lockdown has ended, as homeowners once again feel safe letting people in the homes. We have yet to see this show up in the data, though we do not believe it to be out of the question. Demand in most parts of the market has picked up significantly in the past two weeks, and is likely to offset any modest increase in listings to come.
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Seasonal trends indicate that listing and contract activity should begin to settle down heading into the hotter months of the year, to resume in the fall. Contract activity over the past two weeks indicates we may have enough pent-up demand to
Listings Under Contract
Much of the market is now showing signs of resurging demand as evidenced by the chart below. The story is not the same throughout the valley, however; places like Chandler and Gilbert are nearly back to their pre-crisis contract activity levels, while the luxury and retirement markets continue to drift lower or remain at low levels of contract activity. Markets such as Paradise Valley, North Scottsdale, and Sun City are the most affected.
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Listings Success Rates
The charts below illustrate the bifurcation currently being experienced by the Phoenix real estate market. Note the second chart in particular; listings success rates for properties listed above $1 million have only just now appeared to level off after a steep decline while the bulk of the market experienced a modest decline and leveled off much sooner.
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It is amazing the story that two different data sets can tell, even when under the same headline category as Listing Sucess Rates. If you are a buyer in the $200,000-$500,000 range for any type of property here in Phoenix, you probably hardly noticed a change in offer competition pre, during, or post coronavirus shock number one. In fact, if you were a buyer in the same range at the end of 2018, it would have become easier to get your hands on a home. If you are a luxury seller right now in the Phoenix area, it may appear as though it were the middle of July considering the amount of traffic, and contracts, that most properties are getting.
If you or someone you know is moving soon, we want to help!
If you know someone who we can help, please forward them one of our monthly reports or tell them to give us a call! We hope you’ve found this market update useful, and look forward to the opportunity to work with you in the future. If you have any questions or concerns about the current state of the housing market, or if you would like to discuss the situation presented by the coronavirus. please don’t hesitate to give me a call directly.
Look for our report next month!
About the Author
I've learned through experience that informed buyers and sellers make the best real estate decisions. My top priority is keeping you updated and educated throughout the buying and selling process to ensure you won't be left wondering if you made the best decision.

My fiduciary responsibility to you is to not only be informed on the latest real estate trends in Arizona, but to be available from Day 1 for any questions or concerns you may have whether you're just starting your search or you closed escrow last year. My 100% commitment is a custom-tailored solution for your next purchase or sale, from consultation to close.

I've been helping families move in the Greater Phoenix Area since 2016, but have called "The Valley" home since 2011 and hope I never have to leave. I'm originally from the San Francisco Bay Area, but now live in Optimist Park, Tempe with my dog Katie. When I'm not assisting my clients with their homes, I love to golf, making it to last-minute Diamondbacks games, and breaking away from the city during our many months of great weather.

If you or someone you know is getting ready to buy or sell a home in the Greater Phoenix Area, it would be an honor and privilege to help them. Should you have any questions about the buying or selling process, please don't hesitate to call me at (480) 712-8722.