Market Update: March Residential Results and Early April Results Real Estate Transactions During the Coronavirus Storm
April 26, 2020
V.P. Business Development & Real Estate Analyst, Grand Canyon Title Agency
COVID-19 Real Estate Related Questions
May Real Estate Agents List and Show Properties During COVID-19?
Yes. According to the March 23 State of Arizona Executive Order 2020-12 Prohibiting the Closure of Essential Services, the following are listed as essential services: real estate services, banks, finance lenders, credit unions, appraisers and title companies.
What Has Changed In How Residential Real Estate Is Being Transacted?
Even though real estate services and title services are considered essential services, things have changed as to how these services operate. Some agents are using virtual presentations for listing appointments. Some agents, while taking buyers out to look at homes, are now using separate cars. More agents are using virtual tours instead of physical home tours. Escrow officers are still closing real estate transactions. Some are working in the office, while others are working from home. Most escrow offices are not having signings done at their offices but instead are using mobile notaries. Mobile notaries are meeting buyers and sellers at their homes for documents to be signed. Notaries are taking physical distancing precautions when meeting with buyers and sellers for signings. Much of lending today is already done online, however, wet signatures are still required on the note, deed of trust, and deeds. When it comes to appraisals, some lenders are relaxing their appraisal guidelines.
Are Housing Purchase Prices Likely to Go Down?
Not likely at this time, or not go down much at this time. Why? The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress. The CARES Act provides that if the owner of a single-family home has a loan backed by a federal mortgage, they may request forbearance up to one year in two six month requests. This is if the borrower is directly or indirectly impacted by a financial hardship due to the coronavirus. A sign that housing prices may drop would be a sharp increase in the number of recorded Notices of Trustee Sales. Currently, this is not likely to happen because of the CARES Act. On another note, the jumbo loan market has tightened. In Maricopa County, a jumbo loan is a loan over $510,400. This tightening may have an impact in specific areas. It all depends on supply and demand. While the majority of the time I present housing numbers for Maricopa County as a whole, there are multitudes of submarkets within Maricopa County. Each submarket has
its own unique attributes. So agents need to be dialed into the trends in their geographic area(s) of expertise.
How Are Documents recorded at the Maricopa County Recorder’s Office?
For a number of years, title companies have recorded documents electronically with the Maricopa County recorder’s office. So, even if the recorder’s office was physically closed, it is likely that electronic recordings would still proceed.
For a sample of the document go to AAR Coronavirus / COVID-19 Addendum. March Residential Results and Early April Results The results below were compiled from the Arizona Regional Multiple Listing Services, Inc. and are for single-family resales in Maricopa County. Maricopa County is sometimes referred to as Greater Phoenix. Single-family resales in Maricopa County make up approximately eighty-percent of all monthly ARMLS sales.
Sales in March 2020 were higher than March 2019. While sales were higher in March 2020, March did not fare as well year-over-year as did February 2020 and January 2020. Sales in March 2020 were three percent higher than March 2019. Sales in February 2020 were fourteen percent higher and sales in January 2020 were fifteen percent higher year-over-year. The lower year-over-year sales this March, when compared to February and January, were most likely due to escrows canceling. See Table One for a year-over-year comparison of sales.
New Monthly Listings in March 2020 were down seven percent compared to March 2019. New listings in both February 2020 and January 2020 were also down year-over-year. New listings in February were down two percent and January down eleven percent. See Table One for a year-over-year comparison of new monthly listings. The average number of daily new listings in April are holding when compared to March. Table Two shows the average listings per day for the months of March, February, January, and for the first five days of April. The daily average of new listings for the five days of April is 246. So far this is a little higher than for the months of January, February and March. We may not see, but hard to say at this point, if there will be a decline in daily new listings, but what we may see is a shift in who is listing and the reasons for the listing. I spoke with an owner of a vacation rental by owner known as a VRBO. They said all reservations had canceled. Will there be an increase in VRBO owners listing their properties?
Canceled Listings are up. Table Three shows canceled listings. The daily average number of cancellations from March 1 through March 16 were nineteen per day. From March 17 thru March 31 thirty-three per day. For the first five days of April daily cancelations averaged thirty-six per day. The median purchase price for a single-family
resale once again set a new record. In March 2020, it was $335,000 breaking the previous record of $327,000 in February 2020. The March 2020 purchase price of $327,000 was $38,000 or thirteen percent higher than March 2019.
Arizona Scores Big in Personal Income Percent Increase Among All Fifty States in 2019 The U.S. Bureau of Economic Analysis came out with the annual state percent change in personal income from 2018 to 2019.
The average for the fifty states was 4.4%. Arizona’s percent change in personal income was one of the best in the country. It was 5.9%. Only Colorado and Utah finished higher at 6.1% and 6.0%. The lowest increase for a state was West Virginia at 2.8%. I realized that this information is before pre-coronavirus. But if we had these great results before, we can reach them again post-coronavirus!
We go into the Coronavirus Storm with much economic momentum. Maricopa County and Arizona have had great personal income growth, great job growth, and great population growth. These factors have led to a great demand to own a home with a very limited supply of inventory. Thus, home values have continued to increase. So far, early into this storm, we see daily new listings in April keeping pace with prior months, but there may be a shift in who and why a property is being listed. This may create opportunities. If the number of cancellations continues to climb, there may be less overall inventory. There are job losses, at least temporarily, especially in the service industries of retail, restaurants, hotels, and the overall tourism industry. This decreases some demand to own. Some demand to own increases by the people moving here. We will get through this storm and we will see great results again!