Rents continue to rise

Rents continue to rise through these market conditions. With low interest rates renters may want to consider putting that money to work for them in a home of their own. Investors may want to take stock of their rental units. Now is a great time to liquidate sub prime locations and units with deferred maintenance.

May's Market Update Video

Timing is everything in the real estate market. And if you're curious about the market, by the time you read the newspapers or economic websites, the market has already changed.

This is John Schloz, with your monthly, Phoenix area, real estate market update. During the 6 week period from the beginning of the coronavirus shutdown to mid April, contract activity in the valley dropped 39%. You may beginning to see news stories about a decline in sales - because most escrows take 30 - 45 days to close. This drop in activity is old news. What's not getting reported - yet - is the 49% increase in accepted contracts over the last 5 weeks.

This is key information for buyers right now, especially if they’re on the fence waiting for the market to “crash”. This increase in buyer demand will not be widely reported for another month because these contracts still need to close.

One mistake buyers make is waiting for closing reports before acting. By the time a property closes escrow and the sales price is publicly recorded, the conditions that the transaction was created under may have already passed. That's why working with a Trusted Advisor, who stays current on real market conditions, is so important. Because we watch real time data.

We know that contract activity is up across all price points in Greater Phoenix, but the average list price per square foot is only down on contracts over $500K. All other price points below $500K are seeing the average list price per square foot either higher than or equivalent to where it was 10 weeks ago in February. This does not indicate an impending doom for home values.

Buyers waiting for sale prices to decline are truly missing out. Mortgage rates have declined while the median sales price rose 8.9% over last year, but it works it to a net gain for buyers. The principal and interest payment on a $300K, 30-year, fixed-rate mortgage went from $1,450/month to $1,307/month. That’s down a 10% decline over the course of a year.

The drop in market activity has impacted seller's only slightly. We're not seeing significant price drops but we are seeing sellers making more concessions to buyers with the percentage of homes closing with seller-assisted closing costs, increasing from 18% to 25% over the last 4 weeks.

When you want to know what's really happening in the market with up to date information - before you read it online, reach out to your Trusted Real Estate Advisor. And that's me: John Schloz HomeSmart

Affected Home's asking price, per square foot

What sellers have been asking for their homes under $500,000 seems untouched by Covid 19. With only one small dip the asking prices per foot have continued to rise. The rise in price per foot in 2020 has out paced both 2018 and 2019 year over year increases.

$500,000-$1,000,000 has also seen a healthy increase of 3% in asking price per foot in 2020. The $1,000,000 and above is slightly up since the beginning of the year but still off its peak in 2020. The luxury market was hit at its peak season and is our city’s most seasonal real estate market. We will see if those buyers travel a bit less this summer and do a little home shopping.

Under contract homes rebound from recent lows

The number of under contract has made a sharp correction from their deep decline weeks ago. Currently we are just under 2019 levels. Not all areas and price ranges have recovered equally.

Prices Strong Despite Lockdowns Hindering April Sales, NAR→

Great article from NAR discussing that prices are staying strong on nationally.

Housing Inventory by Price Range

Buyers’ frustration and opportunity. The inventory of homes on the market varies wildly by neighborhood and price range. By cutting the market in half we see the differences quickly. The first graph shows the amount of homes for sale in “Days of inventory” of homes under $800,000. This number has it’s flaws but illustrates we have about 40 days of inventory. The second graph shows that right now the market above $800,000 has nearly 200 days of inventory. I would also say that 200 days does not reflect the number of potential sellers in this price range that would like to sell. We saw many homes in the upper half cancel their efforts to sell their home during March and April.