The real estate market continues to move forward at varying speeds across the country. The lack of current data continues to make it difficult to draw a complete picture of our market. Again, I encourage everyone to be very mindful about their news consumption; a lot of it is very negative and very skewed. Remember consumer sentiment drives our economy and fear stops forward progress. We are starting to see a light at the end of the tunnel; so be sure to share the good news with your clients.
As I mentioned last week, the severity of each market’s new listing slow down is directly correlated with the severity of the lock down for that city. A general trend has emerged as we look at the first cities effected by the virus; Seattle, LA, Bay area, and NYC. In the first week of the virus really spreading in each city, there was an almost immediate response with a slow down in new listings coming to the market. They dropped anywhere from 50%-80% of where they were at the beginning of March. Yes, drops of 50-80% in a week! Immediate response. They hung out at the bottom for 3-4 weeks and then started a slow recovery. We are seeing increases in new listings in all areas across the country except for New York City. Aside from in New York, we are now seeing new listing volumes increasing at a rate of 20-30% a week since they bottomed out. At that rate we could reach 2019 new listing levels in about 2 to 4 months. Based on this information many leading economists and real estate analysts believe we will have a check mark recovery or something that looks like the Nike Swoosh. The national data for new pending listings for March will be released next week, and I will share it next Friday. February’s national data for new pendings shows an increase of 2.4% month over month. That info is for BC, before corona virus, though. Pendings illustrate demand and that will show us the true health of the market.
Keep in mind, new listing info is our way of tracking consumer intent and seller confidence. Buyer demand is measured by the amount of supply. Nationally, our months of supply went up from 3 months in February to 3.5 months by the end of March. Remember 6 months is considered normal. February 2020 saw an 7% increase in closings from February of 2019. March 2020 closings were only 0.8% above where they were in March of 2019. In Arizona, it during the first half of April that we saw a drop off in new listings hitting the market, since then it has been increasing. We are up 18%, from April 2019 in new listings hitting the market in April through the 22nd. Our pendings are down 30% year over year during the same time period.
As you listen to this information please keep in mind where we were in February. We had low, very low, and extremely low inventory across the country. Even with these increases in inventory, we are still not up to normal levels. In Arizona, our inventory levels as of yesterday are 47% below normal. Our demand is about 12% below normal. Today’s demand is still greater than today’s supply. It is a good time to list. There are distinctions by price point and the luxury market has been the hardest hit.
Showing Time has made our demand analysis more interesting. Based on their data the past 6 weeks has been a roller coaster for physical showing requests. Nationally, from March 11 through April 12 physical showings requests dropped by 80%. Since April 12th the requests have increased 23%. In Arizona, our requests also dropped off significantly. From March 8th through April 12th our showing requests dropped 59%. Since April 12th showing requests have increased 26%. And remember, the buyers that are out looking now are serious buyers.
Finally, I want to take a moment to address price. Nationwide there are still no indicators pointing at dropping values. More people pulled their listings off of the market than reduced their price to sell. Again, this is very price point specific. The national median sales price is around $280,000 and in Arizona it is around $300,000. Properties listed around the median sales price are selling the fastest. I am hearing about listings getting multiple offers and selling for above asking. A few months ago properties in these price ranges were getting 30 offers and selling way above asking. Now they are getting 3 offers and selling at or above asking. Making it still a seller’s market. The silver lining of all of this is the slowing of the appreciation. Nationally our housing market was increasing at an unsustainable rate. First time buyers were getting shut out of the market. A healthy market cannot have giant appreciation rates. For example, if Arizona has 0% appreciation for the rest of the year, we will still have an appreciation of 6.5% in 2020. Normal appreciation is 3% a year. The one thing that will push down prices is sustained unemployment. There are expectations that some aspects of the economy will reopen in May which will be good for everyone as long as we can keep people healthy while doing so.
copyright 2020 by Sarah Perkins
Sarah has been with Lawyers Title of Arizona since 2004. As an award-winning sales executive, Sarah’s role is to bring transactions to Lawyers Title. To do this, she focuses on supporting her clients and helping them navigate the ever-changing real estate space through thorough research and understanding of current trends impacting today’s home buyers and sellers.