The light at the end of the tunnel got a little brighter this week. Despite the limited data available, new trends are emerging and they are good. Please continue to share this news with your clients because consumer sentiment is everything. The week of April 19th marked a noticeable shift in the market with increased activity in nearly every state. Perhaps it is due to the pent up demand from the would-be March buyers. Nationally, March saw a 20.8% decrease in new pendings month over month. March was rough. But as we moved through April, our human nature kicked in and we got a little more used to this (short-term) new normal. This brought about new activity and some renewed consumer confidence.
Good News:
- Zillow’s search traffic is skyrocketing, yes it plummeted in March, but by the 2nd week of April the US traffic on Zillow was up 13% year over year and rising.
- After the significant drop in new listings hitting the market in March; April brought increases in new listings in all markets, including in NYC.
- Nationally, since mid-April we have seen a 33% increase in physical showing requests, which helps chip away at the 80% drop in those requests from mid-March to mid-April.
- In Arizona, since mid-April we have also seen a 33% increase in physical showing requests, which makes up for some of the 59% decrease in requests from mid-March to mid-April.
- Still no indication of prices dropping. Earlier this week, Dr. Lawrence Yun, the chief economist at NAR said, “In fact, due to the ongoing housing shortage, home prices are likely to squeeze out a gain in 2020 to a new record high.”
Arizona Market:
Despite inventory increases, demand continues to out-pace supply, according to the Cromford Market Index (CMI). On March 20th the CMI was 241 and yesterday it was a 153. (Balance is 100, above 100 is a seller’s market and below 100 is a buyer’s market. Prices do not drop until the CMI hits 90.) The CMI clearly has dropped drastically and in a short period of time. We did see a tiny little blip of a slowdown the week of April 19, hopefully we see a that as a trend. The 24% decrease in demand we have seen since March 20 is slowing its rate of decline.
- Newly accepted contracts bottomed out the week of April 5th with only 1,641. As of the week of April 19th we have 1,979 newly accepted contracts. We are working our way back up towards our peak which was the week of February 23rd with 2,696 newly accepted contracts.
- Average days on market for the week of April 19th is 21, lower than it was in all of March.
- Average list price per square foot at contract acceptance was $182.81 on April 19th. It was $190.05 the week of March 8th.
- Between the lending challenges and the lower priced new inventory, I believe the reason for the lower average price per square foot is due to the fact that more lower priced homes are selling, not because prices are dropping.
Remember, new listings hitting the market is a good indicator of the health of the market. It shows seller confidence. In the southeast valley, the week of 4/19 we saw a 5% increase in new listings hitting the market over the week of 4/12.
Even more importantly, new pendings shows demand. Right now, all buyers that are out looking are serious buyers. The week of 4/19 we saw a 15% increase in new pendings over the week of 4/12, in the southeast valley.
Conclusion:
As much as I would like to tell you that everything is sunshine and rainbows; it isn’t. We have a rocky road ahead, total unemployment filings is up over 30 million, but the new applications continues to drop week over week. Nationally, mortgage forbearance requests are likely spiking this week. Less than 1% of all mortgages were in forbearance on March 2. As of April 19 nearly 7% of mortgages were in forbearance, that is 3.5 million mortgages in forbearance. Opening our economy safely and quickly will be the key. People are ready to get back to work, so much so new lawsuits are being filed regularly. Signature Sotheby’s International, a Michigan brokerage, is the 5th company to sue the Governor of Michigan stating that the lock down orders are overreaching and unconstitutional.
My final thought is that good agents are taking market share right now. A lot of your competition is at home and afraid. Buyers and sellers are doing their homework and want to talk to you about what is actually happening in the real estate market.
copyright 2020 by Sarah Perkins
Sarah Perkins is an award winning account executive and has been in title sales since 2004. As the Director of Industry Research & Senior Account Executive, Sarah’s role is to bring real estate transactions to Navi Title. Sarah supports her clients by helping them navigate the ever-changing real estate space through thorough research and understanding of current trends impacting today’s home buyers and sellers.