By Mike Bodeen · 4 May 2020
April’s numbers are in, showing that supply increased, demand decreased, sales took a sharp drop, and prices weakened slightly.
Here are the basics ARMLS (Multiple Listing Service) numbers for May 1, 2020 compared with May 1, 2019 for all areas & types:
Active Listings: 14,051 vs 17,513 last year – down 19.8% – but up 6.4% from 13,211 last month
Under Contract Listings: 9,512 vs 12,463 last year – down 23.7% – and down 6.3% vs 10,152 last month
Monthly Sales: 7,127 versus 9,659 last year – down 26.2% – and down 19.6% from 8,864 last month
Monthly Average Sales Price per Sq. Ft: $184.24 versus $172.24 last year – up 7.0% – and down 1.3% from $186.59 last month
Monthly Median Sales Price: $299,999 versus $270,000 last year – up 11.1% – and down 0.3% from $301,000 last month
Let not anyone think that sales have stopped. Dropped? Yes, but stopped? No. Both the monthly average and monthly median sales price dropped slightly from March’s numbers but rose 7% and 11% respectively when compared to one year ago.
The Case Schiller price index released last week, showed the Phoenix metro area values increased by twice the national average from last year’s numbers.
Again, we reiterate, our market was hugely strong prior to the pandemic, and when the pandemic smoke clears, it will again gain strength. Only the timing would seem to be in question.
The Cromford Report does not anticipate any fast return to a normal market. In their opinion, the pandemic would need to cease quickly, which is not likely, likewise with getting a vaccine or herd immunity. They are saying that sales will be on the weak side for at least the next 5 months.
That opinion would seem spot on for the higher price range over $350,000 to $400,000. Under $350,000, the affordability range, we think sales could hold the line better.
As always, consumer confidence is a huge barometer in being able to determine future sales activity. With 3.25% mortgage rates obtainable in the current market, first timers and refi’ers should remain fairly active. Beyond that, obviously, many buyers are currently out of play until their job prospects turn around.
Forebearance. A Good Thing?
Many homeowners have been offered mortgage forbearance from their lenders for 3-6 months during this Covid 19 period. Forbearance is when the lender agrees to “pause” in collecting your mortgage payments.
We need to understand, that this is not a mortgage-free handout. The mortgage payments in forbearance must be repaid at or by a certain time. In some cases, though not many currently with federally insured mortgages, the funds must be repaid at the end of the forbearance period. Most lenders, however, are agreeing to extend these paused payments at the end of the amortized period or adding onto the principle balance.
Of utmost importance, is for each borrower to carefully read and understand what these repayment terms are exactly. If followed correctly, there should not be any negative impact on the consumer’s credit scores.
Our advice: Don’t trust. Do verify!
Market data referenced in this article comes from The Cromford Report.