By Mike Bodeen · 6 April 2020
In light of the global pandemic, it’s tempting to prognosticate about the normal return of our Phoenix Metro residential real estate market, however, wisdom would say, “Mike, let your words be few!” So, for now, we’ll just report on the actual sales and let those numbers do the speaking.
Here is the ARMLS (Arizona Regional Multiple Listing Service) numbers for April 1, 2020 compared with April 1, 2019 for all areas & types as provided by the Cromford Report:
Active Listings: 13,211 vs 18,650 last year – down 29.2% – but up 20.1% from 11,003 last month
Under Contract Listings: 10,152 vs 11,707 last year – down 13.3% – and down 15.3% from 11,988 last month
Monthly Sales: 8,840 versus 8,489 last year – up 4.1% – and up 18.2% from 7,476 last month
Monthly Average Sales Price per Sq. Ft: $186 vs $172 last year – up 8.4% – and up 0.8% from $184.94 last month
Monthly Median Sales Price: $301,000 vs $266,000 last year – up 13.2% – and up 2.0% from $295,000 last month
Active listings were affected by a number of different trends:
Some sellers moved their listings into Temporarily Off Market, so reducing the supply
We had an unusually high number of listing cancellations, also reducing the supply
We saw a sharp increase in new listings in the price range from $150,000 to $400,000 in many of the larger cities, so increasing the supply (still very low historically speaking)
A larger than normal number of listings under contract fell through as buyers got cold feet, so increasing the supply when the listings returned to Active status
OOPS!!! I-BUYER COMPANIES PULL THE PLUG ON THEIR HOME PURCHASES
You’ve seen their ads showing the handsome and happy homeowners who just sold their home via Opendoor, Offerpad or Zillow, or others. I don’t think these companies are showing many happy home seller ads these days. In fact, there’s a lot of very unhappy homeowners who are pretty upset that these I-Buyers (Internet Buyers) pulled the plug on existing contracts, leaving their home sellers high and dry. Yes, you read this right, “existing contracts.”
“We’ve temporarily paused purchasing homes due to uncertainty around COVID-19.” Opendoor
Hmm, I wonder what would happen if a current buyer pulled the plug on an existing Opendoor purchase contract? Yea, I was thinking the same thing.
MORTGAGE RATES PLUMMET, THEN SPIKE, THEN LEVEL OFF!
Well, to be fair to the I-Buyers mentioned in the above story, we also need to report that for a brief week (or less) the 30 year mortgage rate dropped to 2.75%. You read correctly. So, guess what happened? Hundreds of thousands or millions of homeowners went online and applied to refinance their mortgage. Heck, I have a really great rate of 3.75%, and I was about to do it as well.
But then, the market changed radically, spiking to over 4% and 5% in a heartbeat. Why? Too many refinance applications that lenders wouldn’t be able to deliver on, at least for 4-5 months or so, but not at that low rate. So, these conventional lenders in order to stem the tide of applications, jacked the rate up.
The 30 year mortgage rate today? About 3.5%. Kinda where it was before the rates plunged.
Market data referenced in this article comes from The Cromford Report.