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impact looked like rather than what they assumed would happen.\u00a0 Let\u2019s examine the impact in the key areas that compose a real estate market.<\/p>\nAbout that real estate market of ours \u2013 it certainly was impacted by the pandemic.\u00a0 Perhaps the biggest surprise to most people is what the actual impact looked like rather than what they assumed would happen.\u00a0 Let\u2019s examine the impact in the key areas that compose a real estate market.<\/p>\n
Prices<\/strong><\/p>\n The primary concern for most home owners in real estate is pricing.\u00a0 When a sudden economic shift occurs (such as a pandemic, war, acts of God, etc.) fear tends to take over the financial markets.\u00a0 This can cause dramatic swings in the stock market as well as other industries \u2013 but the housing market is very slow to react.\u00a0 In fact it can take months or even years to react.\u00a0 The Valley has been in a very strong sellers\u2019 market for a long time. A few months of pandemic was not enough to really move the needle on pricing.\u00a0 But like normal times, different price points behave differently.\u00a0 It may surprise you to hear that prices in the under 500K range actually rose during this time.\u00a0 The 500K-1 million market saw some minor softening in pricing as did the upper luxury market of over a million.\u00a0 But any reports to the contrary, sellers do not need to give away homes or take low priced investor offers to sell.\u00a0 The average home is holding steady and improving in value.\u00a0 Even the luxury market very recently is showing renewed strength.<\/p>\n Supply\/Demand<\/strong><\/p>\n Real estate prices are tied to supply and demand. As long as the demand exceeds the supply, prices will rise. The bigger the gap, the faster prices increase. \u00a0So what happened to supply and demand?\u00a0 The market was at the beginning of the spring selling season \u2013 typically the most active time of the market- when the pandemic hit.\u00a0 By the second week of March, the news and subsequent shuttering of states finally impacted the market.\u00a0 Within a two week period a large percentage of buyers exited their contracts (including the \u201ciBuyers\u201d such as Open Door, Zillow, Offer Pad).\u00a0 The \u201cback on market\u201d status did a jump as these cancellations accelerated.\u00a0 In fact demand dropped a whopping 39% – indicated by the number of contracts accepted.\u00a0 So while demand was dropping rapidly, what was happening on the supply side of the equation?<\/p>\n Sellers fell in to one of two camps.\u00a0 One group, fearing that prices were headed for a fall, jumped on the market immediately to avoid the looming future price drops they feared. This caused a short term spike in new listings of about 2000 homes.\u00a0 The other group, concerned that \u201cno one would buy now\u201d or concerned about allowing buyers in to their homes, moved to the sidelines removing their homes from the market.<\/p>\n The net effect was a shrunken market.\u00a0 As supply and demand fell in nearly equal measure, sellers retained the control as they have for years but less transactions occurred.\u00a0\u00a0 To sum it up succulently, Michael Orr of the Cromford Report writes:<\/p>\n \u00a0\u201cI would say the impact on the Greater Phoenix housing market has been less so far than many people expected. Transaction volumes are lower than normal, but not dramatically so. Home values have not been noticeably affected at all and are likely to increase during the second half of the year.\u201d<\/em><\/p>\n What is selling has changed <\/strong>\u2013 Another effect of the pandemic was the mix of what was selling changed.\u00a0 The above 500K saw more of drop in demand than the below 500K.\u00a0 Stock market fluctuations tend to impact the above 500K market, and the pandemic\u2019s economic impact was certainly reflected in the stock market.\u00a0 Jumbo loans were temporarily suspended by some lending institutions and others changed their lending criteria for the worse.\u00a0 Consequently, what was selling changed.\u00a0 The upper market faltered, while the below 500K began to dominate the solds \u2013 dropping the average price per square foot price.\u00a0 When you have fewer high priced per square foot homes selling \u2013 the overall average for the market drops.\u00a0 So if you see headlines saying \u201cprice per square foot is dropping\u201d implying prices are dropping, be aware that the author has not examined the underlying numbers.\u00a0 Another interesting factor is that the 55+ community homes have suffered in sales numbers.\u00a0 Perhaps not surprisingly, considering they are the most vulnerable population in the pandemic.<\/p>\n Summary:<\/strong><\/p>\n The market is expanding and moving rapidly to catch up with the 2019 numbers.\u00a0 If you are a buyer, please don\u2019t wait for price drops that are not coming.\u00a0 Buy now while interest rates are at historic lows.\u00a0 If you are a seller, please don\u2019t panic and sell to investors for fear that prices are plummeting or that your home cannot be marketed to the entire pool of buyers safely.\u00a0 We are armed with tools of the trade like virtual open houses and selling without physical showings.\u00a0 All of which protect you as well as your pocketbook.\u00a0 And that remains our goal \u2013 unchanged by market conditions- to protect you, our client.<\/p>\n Russell & Wendy Shaw<\/p>\n (mostly Wendy)<\/p>\n","protected":false},"excerpt":{"rendered":" About that real estate market of ours \u2013 it certainly was impacted by the pandemic.\u00a0 Perhaps the biggest surprise to most people is what the actual impact looked like rather than what they assumed would happen.\u00a0 Let\u2019s examine the impact in the key areas that compose a real estate market. Prices The primary concern for […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,4,6],"tags":[],"class_list":["post-1086","post","type-post","status-publish","format-standard","hentry","category-home-values","category-market-stats","category-the-economy"],"_links":{"self":[{"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/posts\/1086","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1086"}],"version-history":[{"count":8,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/posts\/1086\/revisions"}],"predecessor-version":[{"id":1090,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/posts\/1086\/revisions\/1090"}],"wp:attachment":[{"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}