Metro Phoenix fares better in economic downturns not led by the real estate market, but that doesn’t mean the Valley’s housing market will be unscathed by the COVID-19 crisis.
Listings have climbed 20% in the past few weeks, which could indicate that homeowners struggling financially are hoping to get out from under mortgages or short-term rental owners who don't have customers want to sell.
The number of homes for sale is still 32% below the same time last year, said Arizona Housing expert Tina Tamboer of the Cromford Report.
Veteran Arizona economist Elliott Pollack and others expect the Phoenix housing market, like pretty much every other sector, to hunker down for the coming months.
“People aren’t moving now and that means they aren’t buying homes,” Pollack said. “’Phoenix’s strong population growth was driving the housing market. That’s over until this crisis is over.”
Preliminary reports show home sales and prices climbed in March, though both are lagging indicators because the deals were struck at least a month ago, before the coronavirus shutdowns began.
Pending sales show the median home price could hit a record $301,000 for March, according to pending sales tracked by the Arizona Regional Multiple Listing Service.
Other indicators of the market's response to the pandemic include:
“We anticipate this fall-off to be temporary, with the market leveling off in the fourth quarter and bursting upward into the first quarter 2021,” Jim Belfiore said. “Heading into mid-March, the new home market was better than during any period in the last 15 years.”
If home prices are going to fall, the first step in that direction would be seeing sellers drop their listing prices. "That hasn't happened," Tamboer said.
The median listing price of a metro Phoenix home hit $315,000 in February, according The Information Market, owned by ARMLS. Listing price and sales numbers for March will be out in a few weeks.
A housing market crash led the economy into the Great Recession in 2008. Speculators and subprime loans backed by Wall Street led to a 50% spike in metro Phoenix home prices during 2005 and 2006, and then a record number of foreclosures from 2008 to 2012.
Phoenix-area home prices climbed steadily between 7% and 10% during the past few years, and foreclosures in February were at the lowest level since 2005.
Housing analysts don’t see any similarities between the housing market crash and now.
“The sooner stimulus money gets in peoples’ pockets, the sooner the economy will recover,” Pollack said.
Tamboer, Pollack and Belfiore think metro Phoenix’s housing market will take off fueled by pent up demand as soon as the fourth quarter if the coronavirus pandemic eases.
“It will be like a hose with a kink that is suddenly fixed,” Tamboer said. “Home buyers will pour out. Buyers looking for prices to plummet will be disappointed.”