Market Summary for the Beginning of April

Since last month's summary the world has been turned topsy turvy by the COVID-19 pandemic. However the Greater Phoenix housing market has changed a lot less than you might expect. Yes there are several brand new trends, mostly negative, but the market carried on operating and so far the changes are modest relative to what is happening in other lines of business. And yes, sales prices are still rising.

Here are the basics - the ARMLS numbers for April 1, 2020 compared with April 1, 2019 for all areas & types:

• Active Listings (excluding UCB & CCBS): 13,211 versus 18,650 last year - down 29.2% - but up 20.1% from 11,003 last month
• Active Listings (including UCB & CCBS): 17,238 versus 23,399 last year - down 26.3% - but up 9.3% compared with 15,776 last month
• Pending Listings: 6,125 versus 6,958 last year - down 12.0% - and down 15.1% from 7,215 last month
• Under Contract Listings (including Pending, CCBS & UCB): 10,152 versus 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.: $186.47 versus $172.01 last year - up 8.4% - and up 0.8% from $184.94 last month
• Monthly Median Sales Price: $301,000 versus $266,000 last year - up 13.2% - and up 2.0% from $295,000 last month

In summary, supply went up, demand came down, sales remained strong and prices went up.

None of that should be a surprise to our subscribers, but some of the general public may be surprised how resilient the housing market is when it is not the cause of a recession.

With CMI still well above 200 it should be obvious that sales prices will continue to rise for some time. However the CMI has a lot of downward momentum right now because it combines the Cromford Demand Index, which is dropping and the Cromford Supply Index, which is on the rise in most areas.

Although far more listings under contract fell through during March than in a normal month, we still had more closings than in March 2019. I am tempted not to rain on the parade but March 2020 did have an extra working day - meaning that the rate of sales per working day was flat with March 2019. Still a very respectable performance given the pandemic going on in the background.

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 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
• 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

We saw massive percentage increases in the single-family supply in Avondale, Chandler, El Mirage, Gilbert, Glendale, Laveen, Mesa, Queen Creek and Tolleson. But then again, we saw declines in supply in Anthem, Casa Grande, Fountain Hills, Paradise Valley and especially in Arizona City.

Under contract listings suffered a serious drop, falling 15% from last month when they normally show a rise between March and April. However they are still over 10,000 which is a pretty good number under the circumstances. I do not see closed listings dropping like a lead zeppelin over the next 3 months, though there will certainly be a lot fewer closings than agents and title companies would like. Lenders may be relieved by the substantial fall in volume as they are in all sorts of pain anyway, swamped with refinancing proposals and under orders from the government that they must tolerate borrowers failing to make their monthly payments. It is likely to be a very tough time over the next 12 months for lenders and loan service companies.

For homeowners though, be happy that the monthly median sales price has risen 13% over the past 12 months. That is probably a lot better than your 401-K. The Victorians knew a thing or two when they coined the phrase "safe as houses".

Other segments of real estate are unusually exposed by the current economic situation. Retail property and multi-family apartment blocks are usually valued by the rent they can generate. When people are not paying rent their long term value becomes more questionable. However, the chronic shortage of housing supply should see land values stay resilient.