So much has changed in the last two weeks that we wanted to take a moment and update you on what we know right now. First of all, Governor Ducey did establish real estate as an essential business during this crisis, so while things have definitely slowed down, deals are still closing and buyers are still buying. So what as changed?
1. The Market Continues to Move.
Many occupied homes have been taken off the market as sellers implement social distancing and find that working, homeschooling and regular sanitizing are not conducive to having their homes for sale. However, showings are still occurring and we are still seeing multiple offers on hot properties. We have had such an incredible shortage of available properties on the market, that the housing inventory could easily double we would still not be at a balanced market. This is great news for buyers and investors who have been losing out on deals and looking for quality properties. For those of you who absolutely need to sell, I would definitely start putting a plan in place.
2. Financing is in Flux.
Mortgage rates have been on a roller coaster for the past few weeks and are still seeking stability. Downpayment assistance is no longer available for first time homebuyers. Jumbo loans are starting to disappear and buyers are often having to pay points to get reasonable rates. Credit score thresholds have increased and buyers are needing higher down payments to get the best rates or qualify at all. Lenders are also starting to do an employment verification on the day of closing to ensure that the purchaser still has a job – which can be complicated with companies closed and staff working from home. So, if you are planning on getting a mortgage to purchase your next home, just be patient and know that the entire process may be a little more complex than it has been recently.
3. The iBuyers Have Suspended Operations.
While Offerpad, OpenDoor, Redfin, and Zillow were never large players in the market, they were definitely loud players. All of these “iBuyers” have been losing money year-over-year and have been kept afloat by venture capitalists. Several weeks ago, they all suspended buying and also have canceled existing contracts leaving many sellers in the lurch. We have also noticed that they have started limiting showings on their current listings. It will be interesting to see how these companies fare going forward.
4. Housing Priorities Are Changing.
With all the time everyone is spending at home, we know that housing priorities will be shifting. We think it is safe to say that the tiny house trend is probably going to fade away! We predict that in the next 18 months, we will see more people moving here from urban areas is search of larger homes. Northeast Mesa is particularly well-suited to accommodate these needs with larger homes and better values than other Valley communities. We think that there will be a greater emphasis on homes with guest suites for parents and family members (think second master, casita, or NextGen), homes with irrigated lots or garden spaces, at least one dedicated home office with a door that closes for conference calls, and larger storage spaces for supplies. Larger square footages will trump shorter commutes and those aging homes on large lots may find a sweet spot in the market once again. Plus, people are buying baby chicks and puppies like crazy so that definitely bodes well for houses with bigger yards!
5. Arizona Will Remain in Demand.
As we sit outside on the patio with our laptops in this amazing Arizona spring weather, the phrase #quarantineinparadise keeps coming to mind. We can only hope that our great weather and comparatively affordable property values will continue to draw people to Arizona from across the country. The same reasons that brought people here before the COVID-19 crisis will still drive our future growth.
6. We Keep Moving Forward.
Despite all the obstacles, the real estate industry has adapted incredibly well to the circumstances. At KOR Properties, we have started providing 3D Matterport tours for our listings and offer virtual home tours, inspections and walkthroughs. Title companies have started using mobile notaries exclusively and escrow officers are working remotely. Home inspectors are wearing gloves and masks. We are instructing homeowners to sanitize their properties after showings and inspections. We are doing everything we can to continue doing business while taking precautions and social distancing because at the end of the day, life moves forward and many people still have to buy and sell.
Things are changing at such a rapid pace that we encourage you to please call us if you have real estate questions. We are keeping in touch with statisticians, economists, industry experts, our business partners, and local leaders so that we can provide the most up to date information to our clients. We are here to help!