The one thing all crises have in common is that they end.
And to tap into the opportunities that this one presents, Buyer's that couldn't otherwise lock in a home finally have a little reprieve. But not for long.
During the early parts of Q1, the scale between Seller's and Buyer's had tipped
so far to the Seller side, it was literally "off the charts".
A Buyer's Market is measured on a scale of 0-100, Seller's Market is 100-200. In some parts of the Greater Phoenix market, we were seeing index numbers topping over 400. ISANITY and a continued market at that pace definitely brought up some Real Estate PTSD from the 2008 Market Crash.
Even as late at the end of April, we were seeing 27% of the homes going under contract for OVER the list price.
For now, about 40% of the Buyer's have stepped aside for a myriad of reasons. These Buyers WILL RETURN and quickly as you will see from this chart showing the volume of contracts Pre-COVID (PC), the amount of Buyer's still buying during the Stay-At-Home orders and what we are already seeing just as we barely have started to re-open the state.
Buyer's that get in to the market now will be pleasantly surprised to find one or more of these almost extinct benefits:
Quality homes that have been well-maintained. With many short-term rental property owners moving their money elsewhere, we will continue to see more new listings come on the market over the summer.
Lower price points now available. Trying to find a condo under $200K was almost unheard of, a single-family home under $300K would surely have gone to a cash buyer for well-over the list price just 60-days ago. Affordable housing is back!
Fair price. This does not necessarily mean deep discounts unless a home is drastically over-priced. Too many consumers watch Zillow and Redfin to gauge what's going on. All they see is over-priced homes being adjusted to where they should be.
Repairs negotiated. The hot term for 2020 was 'dump your junk', not kidding. Investors (and most IBuyers) had no problem listing poor quality homes and declining any repairs even if they were health or safety issues. And if you didn't buy the house, the other 5-10 buyers behind you would. I just spoke with a new homeowner (not my client) that was telling me of his new home that built in the 70's. The beams holding up the roof were literally crumbling but the Seller refused to do anything about it. Had the Buyer bought this home just a few weeks later, he most likely would have had a much greater chance of getting at least some concessions to help pay for the work after closing.
Closing Cost Assistance. SUPER lucky Buyers that stayed in the game in April benefited by the thousands and kept their money in their pocket getting more Seller's to pay for the Buyer's closing costs. That's free money that is rarely seen these days and will continue to minimize as the COVID-19 interrupter eventually moves to an event of the past.
The consumer has gotten so used to using the technology company websites (Zillow, Redfin, Trulia, etc.) to gauge what's going on in the market that not only are people coming to the wrong conclusions but they are wasting time and potentially a LOT of money. The price reductions are on Active listings that has no bearing on the temperature of the market or market values. Here is what the market is REALLY doing ...and when you realize that the same home that sold at $393,509 today was $355,172 one year ago, did you really save money by paying $500 less in rent then you would have if you had been paying a mortgage? No. You would have over $38,000 in equity AND you'd be taking home more money as you would now have the tax benefits of paying a mortgage.
For Buyer's waiting for the market to 'drop', they already missed the little drop we MAY see as the contracts from April 2020 will start to close. If you are considering a home purchase, there truly is no better time than the present. Let's talk sooner rather then later!
Real Estate Advisor
North&Co. | Real Estate by Trade
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