With the COVID-19 pandemic disrupting industries across the globe many analysts have their eyes on the nation’s real estate markets, which suffered immensely the last time the nation experienced recession. But reports from the last month indicate the real estate market is faring considerably better than many industries, especially in Tucson.
Long Realty, the largest real estate brokerage company in Southern Arizona, puts it quite simply in its latest report: new pending real estate sales in the Tucson Metro Area are up 9.3 percent from last week, but still down an average of 13.5 percent from before the COVID-19 shutdowns.
“It’s gotten a little more consistent in the last week or two, but for a while it was just changing constantly every day, and even hourly, so it was really hard to see how housing would react,” said Kevin Kaplan, vice president of Marketing & Technology at Long Realty. “But what we have to remember is that we had a very strong first quarter coming into this. Sales activity was up, inventory was down, rates were good. There’s been really good momentum in the housing market for a while, but especially at the beginning of this year.”
According to Kaplan, those underlying positive trends are holding true. Despite recent surges in unemployment, markets throughout Arizona have an increased level of new pending sales from previous weeks. The Green Valley and Sahuarita area’s new pending sales are up 7.1 percent and the Greater Phoenix Area’s new pending sales are up 18.9 percent.
However, other local market data is not so rosy, with new real estate listings in Tucson down nearly 15 percent from before the COVID-19 shutdowns.
“Given that we’re in the middle of a pandemic, and a stay-at-home-order and an economic crisis, I’d say the market is performing pretty well,” Kaplan said. “I don’t think we were surprised, per se, but encouraged from the continued activity. And it is down, and understandably so, but I wouldn’t consider 85 percent of the pre-COVID sales rate a pause in the market.”
Long Realty attributes the market staying relatively strong to two key points: the real estate industry’s ability to shift to virtual business and Governor Doug Ducey designating real estate as essential business in his stay-at-home orders.
With millions quarantining, much of the real estate industry was able to shift to digital services, such as virtual open houses, online paperwork and electronic signing. And Ducey’s “Stay Home, Stay Healthy, Stay Connected” executive order clarified real estate as an essential service, which barred cities and counties from issuing regulations to restrict their business, but encouraged the use of telecommuting.
According to Kaplan, these two aspects combined allowed the real estate industry to be “well ahead of the curve” with regards to closures and quarantines.
Tucson’s housing market is faring a bit better than the national market on multiple fronts. According to the National Association of Realtors’ Weekly Housing Market Monitor, national pending home sales decreased by 20.8 percent in March. But in the Tucson Metro Area, pending home sales are down 13.5 percent from before COVID closures began.
Data from NAR’s Weekly Housing Market Monitor indicated that individual housing prices are holding up compared to the decline in transaction activity; the average listing price on pending contracts in the four weeks through April 26 is up 2.6 percent from last year. Nationally as of April 18, the listing prices are still slightly higher in 65 out of the largest 100 metro areas than they were last year. The same can be said for the Tucson area, with average housing prices remaining more or less consistent. However, it remains to be seen whether Tucson’s housing prices will suffer a delayed reduction from COVID-19.
“There’s a lot of pent-up demand right now, and when things start to get back to normal over the coming months, I think we’ll see a bounce-back from that 15 percent down,” Kaplan said.
Of course, it’s impossible to say exactly when industry will bounce back, or if recent upticks will continue. It is also worth noting that March through May is usually busy buying season in Tucson’s real estate market, which may have momentarily lessened the quarantine’s impacts.
“If you need to buy or sell, you can still proceed with that, you don’t have to wait,” Kaplan said. “And one of the things that’s happened is the institutional buyers – the corporations that are buying and flipping – have pulled out because of the volatility of the stock market… so if you’ve been house hunting, this may have created a window to find something that you couldn’t find before.”