What Impact Might COVID-19 Have on Home Values in Chandler and the East Valley?
The price of any item, however, is determined by supply and demand, which is how many items are available in relation to how many consumers want to buy that item.
In residential real estate, the measurement used to decipher that ratio is called months supply of inventory. A normal market would have 6-7 months of inventory. Anything over seven months would be considered a buyers’ market, with downward pressure on prices. Anything under six months would indicate a sellers’ market, which would put upward pressure on prices.
Going into March of this year, the supply stood at three months – a strong seller’s market. While buyer demand has decreased rather dramatically during the pandemic, the number of homes on the market has also decreased. The recently released Existing Home Sales Report from the National Association of Realtors (NAR) revealed we currently have 3.4 months of inventory. In Chandler, the months of inventory is even lower. This means homes should maintain their value during the pandemic, and that is what we have seen so far.
This information is consistent with the research completed by John Burns Real Estate Consulting, which recently reported:
“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions
that recover quickly enough to provide little damage to home prices).”
Here’s a look at what some experts recently reported on the matter:
Ivy Zelman, President, Zelman & Associates
“Supported by our analysis of home price dynamics through cycles and other periods of
economic and housing disruption, we expect home price appreciation to decelerate from
current levels in 2020, though easily remain in positive territory year over year given the
beneficial factors of record-low inventories & a historically-low interest rate environment.”
“The fiscal stimulus provided by the CARES Act will mute the impact that the economic shock
has on house prices. Additionally, forbearance and foreclosure mitigation programs will limit
the fire sale contagion effect on house prices. We forecast house prices to fall 0.5 percentage
points over the next four quarters. Two forces prevent a collapse in house prices. First, as we
indicated in our earlier research report, U.S. housing markets face a large supply deficit.
Second, population growth and pent up household formations provide a tailwind to housing
demand. Price growth accelerates back towards a long-run trend of between 2 and 3% per year.”
Mark Fleming, Chief Economist, First American
“The housing supply remains at historically low levels, so house price growth is likely to slow,
but it’s unlikely to go negative.”
Even though the economy has been placed on pause, because of the high demand and low supply of homes, it appears home prices will remain steady, or even continue to increase throughout the pandemic.
If you need to buy or sell your home during this Coronavirus crisis, we can help you. We have adjusted the way we work with home buyers and sellers, and have the processes and resources in place to help. Feel free to reach out to me if you have any questions about what it takes to get your Phoenix Metro or East Valley home sold during these trying times. Just give me a call/text at 602-295-6807 and I will be glad to help.
"Real Estate is not just a job for me, it's about making a difference in the lives of others"
Troy Erickson Realtor
Troy Erickson has been blogging about Arizona real estate since 2006. He is a residential real estate agent who specializes in helping home buyers, sellers, and investors in Chandler and the East Valley. He has been recognized for his local market expertise, and frequently volunteers within his community.