REAL ESTATE FORECAST - NORTHERN AZ
Updated: May 6, 2020
Everyone has heard non-stop reporting on the “Corona Virus” and its impact on virtually everything in the world. This life changing event has crippled many industries in America, especially the hospitality industry. However, real estate has not been as impacted as the other service businesses across the world. Most notably, Arizona, in particular, has not seen the ”Corona” issue affect values, affect numerous closings or result in any long-lasting effect for real estate, so far.
An Executive Order issued by Governor Doug Ducey, entitled 2020-12, prohibits the closure of Essential Services in Arizona, of which, professional services providing legal assistance, such as contract writing, and mortgage originations, be excluded from mandatory closing . Basically, real estate companies and mortgage companies will remain open at this time. This could change based on future announcements in the State of Arizona.
Out of state buyers seem to be reacting to this crisis differently than those who reside in Arizona. Provident Partners Realty has experienced several cancellations from folks purchasing property in Arizona but living elsewhere. On the other hand, nearly all of the purchases originated since February 15th are still closing or are in the final stages for close of escrow in the next week.
Inventory is extremely low in all categories, state-wide. Prior to Covid-19, Arizona was the number one state in the country for importing new folks moving out of higher density, high tax states. Phoenix was the number one metropolitan area seeing new arrivals and most probably this will continue after the covid-19 virus frenzy slows. Fear of the unknow caused consternation and widespread anxiety, naturally. However, most buyers who are purchasing property in this environment understand that this too shall pass and look at the long plan where real estate is something to have and hold versus losses in the stock market.
Second home buyers also seem to be maintaining a sense of perspective during this difficult time as we have only seen two cancellations, (both manufactured homes being purchase as second homes). Fortunately, there are eight other transactions in play right now totaling well over $3.5 million that are moving forward and expected to close in April.
The mortgage market, on the other hand, is seeing volatility for Non-QM products that offer Jumbo loans with special features such as interest-only options for specified time periods. These loans vanished over-night this last week. There are jumbo purchase loans available from the larger banks but niche products are being discontinued for lack of investor interest on the secondary market.
Provident Partners has developed long-standing relationships with affiliated business partners including Pioneer Title, various insurance and real estate support companies, building and repair and renovation companies, all in order to be able to support our clients in an environment like exists today. I am happy to report that every one of our affiliates remain open and servicing our industry amidst this unusual time.
Finally, many people become worried and disenfranchised when the stock market is dropping daily and they are seeing their retirement accounts, 401 K’s and savings fluctuate drastically from one day to another. This is only natural. Persevere…the markets will balance out and come back strongly. Real estate in itself will always be a tangible asset; something you own and can rely on even when values fluctuate like they did from 2009-2012. This time around, it looks like owning real estate was the sound asset to have as we do not expect values to fall anywhere near what everybody is experiencing with their stock portfolio’s. In fact, when the country re-opens for business, which looks like it will ion the next month to several weeks, real estate will be poised for continued expansion.
CEO/Designated Real Estate & Mortgage Broker
Tel: (602) 622-1196