Housing Market 1st Quarter 2020
March 2020: the new housing benchmark.
Median Sales Price Single Family Homes $319,000, with an appreciation of 6.3% from March 2019. National housing prices appreciated at a rate of 3.8 %, the median listing price was $320,000. Las Vegas and the national housing market experienced a reduction in new listings, inventory, Las Vegas was down -18.2% from March 2019 and the national market new listing declined by -17.1%. The metro market with the largest amount of inventory decline was Phoenix at -42.2%.
The median sales price for new homes was $415,000. The number of new home sales in February was at 1,136 which was up 42% from February 2019. This was the highest number of per month sales since February 2007. According to Home Builders Research, 2020 was on pace to see somewhere between 11,000 and 13,000 new home closings for 2020. Since the pandemic stay home requirements, 96% of home builders nationally reported a decline in new home contracts. Most new home builders are showing by appointment only and virtual tours for clients. The last week of March new home cancellation rates were 24% compared to the 2nd week of March at 14%. I expect the cancellation rate to rise in April and the new home starts to be reduced. This will add to the housing shortage once the Buyers return to actively previewing and make purchasing decisions.
The sales activity for the 1st quarter was strong with 7512 single-family homes sold. March 2020 closed 5.2% year over year.
As mentioned above, March had a decline in available homes where effective months of availability were at 2.1 months of inventory. This was a decrease from March 2019 of -23.8%. However, post Nevada’s “Stay Home Nevada” directive we have seen inventory numbers rise as more Buyers pause their home purchase decisions. The first two weeks of April 1st through the 12th, there were 1030 single-family home new listings. During this same time period, 624 homes went under contract for sale. If these figures continue through the end of April, we will see single-family home inventory rise to higher levels and days on market stretch out. On April 13th, there were 5990 single-family homes available without a contract. If the remainder of April is on par with the 1st twelve days than projections for April closings would be around 1700-1800 units (end of the month trends higher), inventory could rise to 3.2 mo. However, we really do not know what Buyers will do once the “Stay Home Nevada” directive is lifted. If they all pick up where they left off, we could see inventory reduce back down to July. If re-employment ramps up slower, we could experience higher inventory numbers through August or September. We simply do not know how the consumer will respond.
Post COVID-19 – what will happen to the economy & housing?
What does the Graham Team anticipate for 2nd quarter 2020?
Appreciation Estimate: 0% or drop: Simply we do not know, we are in unchartered times and to forecast what the US consumer will do when the non-essential business open back up is a prediction we cannot make. However, based upon the last few weeks of data we do have an analytical conclusion we can draw from. We anticipate seeing the reported Median Sales price drop for the valley in April & May. This is led by the Luxury home activity post-COVID-19 which slightly decreased on homes priced above 1 million than those homes under 1 million. The increased amount of inventory will also keep sales prices relatively flat. I do anticipate April and May’s median price to drop slightly, however, recovering when homebuyers regain the confidence to make a purchasing decision. This recovery could occur in June, however, anticipate it to be more likely late summer.
One large factor that will impact housing prices is Seller’s motivation or need to sell urgently. With over 50% of the homes having 50% or greater equity, nationally, Sellers are financially invested in their homes. Besides, many Sellers have refinanced to take advantage of the lower interest rates so they can afford the home they are in. Based upon these two factors we do not see Seller’s panic or fire selling their homes at reduced prices.
Interest Rate Estimate.: 3.15 to 3.6% Record low rates to remain through the second quarter. The difference in 1% in interest rate is real money in your pocket. If you purchased a $300,000 home at 3.25% interest rate versus 4.25% at the end of 10 years you would have $17,000 more equity. That is $17,000 more in your pocket versus the bank’s pocket.
Units Sold for Estimate 2nd: 6,000 estimated number of single-family home sales this quarter; April 2250, May 1750, June 1900-2000. The total estimate for 2nd qtr: 5900 to 6000. These estimates would reflect a 20% reduction from 1st quarter.
Buyers: Is this the right time to purchase a home?
- 1st only for those who were blessed not to have their income affected by the closure of non- essential business.
- 2nd if you can accept the potential that prices may fluctuate over the next six months, you are in for the long term and short term fluctuation will not cause you to stress. If you stress over changes in price points no matter how small, this may not be the time for you. If you are looking at the 5 to 10-year return and not the 6 mo.
- 3rd you want to take advantage of the low interest rates, where your purchasing power is increased. The difference between a 3.25% rate and 4.25% is $35,0000 in purchasing power. For many buyers, this is the difference for them to be able to afford the home in the neighborhood they wanted versus the one they could afford, or for them to have certain features like a pool.
- 4th for our Buyers who need assistance with closing costs. While inventory is elevated Sellers who need to sell will be more likely to agree to closing cost assistance.
- 5th, fewer competing offers.
Sellers: Timing will be important.
- We are seeing more online traffic viewing our homes than ever before. Listing your home before the “Stay Home Order” is lifted can have some advantages by placing your home in front of more Buyers than it will once everyone has been set free from their homes. How can your home be safely listed
- Video Walk-Throughs
- Virtual Walk-Throughs
- No in-person showings (occupied homes) until the offer is received subject to viewing. Then the ONE buyer views your home with the strictest safety protocols. No-touch policy. We show the home with gloves, masks, and sanitizer. Our team opens the doors and handles for the contract Buyer.
- Home Inspectors: Interview to ensure they have a safety protocol in place before entry. They are hired by the Buyer, but we can make sure they have a safety protocol to follow.
- Appraisers: FHA and VA are allowing drive-by appraisals and using the listing photos to complete the appraisal.
- If you want to get ahead of the masses who are holding off until June; being part of a smaller number of available homes, while marketing to Buyers who have more time to view homes online, could give you a strong competitive advantage.
- What repairs or remodel items will bring you the greatest return when it comes time to sell? What items should you focus on when getting your home ready to sell? To the Buyer, not all repairs & home improvements bring the Seller the same value. We have put together a guidebook that helps you prepare your home to sell, outlining those home improvements that will bring you the greatest return. Visit for a free guide:
Helpful Links:
Categories
Recent Posts
