Some cautious optimism for housing market

By Mike Sunnucks | Rose Law Group Reporter

There are indications that COVID-19 might not be hitting the housing as hard as initially expected.

Steven Hensley, a research analyst with Belfiore Real Estate Consulting, points to the Tucson real estate market where the drop in sales has not yet been a severe as previously projected.

Hensley said initial indications are that new home sales in the Tucson metro area are down 30 to 35 percent from mid-March to mid-May compared to the beginning of 2020.

“That’s a pretty positive sign,” said Hensley.

There were early projections of an 80 percent drop off in new home sales in both the Phoenix and Tucson markets after COVID-19 shutdown much of the economy staring in March.

“It’s definitely below what we were projecting,” Hensley said.

Hensley said home builders in Tucson say they have seen an increase in sales inquiries and transactions since the beginning of May. The Arizona economy has been reopening this month with Governor Doug Ducey easing some of COVID-19 business closures.

Hensley said there could have been existing demand for home still making its way through the sales process with buyers taking advantage of historic lows in mortgage interest rates.

COVID-19 has significantly cut down on the number of existing homes being put up for sale. That trend and a low supply of new and resale homes for sale before COVID-19 is resulting in the buyers who are out there navigating to new homes.

Hensley said the builders who kept sales offices open for private appointments and shows and those builders who had some speculative inventories are seeing some short-term benefits.

The question for the Tucson and broader housing market is whether the less than expected drop is due to buyers who were already seriously in the in process of buying homes and that more significant drops will occur this summer.

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