By Mike Sunnucks | Rose Law Group Reporter
Sales of new homes are showing unprecedented and unexpected summer strength amid Arizona’s COVID-19 pandemic.
Jim Belfiore, president of Belfiore Real Estate Consulting, said July homes sales were up 15 percent compared to last year and were up 17 percent from June which also showed strength.
“Sales are above any period since we started collecting data in early 2006,” Belfiore said of the July numbers.
Record low mortgage interest rates continue to drive sales demand even with all the certainty around COVID.
Belfiore said low interest rates coupled with a lower supply of existing / resale homes is driving prospective buyers to new home communities. Some of the decline in existing homes on the market stems from sellers and buyers wanting to avoid exposure to COVID-19 at open houses.
“Resales are at lows not experienced since the third quarter of 2005,” Belfiore said. “
“We have sort of this perfect storm as it relates to demand being extremely over the top healthy and supply being extremely low,” Belfiore said.
The real estate expert said low interest rates are continuing to drive home sales.
“I don’t believe we’ve peaked yet. The sales numbers are very, very healthy. I would expect we peak in terms of sales over the next month or so,” Belfiore said.
He points out the housing market is not only showing resiliency in the age of COVID-19 but it is also overcoming the traditional slowdown because of the Phoenix region’s scorching summer heat.
“People are braving the heat and going and checking out models,” Belfiore said.
The number of new home communities is also not keeping up with demand.
Demand for new homes have some builders and communities launching lotteries for prospective buyers.
Belfiore also expects the demand trends and the limited supply of new homes in the pipeline to encourage builders to develop in less expensive outer suburbs such as Pinal County and Buckeye.
“We are going to see a tremendous increase in community counts and activity in market areas that have been kind of ho-hum since the housing bubble realty started to burst in 2006,” Belfiore said.
Rising demand and low interest rates put upward pressure on prices.
Those dynamics coupled with limited supply of land in closer in submarkets will lead to more entry level subdivisions sprouting in the region’s outer suburbs.
Belfiore expects to see builders focus that growth in Maricopa, Casa Grande, Coolidge as well as Buckeye and along the Sun Valley Parkway in the West Valley.
“They’re going to move farther out, and buyers will readily accept it,” he said.