By Mike Sunnucks | Rose Law Group Reporter
Real estate expert Jim Belfiore is bullish on the Phoenix housing market headed for the rest of 2020 and into 2021.
The optimism has led Belfiore to up his projection for new permits for new home building in the Phoenix region this year.
He now expects 28,900 new home permits regionally for 2020. There were 24,937 new home permits in the Phoenix market in 2019.
“The market is just hopping,” said Belfiore, who is president of Belfiore Real Estate Consulting in Phoenix during a presentation to industry leaders Thursday.
Belfiore said low mortgage interest rates, increases in home purchase by millennials and expects population gains in Arizona are and will help drive demand for homes.
“The fires are pushing people here,” said Belfiore referring to massive wildfires in California and Oregon.
He also pointed out that the COVID-19 pandemic has expanded the scope of workers who can do their jobs remotely. Belfiore said that will lead more workers to leave expensive markets such as California for less expensive ones such as Arizona.
Belfiore said August saw record numbers of new home sales in the Phoenix metropolitan area with summer buyers taking advantage of interest rates as well as pent up demand from the COVID-19 shutdowns in March, April and the beginning of May.
He said the summer surge in home sales has eased a bit. “Traffic started to drop a little bit in the second week of August, third week of August,” Belfiore said.
But he stressed demand for new homes is still strong and he expects that to continue the rest of this year and into at least the spring of 2021.
“Homeownership is skyrocketing today,” he said pointing to national numbers showing homeownership levels at 67.9 percent (the highest level since 2008).
The strength of the market is shown in a number of indicators. New home sales per subdivision averaged 5.3 sales regionally the past 30 days. That is up from 3.6 sales per subdivision a year ago, according to Belfiore.
The demand is pushing up home prices. Belfiore projects the prices of new homes will rise 6 to 8 percent in 2020 and 8 to 11 percent in 2021.
Still, the market is challenged by very low inventories of new homes for sales and continued labor and contractor shortages.
The economy also needs to continue to regain jobs lost because of the pandemic. Belfiore said Arizona had 74,000 fewer jobs in July than a year ago.
But he is optimistic about the state’s economy especially if Phoenix benefits from population shifts stemming from COVID-19, social unrest and other factors.
“We are going to see employment tick back up. I think we are not like a lot of the states that surround us,” he said.