2020 a quite the year, that’s for sure! We were all impacted in one way or another by the global pandemic, tense political climate and social issues that made the news cycle throughout the year. To say there were unusual and difficult challenges, would be an understatement. In terms of the Arizona and Gilbert housing market, there were anomalies in 2020, that’s for certain.
The Sellers Advantage
The local housing markets came into 2020 with momentum trending to sellers’ advantage.
- Inventory and interest rates were fairly low.
- Migration to metro Phoenix steadily increased, and
- Local economies were humming.
In March the COVID-19 pandemic began to impact the United States more directly and our first Stay At Home order was enacted here in Arizona. Of concern are the unemployment numbers which include many hospitality and event planning professionals. The real estate industry, like many others, was mired in uncertainty. While seem to have navigated unchartered waters fairly well, none of can say with confidence how this year will play out in 2021 and beyond.
Of concern are the unemployment numbers which include many hospitality and event planning professionals. There was no reasonable expectation that housing prices would hold steady, much less increase so of course, we saw drops in listings, showings, and activity but that was short-lived.
While initially we had clients in escrow considering if they should walk away from a deal, I personally felt the advantage was to the seller. That being said, I also thought there was a real estate market correction coming soon due to a long upward trend. I would not have been surprised if the economic fallout from the pandemic would have forced a correction to housing, in fact it did in some areas of the country, but not so much here in Arizona.
After a brief pause, and a moment to figure out how to adjust the ways we conduct business, it was back to full steam ahead. Realtors changed how homes were shown, open houses were discontinued by most, and then practices modified to allow for more access opportunities. As an industry, we adjusted how we do our jobs quickly. We had to because the demand for housing did not stop.
Arizona Housing – the Gilbert housing market demand
Over the last nine months, we have seen demand for Gilbert housing only increase, and for most of the year have operated in a hyper seller market. Here are examples from the Newman Realty – Arizona experience:
- Cash offer $10,000 above asking price receives a counter offer for more cash.
- Listing in Gilbert activated on a Thursday afternoon receives 43 showings and 11 offers, all above asking price, in the first 48 hours on the market.
- Arrive at a showing appointment to find 15 buyers and agents lined up outside the home.
I’ve really never experienced anything quite like this housing market!
I watch local news like most others and see news reports about a hot housing market. The reporting, at least in my opinion, vastly understates the reality of what has been happening in our market most of the year.
It isn’t hard to see what is driving the market, even in the midst of everything else going on out there. Primary factors include:
- Low inventory of available homes.
- Arizona has been a destination state for the last several years with migration steadily increasing.
- Housing production is not what it was in our last housing boom.
- Challenges acquiring labor and materials has slowed our production of new homes from what it was in prior markets.
- Record low interest rates. Mortgage interest rates fell to the lowest point they have ever been.
These factors create an environment of FOMO, the fear of missing out, which tremendously impacts buyers’ purchasing motivation and strategies. This has been driving our market for most of 2020, despite all the other things going on in the state, the country and the world.
What is next for the Gilbert Housing Market?
As happens every year, I am being asked what the 2021 Gilbert housing market looks like. I think we could be in for another surprising year! Prices that grow unabated for too long reach a ceiling and I think that ceiling is close. That means prices will eventually start to fall. It’s just how markets, real estate or otherwise, work. The real question is how and when the recovery will happen.
At least at the local level, the Gilbert housing market will likely remain robust. People and companies are migrating to Arizona. Businesses are expected to grow and our economy remains stronger than many others. Experts are looking for a continuation of local growth which is typically good for the housing market. This will at least delay a market correction for the short term.
I’d never pretend to be able to tell the future but with 14+ years in real estate, I think I’ve made an educated guess. We know for sure that inventory remains low, as do interest rates, and factors like people and businesses moving here created a high housing demand. There are no indications that these factors are slowing down anytime soon.
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