More than a year and a half after the first news of a highly contagious Coronavirus, we find ourselves struggling when it comes to how we interact in our communities. We are left with many questions including, what does the moratorium on evictions mean for Arizona buyers and sellers?
Continuing impact of COVID-19
Vaccines, which were thought to be the silver bullet to lockdowns and government-imposed restrictions, and despite being generally effective, have been hard-pressed to deal with the spread of new coronavirus variants.
Rising contraction numbers, particularly among the unvaccinated, have brought us to the brink of new mask mandates, and potential disruption of economic activity.
There are many topics up for discussion regarding the pandemic and our responses to it, both private and public, for today’s blog we’re going to stick with the moratorium on evictions in Arizona.
What does the Moratorium on Evictions Mean for Arizona Buyers and Sellers?
Let’s start at the beginning. This was an interesting and understandably controversial move by the Centers for Disease Control and Prevention that took effect in 2020.
In an effort to slow the spread of the virus and provide some relief to segments of the population financially impacted by lockdowns and restricted social engagement, the CDC issued an order preventing landlords from evicting tenants, as defined by the CDC. It was a bold move indeed for the federal government to institute restrictions on how a private property holder could manage their investment.
Billions of dollars in rent relief were sent out to the states and distressed tenants were asked to apply for relief. Thus far the administration of the funds provided has been lackluster, to say the least. Qualifying for rent relief and actually making it through all of the red tape to receive it has been challenging. Frustration levels have been high both on tenants and landlords, understandably so.
Moratorium on Evictions
The moratorium on evictions is set to expire on September 30, 2021, leaving close to 30,000 Arizona renters in danger of eviction. In real estate circles, we have been talking about what the expiration means for housing, in particular, what it will mean for housing inventory.
- Speculations that it will take a month or two for evictions to actually take place.
- Flood of new homes on the market at the end of the year.
- Bold predictions on the collapse of home values.
- Increased homelessness in Arizona and across the country.
In the meantime, what does the moratorium mean for housing markets?
When it comes to buyers and sellers of residential property, it probably doesn’t mean that much. Predicting the future can be fraught with peril and we don’t do so flippantly, but here are the facts as we see them right now:
- Inventory remains at near historic lows, as we’ve discussed ad nauseum on the Newman Realty blog, inventory remains at near historic lows. Recently, we had approximately 7,000 active listings on our MLS system and about 260 of those were in Gilbert and about 200 in Queen Creek.
For reference, we feel a balanced market is 15,000-20,000 active listings at any given time. Our high during the great recession was around 60,000 active listings. Homes continue to be challenging to come by in this season of extremely low inventory.
- Demand remains historically high. The latest U.S. Census figures show Phoenix, currently the fifth largest U.S. city, to be growing faster than any other large city in the country. The city of Buckeye is growing faster than any community of any size in the country. All these new residents, as well as locals that are new to being able to purchase property, have caused demand for housing to skyrocket. Hence the multiple offer bidding wars, ads from people or institutions offering to buy your home, and remarkable increases in property values across the entire metro area.
- Rental rates have also increased significantly. Many investor owners that have been impacted by a tenant not paying rent under the moratorium, are going to opt for re-renting the property at today’s rates once the tenant is evicted. Some will sell, but it isn’t likely all of them will.
In the end, any additional inventory that will come about by the expiration of the eviction moratorium, whenever that may be, is not likely to affect our markets in a significant way. We will likely see more inventory, and that is a good thing, but we are so far removed from a balance that it is unlikely that prices will be affected in a dramatic way. Balance comes first, then prices level, this does not seem to me like it is enough to bring balance
so we can move on to leveling of pricing.
Someday we will see a more balanced market, fewer multiple offer situations, less speculation into residential real estate investments, and smaller gains in value, or even loss of value. To me, the moratorium lifting will not lead to all of that, it will have to be factored in with other market conditions to really have an impact.