Sales of Existing Homes Sputter, Then Surge
By Jay Gonzales
It’s not just new houses here that are in demand.
As the housing market confronted the realities of the COVID-19 pandemic, resales of existing homes hit a speed bump in the spring but have since rebounded substantially.
While it wasn’t all-out panic, there was certainly concern in the housing industry earlier this year when the state’s stay-at-home order was issued. Not to mention, the order came at a time when the market was “cruising along,” said Billy Mordka, a local realtor and president of the Tucson Association of Realtors, a trade association that represents more than 5,600 real estate professionals in Southern Arizona.
Low interest rates, affordability and an attraction to Tucson fueled a market that was certainly healthy.
“People were feeling good about the economy,” Mordka said. “People had a lot of equity in their houses…a good chunk of change that they were using to upsize.”
And then COVID-19 became a full-blown pandemic.
“When that happened, a lot of people just hit the brakes,” Mordka said. “I lost two deals personally. I know a lot of people had deals fall out because people got really scared, and that lasted for about three to four weeks.”
And then, just like that, business was back and a stampede of buyers needing houses immediately collided with a market that had scaled back some of the inventory.
TAR CEO Randy Rogers recalled the feedback from his membership: “They were, ‘Wow, what’s really going to happen? I’m really worried.’ And then, they were like, ‘I’m busier today than I’ve ever been.’”
“We hear anecdotally that everybody’s coming here from California,” Rogers said. “But I think we’re hearing that they’re coming from all over the country. The trends now are that people are looking at not living in the large cities. They’re looking at a place like Tucson that does have a little bit more suburban feel where you can get a little more space.”
The TAR monthly indicators report revealed such in June. New listings dropped 17.7% from the previous June for single-family homes, while pending sales increased 31.7% over the same month in 2019. During the month, inventory decreased by 48.9% for single-family homes.
Another telling stat was the number of houses in inventory vs. the number of sales that closed. The two numbers were nearly even in June – 1,263 closed sales and 1,349 homes in inventory. Mordka said that’s one month of inventory when a normal “healthy” market would have six months of inventory for the market to cycle through.
“There was really a deceleration of sellers and an acceleration of buyers,” Mordka said.
A buyer, for example, who was willing to rent an apartment or a house while looking to purchase, no longer wanted to move more than once, largely because of the pandemic. Those buyers wanted directly into a purchase. While realtors were averaging two, three or four offers on a house during a steady market, instead they had eight to 10, he said.
This, while the median resale home price was inching from $223,000 in June 2019 to $230,000 in June 2020. With interest rates set extremely low due to the pandemic, price increases were not a factor.
“We always say in real estate that real estate is local. This is Tucson. Are we getting killed here? Not in the residential resale market,” Mordka said. “I think as long as these interest rates are where they’re at, this is going to be a constant for the foreseeable future.”
The type of employment the region has attracted in recent years also has produced many buyers despite the level of unemployment, Rogers said.
“I think another thing that fits in here, is that Tucson from an economy perspective, has pretty stable markets,” Rogers said. “Some of the companies that have come in recently have not been impacted greatly by COVID.
“Of course, a lot of our small businesses are being impacted dramatically. But some companies, short of trying to figure out the work-from-home policies, are still strong. We’re not losing people in Tucson because businesses are leaving Tucson. We’re simply trying to re-adjust to some of the housing.”