The housing market took a hit when coronavirus cases began to surge in the U.S. and related shutdowns slowed the economy and the Tucson housing market is among the biggest casualties, according to research.
Clever Real Estate examined the national housing market trends in terms of buyer demand and took a deep dive into how large metro areas fared in comparison by creating a Housing Demand Metric that tracks buyer demand as a result of the coronavirus shutdowns in 50 U.S. metros.
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The Housing Demand Metric includes three variables associated with buyer demand:
• Median days on market
• Percentage of active listings on market for less than two weeks
• The contract ratio (pending sales / active listings)
National analyses showed that the lowest point of buyer demand was during the week of April 6, 2020. Clever Real Estate used that date as a “low point” for comparison. The more-recent trends were based on the most recent data from June 15, 2020.
Take a look at the table of contents below to explore national trends, more detail about Clever Real Estate’s Housing Demand Metric, and the cities with the most and least demand today compared to April.
Metros With the Largest Increases in Demand
No. 1 Albany, NY Metro
No. 2 Houston, TX Metro
No. 3 Harrisburg, PA Metro
No. 4 Dallas-Fort Worth, TX Metro
No. 5 New Orleans, LA Metro
No. 6 Detroit, MI Metro
No. 7 Washington, DC Metro
No. 8 Cleveland, OH Metro
No. 9 Nashville, TN Metro
No. 10 Philadelphia, PA Metro
Metros With the Biggest Drops in Demand
No. 1 Tulsa, OK Metro
No. 2 Salt Lake City, UT Metro
No. 3 Tucson, AZ Metro
No. 4 Virginia Beach, VA Metro
No. 5 Cincinnati, OH Metro
No. 6 Jacksonville, FL Metro
No. 7 Kansas City, MO Metro
No. 8 Knoxville, TN Metro
No. 9 Little Rock, AR Metro
No. 10 Boise City, ID Metro
A closer look at Tucson
Since last year, the supply in Tucson has decreased by over 25% in terms of total number of homes for sale and newly listed homes, according to Redfin. And, while overall demand was relatively low throughout the year, the Tucson housing market has been on a steady decline since early April, with a large drop in June.
The more-recent drop in demand is highlighted by homes sitting on the market longer and fewer pending sales. All of which may be due to a recent surge of COVID-19 cases in the state of Arizona.
Arizona cases were relatively low through the end of May. To match up with the dates used for our analyses, we can see a strong correlation with the increases in cases and sharp drop in housing demand: There were only 187 new cases on April 6, compared to 1,040 on June 15. The daily cases continue to outpace the previous day, with more recent cases reaching over 4,000 per day.
The Tucson area has followed a similar pattern of cases, now reaching more than 11,000 confirmed. As cases continue to rise, it’s likely that demand within the Tucson housing market will drop even further.
Tucson Metro Area Low Point vs. Recent Housing Trends
• Total Homes Sold: 72 more homes
• Pending Sales: 37 fewer sales
• Median Listing Price: Listing for $10,100 more
• Price Drops: 24.13% less
• Median Days on Market: 4-day increase
National Trends: Low Inventory, High Demand
The housing market has been booming for years after recovering from the wake of the 2008 financial crisis, and many questioned the potential for another bubble as a result of inflated housing prices, historically low interest rates, and the uptick in subprime lending. Although those concerns may have been warranted, no one could have predicted the waves of economic turmoil that began scouring the country as a result of the novel coronavirus in early 2020.
Many state and local governments began mandating non-essential business closures in March of this year, leading to a sharp decline in the economy and housing markets. Home sellers, concerned about plummeting home values and job security, put off marketing their homes, while many buyers seemed to hope for a good deal.
There were fewer homes on the market at the beginning of 2020 than the beginning of 2019 — which is perhaps not surprising given the inflated market over the last few years. The overall trend, however, seemed similar to last year; active listings steadily rose through late March.
Real estate tends to be seasonal, with the market heating up throughout the spring and summer and cooling off in late fall. The number of active listings, however, took a downward turn around April when COVID-19 cases became widespread across the US and has yet to recover.
The relatively low number of active listings across the nation supports previous research that sellers are being cautious about putting their homes on the market during the pandemic lockdowns.
Although inventory might be low, buyers are still biting: The weekly pending sales in 2020 took a huge hit in early April but have since recovered to meet back up with 2019 sales.
Based on analyses of previous, similar lockdown procedures across the world, many predicted what real-estate expert Mike DelPrete called a “checkmark” recovery wherein the housing market would experience a quick dip, 3-4 weeks at the bottom, and a steady — albeit slow — recovery period.
Pending sales across the U.S. exhibited this checkmark-shaped recovery: a sharp decline in sales, followed by a quick turnaround after only a week at the very bottom. However, the recovery was quicker than Mike DelPrete predicted, indicating that buyers haven’t shied away from the market.
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