Hello and welcome back to another edition of our weekly market analysis where we use showing data and other indicators to measure the impact of CV-19 on the housing market. This week we again begin with new listings and pending sales straight from our Weekly Market Activity Report. First up is our new listings trend going through 4/11. The decline in seller activity since about mid-March is evident here. New listing volume is on-par with 2/15 levels but still ahead of that first week of February. This is a time when we’d ordinarily expect new listings to rise.
Pending sales are still exhibiting a similar dynamic, with declines beginning around mid-March. Like new listings, pending buyer activity began declining around mid-March right after the school closure. On a weekly basis, pending sales are also back to mid-February levels. This is a time when we’d also expect pending sales to be on the rise.
From the oversupply leading up to 2008 to the dramatic under-supply challenges we’re facing now, inventory is arguably the metric that has driven market dynamics more than any other over the last 12 years. That said, months supply of inventory is an even better measure of over- and under-supply as it takes a demand indicator into account as well. Since maxing out for the year so far during the week ending 3/28, we’ve since seen two consecutive weeks of declining active listings (homes for sale).
And now on to showings. After a brief holiday pause last week, showing activity has accelerated noticeably. This is good news. That bears repeating since it might get drowned out: THIS IS GOOD NEWS. And while it’s great that this indicates increased buyer traffic and showing activity, it is still imperative to follow CDC guidelines around open houses and to consider virtual showings instead of in-person. The number of showings is currently 50.3 percent above its valley from early April and about 28.3 percent below its peak from mid-March.
This week demonstrates the importance of having overall showing activity by price range as well as overall share of showing activity by price range. Every single price range had an increase in showing activity during the week ended 4/19 compared to the week ended 4/12. But some ranges had larger increases than others, which means some ranges gained market share while others lost it. For example, the gain in showings between $200-249K wasn’t as large as gains elsewhere, so that segment actually lost some of its share of showing activity.Looking at the change in showing activity is also quite helpful here. In the event the current and week-ago bars are close, this highlights the change, but not the level. Perhaps surprisingly, we see the largest gains in showing activity at the upper end of the price spectrum. This is likely driven by two factors. First, since showing activity is limited above $800K and especially $1M, a small number of new showings could effectively double that figure (“small sample size”). Second, the luxury segments were hardest-hit early on, and so this could be a bit of a “return to(ward) normal,” whereby activity levels look strong due to suppressed baseline activity (or since showings were slow in the previous period).
The next two are our regular rolling weekly averages for new listings and pending sales. Other than new listings possibly stabilizing somewhat, it’s mostly been a continuation trend for both of these metrics.
This week we saved the best for last. These last two show the change in buyer and seller activity by price point. These are monthly figures, so they’re comparing March 2020 against March 2019. Here we can clearly see just how much activity varies by price range. We can also see how once again it was the low and high-end segments that played second fiddle to the mid-market ranges. For both listings and pendings, homes between $250-500K enjoyed the strongest gains in activity, though other segments showed increases as well.
The <$120K market is already quite thin and has been declining since 2012. Investors were active in this segment after the 2008 recession and since. The $1m+ market has been improving but still suffers from oversupply issues. This could also reflect a parallel-but-unequal impact of CV-19 on the human side. Buyers at the far affordable end of the market (<$200K) were likely more affected by job losses in the leisure, hospitality and retail sectors, while higher net worth individuals who can afford $1M+ homes may have seen their wealth impacted by stock market gyrations. That can create a perceived “wealth effect” that drives consumer spending and behavior.
Perhaps that leaves salaried professionals in the middle who can work from home in the driver’s seat.
Whatever your angle is, one thing is for sure: we live in historic times.
Thanks for reading and be sure to tune in next week.
Join MAR’s Director of Research and Economics, David Arbit, for a free weekly 1 hour presentation and discussion around the impact of COVID-19 on the Twin Cities real estate market Thursday, April 23, 2020 (2:00 PM to 3:00 PM). Registration is required.