Greater Phoenix Outlook
Journal Industry Award Recipient, Phoenix Growth Trends
July 1, 2020
2019 Residential Real Estate Rookie of the Year
The world of real estate has seen some massive changes in the way business has been conducted since the beginning of the year. Although the COVID-19 pandemic has certainly slowed things down, we haven’t seen a complete stop like many would have expected. Why? We first must thank Governor Ducey for deeming real estate an essential business for Arizona. It was a challenge, but real estate agents and brokerages continued to find ways to carry out business and meet the needs of buyers and sellers.
The real estate community worked together to come up with virtual options that quite honestly might be here to stay, pandemic or no pandemic. Buyers and sellers always had access to online listings, but the growth and opportunity in this area has cultivated even stronger interest. Clients can now see a virtual tour of the entire property and get the full experience of being in their potential home without even getting off the couch in the house they currently live in! They can make more informed decisions because they’re able to get an up close and personal view of more properties. This may sound like more work for the agent, but in reality, the virtual tour you put together can be sent to countless prospects, and even personalized in some cases, so you’re reaching an even bigger base.
It’s also worth noting that Yahoo Finance named Phoenix the hottest real estate market in 2019, beating out Las Vegas in the race for the city with the fastest home price growth, according to the S&P CoreLogic Case-Shiller 20 City Composite. That kind of momentum does not go away overnight.
One area that might see an elongated downturn is the commercial real estate market. Just like the real estate business, companies of all industries had to find ways to go virtual to survive. This means business that was once conducted in an office setting is now happening virtually. Leadership everywhere scrambled to find solutions to keep their teams connected and motivated. In many cases, workers have been happier and more productive working from home, and their respective companies are noticing. We couldsee a change in office space usage in the future, but for now, it’s encouraging to note that collections of April rent were on the upside for office and industrial, at around 90%, according to CBRE. What is concerning is the retail market, which fell below rent expectations at 20 to 40% on average, depending on the asset type. As businesses are permitted to reopen and adjust to the new “normal,” we’ll continue to keep an eye on COVID-19’s impact on the commercial real estate market.
Overall, the slow-down in the market seems to be temporary. Earlier in the year, the public was scared to go outside, scared to spend money, and just plain scared in general. Arizona’s Governor deeming real estate as an essential business was an important decision that allowed our industry to keep moving. People who needed to buy or sell kept coming in the door (figuratively speaking) motivated and ready to make moves. This movement in of itself provides a positive outlook. Remember that Phoenix not only bounced back after the crash of 2008, we came back stronger than ever. We became one of the top 5 most populous cities in the U.S.
As we look to the future, the bottom line to keep in mind is, people will always have a need for real estate services! There is much positivity to be celebrated in that statement. As agents, we should celebrate the human connection that we offer our clients. Virtual options will continue to be a big part of the real estate industry moving forward, but your clients will need someone they can trust and rely on to help them make some of the biggest decisions of their lives. A website will never be able to provide the assistance and reassurance that we offer. Stay alert, positive, and motivated, my friends!