Local real estate experts came together virtually for a webinar May 29 to discuss the state of the industry in Arizona with two topics emerging — activity from first time home buyers and a continuing shift to single family rentals.
These have been themes as the pandemic has evolved.
The forum was part of Rose Law Group’s virtual series The New Economy Power Lunch.
Darryl Berger, co-founder of BB Living, which specializes in build-to-rent properties, said that pre-pandemic, economists espoused up to 10% of U.S. housing starts should be for rent, and now that could increase to 15%.
Two of BB Living’s best leasing months were March and April, as well as a strong May, Mr. Burger said.
There has been a shift from multi-family to single family rental leases and an aversion to density, no doubt about it, he said.
“Across the board, [tenants] don’t want folks living above them or below them. They don’t want shared elevators or corridors or airflow. We’ve seen a tremendous pick-up in our leasing,” he said.
“The supply for this product is not being met. There is a runway in front of us. ... But we are still worried about a second wave and what may happen in July, and when stimulus checks stop coming. We are bullish for this asset class relative to other asset classes, for sure. But that is not to say that if there is a deep recession we are not going to be impacted. We certainly are, but I think we will be impacted less than the other asset classes.”
First time home buyers have been more active than expected during the pandemic, at least anecdotally.
Andy Warren, president of Arizona homebuilder Maracay Homes, said the for-sale housing market is basically divided into four main categories: first-time home buyers, move-up buyers, luxury buyers, and active adults.
Maracay Homes has built countless homes throughout the Valley, including those within the Camino a Lago site in Peoria, which includes The Meadows community.
Maracay focuses on move-up buyers, like those who would move into Camino a Lago.
Mr. Warren said the big word he is getting throughout the Valley is that first-time home buyers were the first group to see some strength in the latter part of April and early part of May.
“At the end March and in April everything was in suffering. There was lock-down and free fall, and the whole world was scared. All those segments were equally suffering,” he said. “But for the last four or five weeks I have been hearing encouraging things about the first-time home buyers.”
Before the pandemic hit, home prices went up across the nation during the first quarter of 2020 including in the Valley and Peoria, according to a recent report by the National Association of Realtors®.
Mr. Warren said Maracay Homes in the early part of 2020 had banner home sales, including a record month of February. He said it felt like a potential overheated housing market was coming, and then of course the industry was knocked down pretty significantly.
Today there is a lack of supply in new home builds, he said.
“The resale market has been strained. People that had houses on the market maybe took it off the market because they didn’t want people coming through their homes or feeling this is not the right time to list a home,” he said. “Demand for resale is low but the supply is also lower. What drives [Maracay’s] sales and our values is the tension between that supply and demand. Fortunately for us the supply of homes has declined at the same as the demand. We are taking it week by week.”
Philip Haldiman can be reached at 623-876-3697, firstname.lastname@example.org, or on Twitter @philiphaldiman.