The COVID-19 pandemic is not letting up any time soon and this morning over 92% of the US population lives in states where the weekly count of new cases is rising. The only exceptions are Alabama, Arkansas, Hawaii, Maine, Nebraska, North Carolina, Puerto Rico and the US Virgin Islands. Record numbers of new confirmed cases are being reported by the health authorities in Alaska, Indiana, Kansas, Kentucky, Minneapolis, Missouri, Montana, North Dakota, South Dakota, Utah, Wisconsin and Wyoming.
While the pandemic is wreaking havoc in parts of the real estate market, especially, the retail, office, and hospitality sectors, single-detached housing is more popular than ever. In a trend seen around the world, buyers are seeking some open space with privacy, so larger yards are at a premium but flats in tower blocks are out of favor. Big expensive cities with crowded downtown areas are seeing an exodus to the suburbs, especially for people who can effectively work from home.
Because Phoenix does not have much dense downtown housing (none at all that is comparable to New York, Paris, Tokyo or London), its residential sector is looking very strong even for the central areas. To get some idea how much of a shock the pandemic has caused elsewhere, look to the exclusive area of Kensington and Chelsea in London. This is unaffordable to most people, but it is getting cheaper. Residential rents have fallen by a staggering 25% in the past 12 months. Landlords are in despair as their property values fall and they fail to collect an unusually large percentage of rents, especially if they include retail units. New listings are flooding onto the market, bringing prices down.
One of those landlords is the Queen. Forbes estimates that her real property portfolio has fallen by $700 million since March this year.
However, the remote parts of the UK, such as Scotland, Wales, and the North of England are experiencing the highest rates of appreciation they have witnessed since 2009. Suddenly a rural location is seen as an advantage, not an inconvenience.
Similar effects can be found in Arizona with small villages in Gila, Yavapai, and Coconino counties being overwhelmed with buyers from outside the area and often outside the state.
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A positive take away from the Daily Observation above (and a question that's been on my mind and I suspect yours) is that Phoenix and by extension Tucson's urban areas are still seen as desirable - not suffering so much from the sudden, pandemic-drive and potentially sustained international migration away from the densely populated urban areas.
Simultaneously we are clearly seeing the surge in interest from out-of-state buyers for our suburban and master-planned communities.
Buttressing this demand has to be Arizona's broad association with golf communities, inherently providing the 'open spaces' people are seeking worldwide - giving us a new premium attractor-factor for the Arizona lifestyle.
Urban to suburban - we have the best of both new worlds!
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