save time and conduct business The curse of the decade. How COVID-19 is slowing Phoenix metro multi-family deal

THE CURSE

OF THE DECADE

HOW COVID-19 IS

SLOWING PHOENIX METRO MULTI-FAMILY DEAL CLOSURES

When the novel coronavirus was first reported in the US, there was not much panic or threat. As the virus slowly and surely crept in and spread to a better part of the country, states and the federal government rushed to implement public health measures to put the coronavirus pandemic situation under control. By the beginning of March, almost the whole of the US was under lockdown. That meant that no businesses were operating unless for those that offer essential services.

The effects of the pandemic were felt in every aspect of the US economy, including in the housing market. Although in early April, Valley housing experts stated that it was somewhat early to predict how the curse of the decade would impact the housing market in the US. On the other hand, Arizona real estate experts were contending to head into the uncertain economic situation claiming that the Phoenix metropolitan housing market was well-positioned to face the storm. Mark Stapp, the executive director at The Center for Real Estate Theory & Practice at the W.P. Carey School of Business at Arizona State University, commented that “It is very early in this process… Only in the last two weeks has there been any data to show any profound effect. You are starting to see Escrows cancel --- We have about 30 days to see how this is going to play out here. The reality here is it is going to have profound impacts. It will pull things up short for quite a while. How long this lasts, and the financial ramification and how the federal government deals with it will play a major role.” Before the onset of the coronavirus pandemic, Phoenix housing was progressing pretty well since the beginning of the year, sending an implication on the wellbeing of the housing market and promising better days ahead. When the pandemic was reported in the country, and its effects slowly spread, the narrative changed. Operations suddenly stopped temporarily as the stay-home directives took effect. Mr. Stapp states, “It is not a complete shutdown, but the agents I have spoken to say they are beginning

to see cancellations… We are talking to a few different Realtors, and it is almost one in four that are closing.” The economic disaster due to the pandemic has profoundly impacted the housing market and is going to be a blow to both the landlords, real estate dealers, and lenders. “Now we run the risk of a really significant financial disaster,” Mr. Stapp commented on the economic concerns of the pandemic. “It is going to come down to the level of empathy from landlords and lenders, in particular.” In another event, the senior managing partner for Phoenix-based ABI Multifamily, John Kobierowski, explains what the business is going through as a result of the impacts of the pandemic. In the middle of March, he was all excited about the 30 multi-family properties he already had in escrow. He has all the reasons to be excited as there was a good sign from investors from all over the country, having recently shown so much interest in buying metro Phoenix real estate multifamily houses. In the previous year, Mr. John and his team had sold more than 130 multi-family apartments in Arizona. By March 2020, they had already sold off 24 multi-family properties with 33 others on the listing and 28 in escrow. This is such a perfect sign for a real estate dealer that deserves more than just excitement. The financial situation due to the Covid-19 pandemic seems to be worsening, and Kobierposki is uncertain about the future. “Whatever is going to happen, I don’t see a bunch of new ones originating very quickly until people feel confident where the market is going,” he states. As the situation keeps getting more severe with each passing day, let us, however, not lose hope. Nothing lasts forever; not even the Covid-19 pandemic will. In the meantime, let us join our efforts to ensure that we win this war. Keep adhering to the state directives at all times.

Works cited

https://www.bizjournals. com/phoenix/ news/2020/03/24/howthe-coronavirus-is-slowingphoenix. https://www.yourvalley. net/stories/phoenixmetropolitan-housingmarket-braces-forglobal-pandemicimplications,151167 Towards the end of March, the narrative was a whole different one with a whole different reality due to the effects of the coronavirus pandemic. “We’re in a wartime situation,” John states. “Everything is very fluid.” John gives an example of an event on March 20, where the money to close two house deals were being wired but hung up in the process. “We got an email that said the system behind 90% of the bank wire transfers crashed on Friday.” He states. This meant that they had to do transactions via manual wire transfers. “The whole process of moving money around is slowing, and that affects buying and lending and is slowing commerce,” he adds. This situation leaves him full of uncertainties, and he is not sure how fast he can close escrow on the deals already in progress.