October 27 - Today is the day the market returned to the balanced zone. The Cromford Market Index™ stands at 109.5. A balanced market occurs when the Cromford Market Index™ lies between 90 and 110. The months of supply for all areas and types stands at 4.5 months. A balanced figure is between 4.5 and 6.0 months. March 2, 2011 was the last time we saw the Cromford Market Index™ below 110. March 31, 2011 was the last time we saw a months of supply reading above 4.4. Those who have got used to a seller's market over the last two and a half years now have a new type of market to get used to. Greater Phoenix has not spent much time in the balanced zone in the past ten years.
October 26 - Time to study the market by price range - here are some significant indicators for the single family market:
| Price Range | Annual Change in Active Listings (excluding UCB) | Annual Change in Pending Listings | Annual Change in Days Inventory | Annual Change in Contract Ratio | Annual Change in Months of Supply | Annual Change in Sales per Month | Annual Change in Monthly Average $/SF |
| $0 - $99,999 | -26.3% | -66.7% | +7.6% | -62.8% | +30.1% | -67.9% | +6.7% |
| $100,000 to $199,999 | +35.8% | -39.3% | +2.4% | -59.2% | +34.2% | -22.5% | +11.6% |
| $200,000 to $399,999 | +64.2% | -20.1% | +6.6% | -51.0% | +25.6% | +17.8% | +9.2% |
| $400,000 to $799,999 | +50.6% | -6.5% | +2.9% | -36.2% | +22.8% | +17.7% | +5.4% |
| $800,000 and above | +30.7% | +38.3% | -1.8% | -6.1% | +9.3% | +18.0% | +7.0% |
For the range under $100,000 we see the supply of active listings dropping, but sales dropping much faster. So although inventory is not building, the market is very much cooler than this time last year. This has a lot to do with the lower buying interest from investors.
From $100,000 to $199,999 supply is up while sales per month and pending sales are well down. Prices have moved the most in this sector inhibiting buyer interest from both investors and first time buyers. This sector is much cooler than last year.
Between $200,000 and $399,999, we have seen a large increase in active listings and a modest increase in sales. However pending sales are down more than 20% and volume is trending down.
From $400,000 to $799,999 supply is also up sharply from last year but pending sales have not dropped as precipitously as for the sectors under $400,000. Pricing has increased the least in this sector
From $800,000 up is the healthiest sector with more supply but more sales and, unlike the other sectors, far more pending sales. The contract ratio is down only slightly and days of inventory is actually lower. This sector has been helped by the improved availability of jumbo loans. A bull market in stocks has also helped keep demand high in this price range.
October 25 - The following cities have moved from a seller's market into the balanced market zone based on having a Cromford Market Index™ for single family homes between 90 and 110.
- Phoenix (108.8)
- Mesa (108.0)
- Peoria (108.2)
It looks like the following will enter a balanced market within the next ten days:
- Scottsdale (116.1)
- Chandler (110.5)
- Glendale (116.0)
- Goodyear (111.7)
- Paradise Valley (118.8)
The following have moved from a balanced market into a buyer's market:
- Gold Canyon (88.6)
The following are already in buyer's markets and are tending to get more favorable for the buyer and difficult for sellers:
- Queen Creek & San Tan Valley (75.5)
- Tempe (81.2)
- Maricopa (59.8)
- Buckeye (87.1)
- Casa Grande (74.9)
- Tolleson (85.8)
October 24 - As expected, sales prices are moving ahead quite briskly now that temperatures are below 100. The average price per sq. ft. for monthly sales (all areas & types) is up to $122.58. This is the highest level since August 8, 2008. It is also 2.5% higher than last month. This must be dismaying to buyers who are waiting to see if prices will come down. If they refuse to buy until prices come down and enough buyers have the same idea, then eventually demand may fall enough for it to exceed supply and price will have to decline to rekindle demand. The big question is whether enough buyers will think like this. Sales price per square foot is very much a trailing indicator and it is likely to take several more months before it stops rising. Also possible is for demand to pick back up again now that interest rates have fallen and the government is reopen. A change in the trend line for the Cromford Market Index™, days inventory and pending listings are the indicators that will quickly tell us if the market is warming up again. At present the cooling trend remains in force.
October 23 - Good news for buyers is that the overall months of supply for all areas and types is up to 4.3 months, the highest reading since March 2011. It is still below average however. The long term average since January 2001 is 5.4 and I would describe anywhere between 4.5 and 6.0 months as normal. Since we have already seen months of supply rise from 2.5 to 4.3 in just 3 months, it looks almost certain that we will be in the normal range within a couple of weeks. Sellers will then have no excess bargaining power as they have enjoyed for the past 2 years.
October 22 - The number of listings under contract, which includes those in pending status plus active listings marked UCB (under contract accepting backup offers), is currently 9.633. We have been around this figure since October 1, varying between 9,455 (on Oct 19) and 9,860 (Oct 15). This is the lowest level we have recorded since February 2009. The peak level was 23,348 reached on April 2010 at the height of the sales activity spurred by the government tax credit.
Today's number is 40.2% below last year on the same date. Last month the year to year comparison yielded a drop of 38.6%, so the lack of demand has got slightly more severe over the last month.
~ Cromford Daily Observations
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