Tuesday, August 12, 2014

Market Slowing

No Big Gains Through the End of the Year : (
The monthly average sales price per square foot for all ARMLS areas & types is $126.41 today, once cent higher than it was on the first Saturday of January. After peaking in early April at $131.37, a gentle drift downwards has been the overall trend in this measure. In the short term we see some weakness in the pending $/SF so we anticipate the monthly sales $/SF entering the $120 to $125 range during the last 4 months of 2014. Our guess is that $/SF pricing will be a little lower in January 2015 than it was in January 2014. Not enough to cause significant appraisal problems, but enough to confirm we are no longer in a market with rising prices.
The Cromford® Market Index started to move downwards in July last year. It generally takes about 12-15 months for sales pricing to follow its lead, which is now starting to occur. The Cromford® Market Index is specifically designed to be a leading indicator while monthly average sales price per sq. ft. is very much a lagging indicator. Since the Cromford® Market Index started to rise again in March this year, the price weakness we see ahead is likely to be brief and relatively inconsequential over the longer term. Based on current trends we would expect sales pricing to start to firm up again during the spring of 2015, since that will be about 12 months after the Cromford® Market Index hit its low point and changed direction.
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If you're reading the above and wondering what the index is indicating for your particular city of interest, go to the City Snapshots posted here: http://RLSIRMarketing.com/stats
Keep in mind, an index score of under 100 favors buyers; over 100 favors sellers; 90 - 110 equals relative balance in supply and demand, which is where we are now.
Example: Snapshot of Scottsdale below (see arrow @ bottom of page pointing to the CMI):
BTW - This a pretty good improvement in the CMI for Scottsdale over the last 30 days. However, that's because, as you see below, month-over-month, we see more Active Listings than either Pending or Sales.
Ps. Green button trend good for sellers; red button trend good for buyers.

Friday, August 8, 2014

Quick Real Estate Update...

Despite there being very little sign of an improvement in demand, the market continues to swing slowly but surely back towards a more neutral and balanced state thanks to the weakest arrival rate of new listings in 14 years. This pushes the Cromford® Supply Index down and hence the Cromford® Market Index moves up. When we look at the single family market in the major and secondary cities over the last week we see:




































Here we see 22 cities with an improved market for sellers and only 7 deteriorating. The largest percentage improvements were seen in:
  1. Gold Canyon
  2. Litchfield Park
  3. Sun Lakes
  4. Sun City West
  5. Fountain Hills
  6. Tempe
  7. Chandler
  8. Goodyear
Deterioration of more than 1% was seen only in:
  1. Casa Grande
  2. Laveen
The overall Cromford® Market Index has risen from 92.0 to 92.5 over the last week, certainly not a spectacular move but we are now well inside the balanced zone between 90 and 110.
The improvements in the cities that have become more favorable for sellers are mostly due to reduced supply. For example, active listings in Gold Canyon are down from 185 on June 26 to 118 today (excluding UCB). However Litchfield Park is unusual in seeing a short term uptick in demand.
Demand from investors has now dropped below normal and the market is once again dominated by regular MLS sales. Most agents who work only normal re-sale listings are experiencing pretty reasonable market conditions. However, the new home market remains in the doldrums and much weaker than expected. The REO and short sale sectors are much quieter than they used to be and this is not just due to lower numbers. Ordinary buyers are much less interested in rehabilitating a property. It is noticeable that most well-priced homes in great condition are moving more quickly than those that need a lot of work.