A nice supply jump! Quickly off-set with another demand peak.

 I have to admit I was not expecting the daily CMI chart to look like this:

Having reached a plateau at 342 and facing a large percentage rise in new listings compared with September 2019, I was expecting to see a decline starting in early September. But even if you have been tracking the market closely for 16 years, it can still surprise you. Demand has continued to increase despite its already high level. This has not only soaked up the new supply it has prevented the active listings without a contract from growing except in a few small areas.

As a consequence, the CMI keeps making new record highs, today's being 346.1. This comfortably exceeds the highest point in 2005 (312.9). In April 2005, the CMI started a long and continuous descent to eventually reach its nadir at 26.5 in October 2007. Today's situation is unlike 2005 in many significant ways, but I would still expect a little steam to come out of the boiler to relieve the pressure. In most years we see a noticeable increase in active listing counts between September and the beginning of December. 2020 has been different from normal in so many ways, so we do not know if this pattern will repeat. In theory, the rapid rise in prices which is now taking place, should make homes less affordable and damp down some of the buyer enthusiasm. On the other hand, many buyers may see the price increases and decide that if they wait it will only get harder to get the home they want.

So we do not know if the CMI will keep hanging up there like Wile E. Coyote running off the edge of a cliff, continue another leg upwards or start to obey the natural laws of economic gravity. The only thing we do know is that a CMI of over 200 means home prices must rise a great deal from where they are in the immediate future.

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Defying season norms is great for my business. However, it does beg the question of sustainability. Some of my potential buyers are thinking: Are we buying at the top of a market that will ultimately implode. 

Simple explanations are usually the best. 

Of course, we don't have a crystal ball. But we can cite short and long term trends - the simple dynamics of supply and demand. 

There's inherently a finite supply of land and homes to feed the supply side. 

It's the demand variable that's key. 

Like a broken record we keep coming back to the historical facts that long term - truly ever since air conditioning came to the Valley about the time Russ Lyon Realty was fortuitously formed in 1947, people have come for their place in the sun. It's my story. Perhaps yours as well. That, together with the Arizona lifestyle, has kept us in record-breaking territory these past 70 plus years. 

The pandemic in a very real sense has just put this long term historical trend on hyperdrive. 

To the question of sustainability - 

Beyond the continuation of the long term trend, we're experiencing a fundamental shift in how people think about 'home'. Most notably, the sudden rise in the work-from-home option. Ironically, just that alone is creating a massive shift being felt Statewide, as well as nationwide and worldwide. 

It's setting in motion a recalibration that clearly has legs. I say 'clearly' because everyone feels it, knows it, making it self-perpetuating.