Slowing Trend Continues...as predicted.

 Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities:

For the second week running, we have all 17 cities moving in the same direction over the last month - favorable to buyers. The cooling trend is becoming more apparent as inventory levels start to recover from the extreme lows reached 3 or 4 months ago. Sales counts remain very healthy but the number of listings under contract is in a falling trend meaning that demand is in decline, albeit a very mild decline.

Most areas are seeing higher active counts due to the fast arrival of new listings. Although many of these go under contract in a matter of days, if not hours, the number of listings available has grown by quite large percentages since February. Examples include:

• Phoenix - minimum was 530 on Feb 24 - now we have 809 - up 53%
• Mesa - minimum was 124 on Feb 17 - now we have 255 - up 106%
• Scottsdale - minimum was 377 on Mar 3 - now we have - up 32%

To put these into context, the long term averages are:

• Phoenix - 4,327
• Mesa - 1,536
• Scottsdale - 2,222

Normal levels of supply are still a long way over the horizon.

All 17 cities still have CMI readings over 300 which indicate there are plenty of price increases still to come. However, the pace of appreciation should start to fall off if the CMI continues to show a strong declining trend.

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When they say 'normal levels of supply are still a long way over the horizon', the long term view below dramatically illustrates just how far we currently are from relative balance between supply and demand:

Note: You have to go back about 7 years to 2014 to find that 'balance'.

Interesting how the past 'market peak' rather pales to what we're experiencing today.

Keep in mind that it's easy to be misled ie. We see the pattern of the rapid rise, followed by the rapid fall folks are concerned about being repeated.

Two words should mitigate that concern: Housing shortage: 

Again, the dynamics of that 2004-2006 rise and fall are completely different than what we're experiencing. 

Most notably, while there is plenty of speculation and institutional buying today (Blackrock et al), it's not being fueled by 'liar loans'. First and foremost, we have a housing shortage - it's local, national and international. 

Message to buyers: 

To the extent there are more choices out there, jump on the opportunity. It appears there is still plenty of upside potential.

Message to sellers: 

'Competitive positioning' - pricing your home as 'the next best value all things considered' is always the strategy that delivers the highest price. And that's because 'it's competition for the best home in any given market segment that drives the price (and shortens the marketing time). The operative word is 'competition'.

Here comes the slow down : ) Not much, but buyers will take anything...

 New listings continue to arrive at a strong pace and supply is growing at the fastest rate we have seen since April 2020. Those who did not believe us when we said the market had started to cool in the second half of March must surely believe us now. This is cooling akin to an Arizona Summer when 110 degrees feels quite a bit less toasty than 117 degrees. But still hot.

Here is the weekly chart showing active listings excluding active listings in UCB and CCBS status.

Active counts are leading indicators and it is tricky to predict where they will go, but the last 2 weeks suggest that more people are getting tempted by the high prices.

If you (at the above) chart you can check out 2005 and see how active listings grew massively from around 9,000 to almost 24,000 between June and December. The key question is whether our counts in 2021 will follow a similar trajectory or increase at a more moderate pace. It looks unlikely that the current upward trend will be reversed, but you never know for sure.

Nobody can accuse this market of being boring.

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The Cromford Observation above parses an interesting point we've highlighted - that more sellers may be getting tempted by the high prices'. 

We normally associate the 2006 - 2008 rapid increase in inventory relating to the crash in market demand. But today's Cromford Observation rightly points out that just after the inventory bottomed out and sales were peaking, there was this ramp-up in inventory shown in the graph above. 

The point is, if we do continue to see an increase in inventory, beyond seasonal expectations, as the Daily Observation suggests, it will likely be driven by sellers wanting to cash-in on some of that equity and not a predictor of a reduction in demand (other than seasonal).

We don't see anything in the immediate future that would shake our confidence in things continuing to continue, as our 'bank-grade' Forecasts suggest.

And Collateral Analytics 5-year Forecast for the Phoenix Metro (grey line) and select Scottsdale zip codes:

Also, keep in mind that if we going to be ground in the fundamentals of supply and demand dynamics there's this: The latest Top Inbound / Outbound report from North American Moving Services:

Interesting times to say the least!