GOOD NEWS!! Faster than I expected...

This table is quite startling - the market balance is now swinging quickly towards sellers, yet this does not seem to be reflected in market commentary in the general media. This shows the advantage of measuring the housing market every day, rather than once a month. One month ago, the situation looked bleak for sellers. The average CMI had fallen by -4.3% in the month prior to December 1.

I thought for sure it would take a huge interest rate reduction into the 4% range or a screeching halt of new inventory to see this type of improvement.  We are certainly feeling this improvement.  Mostly in cities such as Paradise Valley and Chandler.  PV would be most predictable as seasonal demand is high in the winter.  Chandler on the other hand was substantial at almost 30%!!!  This is showing up in both declines in new listings AND massive increases in showing activity across all price ranges.  Great news for sellers!

Today we see an average CMI improvement of +16.3%.

It is not just that supply has been falling rapidly, we are now seeing stronger demand. It being December, this may easily go unnoticed by those not paying close attention, but the numbers do not lie. Relative to November, December's demand numbers are improving. If this trend rolls over into January and continues, we could see a much more positive picture during the first quarter than we expected just 3 weeks ago.

The swing in favor of sellers is most noticeable in Paradise Valley, Avondale, Chandler, Tempe, Mesa, Glendale, Gilbert and Phoenix. Only Goodyear has yet to get with the program. Scottsdale is late to the party but is starting to swing over the last week.

We now have 5 cities in the seller's market zone over 110, 5 cities in the balanced zone between 90 and 110 and 7 in the buyer's market zone under 90.

Market Update - Stil Declining

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

Yes, things are still getting worse for sellers, with all 17 cities having seen a fall in their CMI over the past month. The deterioration in the market continues to accelerate with the average monthly change in CMI at -8.8%, worse than -6.8% last week. Paradise Valley is the most notable with a 29% drop in its CMI, while Cave Creek, Avondale, Mesa and Maricopa all fell 12% or more.

Least affected were Tempe and Buckeye, the latter managing to escape the bottom rung and leaving Queen Creek in that unenvied position.

11 cities are buyers markets, 3 are balanced and 3 are still sellers markets, though all 3 are deteriorating rapidly.

Outside the Northeast Valley, Phoenix and Chandler are the strongest markets, but even these look likely to slip below 90 within the next couple of weeks.

Demand Just Gave Us A Warning

 The listings under contract chart has suddenly shot a warning cannon across the market.

This is a much more negative view than the one we published just a couple of weeks ago, which we described as worrying at the time. A drop below 7,500 at a time when the autumn buying season should be fully underway is not a good sign. Only 2007 and 2008 gave us lower readings than this.

It suggests that another leg down in demand has followed the recent rise in mortgage interest rates. Not exactly surprising, but the drop is even larger than we anticipated.

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The drop in demand is being driven primarily by the rise in interest rates. 

HOWEVER, the Central Banks have blinked. 

It appears the strategy of raising interest rates to fight inflation is more painful to the markets than the long term consequences of continuing quantitative easing ie. 'printing' money / buying debt, which should lower rates some. 

• The stock market loves it - on a tear this morning. 
• Mortgage lenders will love it.
• We should love it...at least short term, as we would expect some interest rate relief that will increase buyer purchasing power.

How this plays out in the longer term e.g. inflation; the value of the dollar; etc. is above my pay grade - which really means I'm not only not qualified to comment with any authority, but truth is, choose not to parrot what many sober prognosticators are saying is simply kicking the proverbial debt can down the road.

This brings up a 'problem' for me as a trusted advisor. 

Everything is connected. More so than I can ever recall. No doubt, in no small part due to the acceleration in global messaging via the internet.

To the rescue: 

We do have Collateral Analytics' 5-year Forecast, which we would expect will recalibrate accordingly. 

Btw, no change yet as of this writing. 

I take great comfort in your proprietary access to this tool - both for its utility in giving us that 'bank grade' metric to translate the financial markets big picture to our local market, but also the differentiation it gives me; the power to add value to the conversation with the greatest objectivity we can provide for a forward look!

The point is, real estate trends don't happen in a vacuum. So we have the inherent challenge that even as the real estate market is a hyper local business we can't ignore the broader context that drives interest rates; the stock market; and at the end of the day, people's confidence in moving forward.

Stay tuned for an interesting ride as we enter Q4!

Market Update 10/3/2022

The total number of active listings without a contract has just exceeded 20,000, across all areas and types, excluding UCB and CCBS listings. This is the first time we have broken through the 20,000 barrier since March 2017. However 20,000 is still below the long term average , which is around 25,000.

While it is true we no longer have a supply shortage, we do not have an excess of supply either, at least when we examine the market as a whole. Things get a bit more complicated when we look at counts by price range.

In certain price ranges, supply can appear very high compared to the long term average. For example:

• For single-family detached homes priced between $350,000 and $400,000 we have 2,082 active listings. This is the highest count since January 2008.
• For single-family detached homes priced between $400,000 and $500,000 we have 4,456 active listings. This is the highest count we have ever seen.
• For single-family detached homes priced between $500,000 and $600,000 we have 2,510 active listings. This is the highest count since December 2007.

You might be thinking - wow - those are high active counts if they are setting new records like that, especially for the $400,000 to $500,000 segment. But this is because $400,000 to $500,000 is the new normal. The median sales price falls in this range and closed listings are also relatively high for this price range compared to the long-term average.

The key is to look at the how the active inventory count compares with the current sales rate:

• $350,000 to $400,000 we have 3.3 months of supply at the current monthly sales rate and 75 days of inventory at the current annual sales rate
• $400,000 to $500,000 we have 3.8 months of supply at the current monthly sales rate and 87 days of inventory at the current annual sales rate
• $500,000 to $600,000 we have 3.7 months of supply at the current monthly sales rate and 90 days of inventory at the current annual sales rate

These supply statistics are high compared to the last several years, but not even above average from a long term perspective.

With interest rates still moving upwards, things could certainly get worse from here, but we should not misunderstand the situation right now. These price ranges are looking very normal from a supply versus demand perspective. We will see prices fall for sellers who hold a weak hand or are impatient, and because sentiment is poor after such a positive 2 years. But this is not what a crash looks like.

It is what a correction looks like and it would not be at all surprising if prices in December 2022 look similar to those in December 2021.

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We can't stop at $500-600K...

As we go on up price ranges below, I'm adding the Months of Supply chart giving you that remarkable market 'shift' trend line visual ~

• $600 - 800K we have 3.8 months of supply 
  

• $800 - $1M we have 4.3 months of supply 
  
• $1M - 1.5M we have a 4.9 months of supply 
  
• $1.5M - 2M we have a 5 months of supply 
  
• $2M - $3M we have a 6.4 months of supply 
• $3M plus we have a 11.9 months of supply 

Phoenix Rental Market Changing

In several media reports, the rental market is said to be softening nationwide and we can certainly see some evidence in the local ARMLS data, even though the bulk of rentals are not handled through MLS listings. Landlords tend to use the MLS for more unusual rentals where clients can be more difficult to locate. This means they are usually skewed towards more expensive homes, and far more single-family detached homes are listed than apartments or condos.

The ARMLS data represents a small sample of what is available overall, but still provides us with useful data on what is happening in the rental marketplace.

Over the last 4 weeks we have seen a flood of new listings, with 66% more being added (2,952) compared with the same period last year (1,769). Clearly prospective tenants have far more choice with 3,445 active listings, the highest count in the last 7 years. This is up a massive 157% compared to this time last year. Something big is going on.

There is also a clear downward trend in the rents that are being advertised - currently the average is $1.55 per sq. ft. per month. This is down from $1.60 last month and $1.65 in mid July.

The rent for closed leases has been flat over the past 14 months, stuck at about $1.35 to $1.40 per sq. ft. per month. We anticipate that competition among landlords for the remaining prospective tenants is going to lead to more incentives and concessions. Once that these have worked through the system, actual rents for signed leases may start to decline.

This would be very helpful in lowering inflation and in turn this might encourage the Federal Reserve to stop raising interest rates. Although a 6% mortgage rate may seem quite low to people as ancient as me, who bought their first home in the mid 1970s, most people below the age of 40 consider it outrageously high.

As pointed out in the Cromford Daily Observation above, the MLS is a limited resource for rental markets; tends to be weighted to the more expensive single family detached homes for rent.

That said, there is a Cromford Tableau Chart where we can sample select Valley city rental data. 

You can see that the charts below allows us to filter down to average lease price by zip code and price range. 

However, again, because the MLS is a limited resource for rental properties, smaller cities and / or filtering gives us schizo looking graphs.

Below, with the unfiltered broad brush in larger Valley markets, including all property types, we do see the softening referred to above. 

Phoenix ~

Scottsdale ~

Gilbert ~

Peoria ~

Takeaway ~

The rental market is softening.

Market Update

 Here is the latest market update...

As a reminder, 100 is a completely balanced market.  1 buyer for every 1 listing.  5-6 months ago, 600-700 was common.  This has been the fastest drop-off we have ever seen (including 08').  

Historically, August is the month with the least options for buyers.  January is the most.  How this progresses into the holidays will be very interesting.  Should the trend continue, we will be in a heavy buyers market by the 1st of the year.  As with our ascension, the decline could be just as fast.  

However, one major pressure will keep a decline slower than our rise.  1) Appraisals.  When a bank comes in, they will look backward 6 months to determine value.  As this happens, they will pull in previous higher numbers and keep declining prices at a reasonable, albeit uncomfortable, decline.  

However, a few things could remove this protection...distressed sellers.

The market will always have a certain number of sellers that are distressed...death, divorce, job loss, job transfer, inheritance etc. can all cause sellers to make unprecedented price reductions.  When this occurs, a snowball is formed as the sales price becomes the new "comp" in the neighborhood.

Last month we saw a price decline of about 3% in value.  This is likely to continue but slow.  I'm predicting a "value" decline over the next 12 months to be 20-25%.

Major factors that will push this one way or the other would be interest rates and buyers such as Opendoor and Offerpad.

After 12 months is too far out for me to comfortably predict.  A substantial number of factors will come into play unrelated to predictable statistical reactions.

If you are a seller, you need to accept these uncomfortable realities.  With a market decline of 2-3% a month, your "normal" price reductions may not cut it.  You are simply keeping up with the trend.  You will need to be uncomfortable in your reductions to truly realize a market reaction and solicit an offer.  2-3% is the "normal" right now.  5%+ a month may be the only way to solicit interest from a nervous and empowered buyer.

At $800k this might mean $40-50k...on $500k 25-30k a month...until sold.  Obviously, this is motivation dependent.  If it's a situation where you'd "like to" move then being more aggressive may be fine depending on your condition/upgrades/comps etc.  If you are highly motivated, "need" to sell, or distressed...higher reductions should be taken sooner rather than later.

Right now, we have 18,000+ homes for sale, 6 months ago it was in the 5,000's.  If the last 10 years of history continue in January, we will have 23-25k.  You do not want to have 3-5 months on market time going into this scenario.  

August Market Update: Summary? Not Good.

 Market Summary for the Beginning of August

Here are the basics - the ARMLS numbers for August 1, 2022 compared with August 1, 2021 for all areas & types:

• Active Listings (excluding UCB & CCBS): 17,957 versus 7,105 last year - up 152.7% - and up 24.6% from 14,406 last month
• Active Listings (including UCB & CCBS): 20,724 versus 10,913 last year - up 89.9% - and up 20.1% compared with 17,261 last month
• Pending Listings: 5,291 versus 7,236 last year - down 26.9% - and down 8.2% from 5,766 last month
• Under Contract Listings (including Pending, CCBS & UCB): 8,058 versus 11,044 last year - down 27.0% - and down 6.5% from 8,621 last month
• Monthly Sales: 6,171 versus 9,139 last year - down 32.5% - and down 24.0% from 8,115 last month
• Monthly Average Sales Price per Sq. Ft.: $285.93 versus $250.59 last year - up 14.1% - but down 4.8% from $300.38 last month
• Monthly Median Sales Price: $452,500 versus $400,000 last year - up 13.1% - but down 4.6% from $474,374 last month

We described June as dismal but July was worse. There has been a slight let-up in the supply of new listings, but they are still arriving much faster than demand can cope with. This means an ever increasing number of active listings - the total without a contract having grown another 25% in the last month. This is for the market as a whole, but the high-end is not seeing the same increase. Areas like Paradise Valley, Fountain Hills, far North Scottsdale, Carefree and Cave Creek still have fairly modest numbers of active listings. Other modestly-priced areas like Buckeye, Maricopa, Florence and Queen Creek (including San Tan Valley) already have more active listings than their long term average.

The real downer is the demand. Closed sales dropped 24% compared with June and they are almost 33% lower than last year. This is obviously bad news for those whose incomes are derived from closings, such as real estate agents, title company staff and mortgage brokers. Listings under contract slipped again, down more than 8% from last month, meaning that we do not expect much joy from August numbers this time next month. Even in the high-end of the market, demand is low, so the modest number of active listings is still plenty.

Prices are reacting much more quickly to the poor market conditions than we expected. In 2005 and 2006, it took a long time for prices to change direction. In 2022, the change has happened almost overnight. This is probably because people are primed to believe price drops are likely whereas in 2005 most people still believed that home prices never go down. Whatever the reason, sellers in 2022 have been willing to make quick and frequent cuts in their asking prices and accept offers well below those. The average percentage of list (price) achieved has dropped from 99.81% on July 1 to 98.74% on August 1 and the trend is strongly downward.

Further falls in price are likely until a recovery in demand takes place. There is very little distress in the market with foreclosures still extremely low. Pressures to sell at lower prices are coming from the sellers themselves. Low demand means they are competing with other sellers and a lower price is an obvious tool for them.

Demand from iBuyers has remained surprisingly strong for the last few months and they have built up large inventories. These have to be a concern to them, so we expect far fewer iBuyer purchases and much more effort focused on selling their existing stock of homes. These two factors will unfortunately compound the problem of too little demand and too much supply, driving prices lower. Many iBuyer homes are already being closed at sale prices lower than their purchase prices. This will probably become commonplace in the next few months.

Institutional investors have mostly continued their homes buying sprees, but in the July numbers we are seeing clear signs of their enthusiasm waning. If more of them stop buying this will cause further falls in demand measures. If they also start to dispose of any of their rental properties, this might add to supply.

The listing success rate has dropped from over 91% on May 1 to under 73% on August 1. This is a crucial statistic and it is in free fall. The long term average stands at 67.5% and it looks as though we will drop below this percentage during August. If more than 1 out of 3 listings fail to sell, it creates an atmosphere of worry that is hard to escape. We are nowhere near the dreadful 20.4% that we experienced in January 2008, but the listing success rate is a reliable and crucial indicator that is flashing red. We need this to stabilize and start increasing if we are to be optimistic in our outlook. We recommend watching this number closely.

All in all, there are few reasons to expect an improvement in market conditions just around the corner. A large drop in interest rates would almost certainly help, but this is not something that is widely expected at the moment.

____________________

'Prices are reacting more quickly'. 

I've recently shared how historically 'prices are a lagging indicator', born of the 2005 notion that home prices never go down (as it took over 2 years for prices to reflect the crash in sales back then).  Well, apparently a lesson learned. 

1. The Listing Success Rate (the % of listings selling within their contract period) 'has dropped from over 91% on May 1 to under 73% on August 1'.
• Access the chart below using our STATS page | Cromford Tableau Charts
• 
  
• The Listing Success Rate is very price range sensitive.
•  Notice, in spite of the relative resilience of the luxury sector, how we appear to be moving back very quickly to the long time average of half the uber high end properties not selling within their contract period:
• 
  
2. The Trading Range (list-to-sales-price ratio) 'has dropped from 99.81% on July 1 to 98.74% on August 1 and the trend is strongly downward.'
• I've labeled the list-to-sales-price ratio The Trading Range, as we find that residential real estate, regardless of the market or location, has historically been 'trading' in the 2 to 5% range (seller discount when priced to sell). 
• This goes to how 'efficient' the market is. The current barely over 1% discount successful sellers are achieving is still on the very positive side of that equation. However, if demand continues to wane and competition increases, this will be a stat to track. 
• The best market specific way to have this statistic is using the FlexMLS Buyer Statistical CMA
• Sample below is 85258 | $2M - $2.5M | last 3 months. 
• 
  
• More broadly for the zip code specific Trading Range you can also use Collateral Analytics | Trends - sample below is 85255:
• 
  
3. Days Inventory (or # of Month Supply)
• 
  
• Above chart is zip code 85255 - filtered by price range & sourced from our STATS page | Cromford Tableau Charts
• 
  
• Above chart is 85255 sourced from Collateral Analytics | Trends
4. Listings Under Contract (Demand)
• Chart below can be accessed from our STATS page | Cromford Tableau Charts
• 
  
• Again, very price range sensitive e.g. the $2M plus range is still outperforming last year:
• 
  
5. Active Listing Counts (Supply)
• Chart below can be accessed from our STATS page | Cromford Tableau Charts
• 
  

Takeaways ~

• Prices are reacting more quickly to market conditions.
• Key metrics can help make the case for market-specific competitive positioning.
• Remember, there is always competition for 'the best'. 

And the violins continue...

Available supply has grown dramatically in most segments of the market since March 16, this year's low point. We had 4,367 active listings without a contract on March 16 and have 17,509 today. This is an increase of 301% across all areas & types. Within Greater Phoenix the growth has been 318% from 3,884 to 16,235.

By dwelling type we have seen supply grow at the following rates:

• Single-family Detached - up 344%
• Townhouse - up 370%
• Apartment-style - up 288%
• Gemini / Twin - up 130%
• Loft-style - up 240%
• Patio Home - up 257%
• Mobile Home - up 65%
• Modular / Manufactured - up 20%

These figures are for Greater Phoenix locations only. Out of area supply has grown 164%. It is very noticeable that mobile and manufactured homes have seen supply grow much more slowly than the rest of the market.

Largely due to a change in the mix of homes available, with low growth at the high end luxury market compared with the mid-ranges, the average advertised price of a home in Greater Phoenix is down from a peak of $1,010,002 on March 24 to just $731,744 today. The average available home size is also down from 2,430 to 2,172 sq. ft.

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

The average monthly change in CMI was -34%. This is the same as last week and the week before. The week before that it was -35%.

The deterioration in the market for sellers continues with almost as much speed as ever. There has been a slight reduction in the rate of arrival of new listings, but it is still much higher than last year at this time. Demand has not stopped falling and listings under contract are exceptionally low for the time of year. Even our best performing city, Paradise Valley, has slumped 11% over the last month, but it may yet overtake Fountain Hills and grab the top spot, since Fountain Hills fell 18%, the second best result. Cave Creek is third and fell "only" 21%, which looks good by comparison with the other 14 cities which range from -30% (Avondale) to -44% (Glendale).

Buckeye is now a buyer's market by a large margin and Queen Creek is almost as bad for sellers. Maricopa is not quite there yet but it will be a buyer's market in 2 or 3 days. Gilbert, Tempe, Peoria, Chandler and Surprise are all going to be balanced markets within a few days and on their current trajectory they could be buyer's market by mid August. The largest market by far, Phoenix, looks like it will be balanced before the end of July and a buyer's market before the beginning of September. Glendale and Mesa are just a week or so behind.

The high end market is still holding out much better than the mid-range.

Only 3 cities are now over 150. A month ago we had 14. The market has changed dramatically for the worse over the past 4 or 5 weeks.

____________________

Picking up on the above 'The high end market is still holding out much better than the mid-range', the positive luxury sector story you can broadcast is the inverse relationship between higher price ranges and inventory (Supply); and following suit, in the higher price ranges we see a higher percentage of year-over-year sales (Demand - Listings Under Contract) ~

Supply ~

Demand ~

 

Takeaway ~ 

Using the broad brush, inventories are clearly on the rise and accelerating relative to demand. However, the luxury sector tells a much more resilient story.

Notable distinctions:

• We see an inverse relationship between increasing inventory and prices (as prices go up the percentage of inventory increase goes down).
• Following suit, Demand in the luxury sector (defined as $1M plus) is still at or above last year, with more relative demand as you go up in price range.

Hits keep coming...

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

The average monthly change in CMI was -34%. This is the same as last week. The rate of decline in the CMI readings over the past two months is easily the fastest we have ever witnessed.

The negative trend remains extremely powerful. Supply is still growing at roughly 1,000 listings a week while demand is still weakening despite some (possibly temporary) relief in the mortgage rates. We now have 1 city (Buckeye) which is a buyer's market and 2 cities (Maricopa and Queen Creek) that are in the balanced zone between 90 and 110. It is just a matter of days before Maricopa and Queen Creek become buyer's markets and their time in the balanced zone will have been very short indeed. Peoria, Tempe, Gilbert, Chandler, Surprise and Phoenix are all just a week or two away from a balanced market as they all dropped close to 40% in the last month. Based on current trends, these 6 cities will probably be buyer's markets before the end of August.

Things are different in Paradise Valley where there has been very little increase in supply and the 7% fall in its CMI is entirely due to a drop in demand. Fountain Hills and Cave Creek are also seeing declines in their CMI, but at roughly half the rate of the average city in the valley.

Only 5 cities are now over 150. A month ago we had 15.

Buyers are much more aware of the dramatic change in the market than are sellers. New sellers will need to take time to understand just how different market conditions are today compared with 3 months ago. They should not expect multiple bids. They should plan to market their property, not just sell it.

With the Federal Reserve considering a 1% rise in the federal funds rate in their July meeting, demand could drop even lower next month if mortgage rates move sharply higher again.

____________________

Let's drill down on supply and demand, particularly the above-referenced rapid increase in accruing inventories.

Here's the percentage increase in inventory by price range ~

You can't help but notice the inverse relationship - the dramatic increase in inventories stacking up as you go from the higher to lower price ranges.

This begs the question of what's happening on the demand side.

Our best demand indicator is Listing Under Contract.

What we find (once again) is that it's the $300K - to $400K market that is being savaged in terms of demand:

All other price ranges are at or above last year. 

Here's the combination of price ranges $400K-plus just to broadly make the point ~

Takeaway ~ Relative resilience

Supply: 

• While inventories are increasing across the board, there's a clear inverse relationship ie. as you go down in price range you go up in the pace of accruing inventory.

Demand: 

• Looking at the demand side, it's the lower end market (under $400K) that's being crushed, in no small part by our oft mentioned 55% year-over-year effective cost increase - when you factor in the double punch of 25% appreciation plus 30% effective loss of buying power resulting from nearly a 3% YTD increase in 30 year fixed interest rates.
• Demand (by contrast) in the mid and upper ranges, while trending down (somewhat seasonally) is still tracking at or above this time last year.

So, as we quickly move toward a more balanced market we would be remiss at this moment not to note the relative resilience of the mid and upper range markets in the Valley. 

Its a DRAMATIC change in the South East Valley...

This is substantial.  These are not cracks anymore.  Demand has fallen off a cliff.  The Fed has hinted at another 75 basis point hike in rates.  If that's the case I'm predicting a decrease in values.  If they flattened out and stayed at 6% we can survive that with no major decline 5-10% in values max.  If we get interest rates over 7-7.5% it could be rough.  The panic and emotion would have more of an impact than the rate, but it would happen, the why really won't matter at that point. 

Certain cities (obviously Phoenix) will be impacted most.  Real estate drives huge numbers of jobs, businesses, goods, and services.  If we go into a recession the snowball if we see increases in unemployment gets ugly quick.   

Couple of things to mention different than the last crash...

1) Equity - a huge number of people put down large down payments, paid cash, etc.  Those that didn't lock in ridiculous interest rates and have large amounts of equity.  It would be crazy to foreclose on a house you have equity in only to go rent an apartment at a higher payment.  

2) Investor Demand - The current crashing of demand is related to rates, not employment.  Because of this people still, qualify for a place to live.  This means they can't purchase but can afford rent.  This will hold rent prices stable and elevated.  When you have a stable elevated rental price the values for houses will have a floor value.  Once this is reached investors will scoop these up and bottom out the market naturally.  

3) Safety Net:  If you bought 18 + months ago you have more than enough equity to weather 3-4 years of a market downturn.  Even if you lost a job you could tap some of that equity to float your monthly expenses for a while.  

Buckle up...we are 2-3 months from finding out if this will have soft landing or a difficult few years.

  

Contract Ratio indicates how "hot" a market is. It specifically measures the number of completed sales contracts relative to the supply of active listings. It is defined as 100 x (Pending Listings + UCB Listings) / Active Listings Excluding UCB. The higher the number the greater the buying activity relative to supply. If this number rises then it is a sign of growing contract activity and a positive signal for sellers. Conversely a falling number is a sign of a weakening market - either supply of active listings is increasing or contract activity is slowing, or both. In a balanced market for normal market segments, the value of the Contract Ratio is usually between 30 and 60. When it lies below 20 the market can be considered "slow" or a "cold market". Above 60 can be considered a "hot market" and when it moves above 100 we regard this as evidence of a "buying frenzy". In high-end luxury market segments the normal level is lower, usually lying between 15 and 25.

Using this measure today's Cromford Daily Observation gives us the following 29 largest cities in the Valley, ranking from least to most affected by the downturn in the market:

Rank	City	Contract Ratio 4/7/22	Contract Ratio 7/7/22	Change %
1	Paradise Valley	82	42	-49%
2	Arizona City	509	188	-63%
3	Fountain Hills	188	59	-69%
4	Casa Grande	315	94	-70%
5	Apache Junction	219	60	-73%
6	Gold Canyon	223	59	-74%
7	Tolleson	359	91	-74%
8	Cave Creek	198	50	-75%
9	Maricopa	261	66	-75%
10	Buckeye	232	57	-75%
11	Sun City	248	59	-76%
12	Scottsdale	182	43	-77%
13	Goodyear	321	74	-77%
14	El Mirage	333	74	-78%
15	Tempe	208	46	-78%
16	Peoria	246	52	-79%
17	Surprise	273	58	-79%
18	Sun City West	286	61	-79%
19	Mesa	294	57	-81%
20	Laveen	356	69	-81%
21	Litchfield Park	231	44	-81%
22	Phoenix	272	48	-82%
23	Glendale	303	50	-84%
24	Chandler	293	48	-84%
25	Avondale	340	54	-84%
26	Queen Creek	334	50	-85%
27	Gilbert	354	51	-86%
28	Anthem	281	39	-86%
29	Sun Lakes	276	35	-87%

All 29 cities have seen their single-family markets cool down, but Paradise Valley has cooled much less than the others.

Casa Grande and Arizona City have also done better than average, perhaps supported by the new industry that has been established in their local area.

The Southeast Valley has fared particularly poorly, as has Phoenix, Glendale and Anthem.

We normally classify readings under 60 as corresponding to a balanced market. By this definition, 19 of the 29 cities are already in a balanced market while Sun Lakes and Anthem are most in danger of slipping into a buyer's market.