Hits keep coming...

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

The Greater Phoenix housing market continues to weaken and the trend is still accelerating, with an average CMI decline of -35% which compares unfavorably with -34% last week. The luxury market is cooling but at a slower rate than the mid-range. Paradise Valley is easily the best performing city in the top 17 but has still seen a decline of 16% in its CMI. Fountain Hills and Scottsdale are tumbling by 33% or more but are the strongest markets in the list.

Maricopa, Queen Creek and Buckeye are much easier places to find new homes and the builders have been far more enthusiastic about putting their homes onto the MLS over the past two months. They are also more generous with buyer broker commissions. This only happens when they are concerned about a shortage of demand. Higher interest rates have taken a lot of buyers out of the market, but at least the ones who remain active will be getting more respect and personal attention. They may even be getting some concessions.

The largest declines are to be found in Avondale, Gilbert, Phoenix, and Chandler, all down 40% or more since this time last month.

At 131.5, Buckeye is getting close to a balanced market. At the current rate of decline, its CMI would fall below 110 by the end of June. Queen Creek and Maricopa are about 10 days behind and are likely to become balanced markets during July.

**As an indication of how far demand has collapsed in the last few months, the number of pending listings of all areas & types in the ARMLS database is 6,873. This is the second lowest number we have ever recorded for mid-June, beaten only by June 15, 2007. June is usually a strong month and we would normally expect counts to fall from June through the rest of the year.

We have been saying for several years that the imbalance in the market was caused by very low supply, not unusually high demand. This is illustrated by the fact that a sudden increase in mortgage interest rates can drop the demand to almost record lows.

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**You'll have to forgive the broken record here, but the above referenced 'collapse (in demand) in the last few months' is absolutely price range specific - specifically under $400K.

Evidence from the Percentage Change in Listings Under Contract - our best gauge of current demand:

Under $400K year-over-year ~ down a sobering 53.7%. 

But to give some perspective - this dramatic impact is on what amounts to 20% of a total 24 billion dollar YTD market - total volume up 12% year-over-year!

Volume in the under $400K market ~

Now, just take it up to the next bracket - $400K to 500K and Listings Under Contract are outpacing last year by a rather stunning 26.1%!

As we shared yesterday, the biggest gains year-over-year in Average $/SqFt and now Listings Under Contract are in the $500K to 600K range ~

$600K to $1.5M is running a very healthy 23% over last year in UC's ~

$1.5M to $3M is just under par with 2021 in UC's (again, keeping in mind 2020 & 2021 were banner years in the luxury sector) ~

And finally, the uber luxury $3M plus market is doing just fine tracking at a 14% year-over-year increase in UC's ~

Takeaways ~

Clearly, the lower end is being decimated by higher interest rates. 

How can it not be with year-over-year appreciation of 25% - making that $400K home last year, $500K today - combined with the effect of interest rate hikes robbing an additional 30% in borrowing power! 

We can summarize the crash in low-end demand to one word: Affordability.

However, with all do empathy, we would be remiss not to recognize that while we would expect and even welcome some softening after such an incredible appreciation run these past few years, at least so far, the mid and upper range markets are more than holding their own, with more opportunities for buyers to boot, as inventories increase to double what they were a year ago.

Rinse and repeat ~ As long as we hear the deafening drum beat of a market in decline we must keep driving the point of 'interest rate impact compartmentalization'.