Market Update 6.28.2024

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

The average change in CMI over the past month is -6.1%, a steeper fall than the -5.0% we saw last week . This is increasing the downward trend that started 6 weeks ago. As sellers compete with each other, price reductions are still increasing in both size and frequency.

This week we only have 3 cities showing an increase in their Cromford® Market Index over the past month, while 14 have declined.

Avondale is the biggest mover in favor of sellers. We have a much longer list of cities that moved substantially in favor of buyers: Paradise Valley, Gilbert, Goodyear, Peoria and Fountain Hills.

9 out of 17 cities remain seller's markets over 110. We have 2 cities that are balanced, while the remaining 6 are buyer's markets.

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All those red dots with the arrow pointing down indicated the month over month CMI trend is down, with the red signifying the trend favors buyers.

The reason you can still have a 'sellers market' in spite of the red down arrow is the CMI score. 

To the degree the CMI is over 110 it indicates the relative supply (inventory / sellers) vs. demand (buyers) favors sellers.

This current trend is born of my oft repeated 'mantra for the year-to-date' ~ generally speaking: 

Inventories (Active Listing Counts) are increasing disproportionate to buyer demand (Sales or Listings Under Contract).

This point is worth repeating as the trend of increasing inventory relative to demand is something we haven't seen for maybe a decade - longer than many have been in this practice.

In the long term CMI chart below you can 'see' the last time we approached a balanced market was 10 years ago. 

Yes, there's the dramatic dip in supply in 2022, when would-be sellers stayed out of the market to preserve their low mortgage rate - this offset the simultaneous downtrend in demand at that time, for the same reason - the unprecedented 4% rapid rise in mortgage rates from 3% - 7%.

What's happening today that differentiates from 2022 is listings are accruing, even while demand is on the wane. 

To the extent mortgage rates improve for buyers this dynamic could shift quickly. 

That said, the luxury sector has enjoyed an incredible 'ride' these past few years. 

With over half the transactions being cash, luxury has been more resilient. 

The recent softening in the luxury sector is noteworthy, albeit the number of transactions is still ahead of last year and there is the seasonal component self-evident here:

All of the above explains: 

• why your sellers may complain of lack of showings
• why average days on market are increasing
• why price reductions are on the rise
• why the historically lagging indicator, average prices, will moderate if this trend isn't reversed

Demand volume matches 2007 : (

 Cromford Daily Observation ~ The number of listings under contract (8,238) at week 23 is the lowest we have recorded for that time of the year since 2007.

At no point so far in 2024 has the count managed to claw its way above the miserable totals for 2023.

Now 2007 was an awful year with the market stalled by the certain knowledge that house prices were about to collapse. We are not in that situation in 2024, but buyer enthusiasm for resale homes is still very low indeed. To put 8,238 into perspective, the total for week 23 of 2011 was well over 21,000.

If the 30-year fixed mortgage rate finally tumbles well below 7% then things are likely to improve. 

I recommend watching the turquoise line above to see if it can creep above the purple line over the next couple of months.

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That 'recommendation' above to track Listings Under Contract, is one I would underscore.

Listings Under Contract are our best 'finger-on-the-pulse' for measuring the demand trend - and that would be because Sales per se, actually were put under contract a month or two earlier. 

The bifurcation is self-evident when we filter by price. 

For example, here's what that same year-over-year Listings Under Contract looks like over $1M ~

This is why you want to filter by price. The trendline above is flipped from the trendline below - Listings Under Contract below $1M ~

Below shows the trend sans the upper end (up to $1M) ~

A single graphic illustration of bifurcation over the last 8 years can be shown in the graph below, where you can 'see' the current increasing strength of the higher end relative to low-mid range. This chart also evidences the dramatic increase in prices, which, of course, goes a long way toward explaining the softer current low-mid range market, especially when appreciation is compounded by the increase in mortgage rates ~

The Fall Continues

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

The average change in CMI over the past month is -3.4%, a steeper fall than the -2.1% we saw last week . This is continuing the downward trend that started 4 weeks ago. Price reductions are again increasing in both size and frequency.

In contrast to last week, we only have 4 cities showing an increase in their Cromford® Market Index over the past month, while 13 have declined.

Cave Creek is the biggest mover in favor of sellers but it is only up 8% over last month. Glendale, Peoria, Mesa, Phoenix and Gilbert are the primary locations moving in favor of buyers, with Gilbert's market deteriorating the fastest..

Despite the continuing deterioration, 11 out of 17 cities remain seller's markets. We have 2 cities (Goodyear and Cave Creek) that are balanced, while the remaining 4 are buyer's markets.

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'Price reductions are again increasing in both size and frequency'. That's the takeaway from today's updated CMI (Cromford Market Index) - for those new to my 'News...', the CMI is a proven short term predictor of the market.

My 'drum beat' year-to-date has been that you could sum up market conditions broadly by saying it's a good market, but the trend is new listings increasing disproportionate to listings under contract (sales). Further, that even though prices are a lagging indicator, the above referenced increase in frequency and size of price reductions will invariably affect the overall average price trend.

Here's the graphical evidence of those price cuts - they've doubled per week year-to-date in the broader market; up 37% per week in the luxury sector ($1M plus) - Note: one factor the affects luxury is the typical seasonal decline in luxury inventory:

Takeaway ~

• The consequence of listings increasing disproportionate to sales is upon us.
• Your remedy ~ competitive positioning to cut the marketing time by 2/3rds and net the highest price achievable (we have the metrics to prove this.

Market Update...June 24'

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

The average change in CMI over the past month is -2.1%, down from -0.8% last week and continuing the downward trend that started 3 weeks ago. The market is deteriorating a little faster now for sellers. Price reductions are increasing in both size and frequency.

On a brighter note, we now have 7 cities showing an increase in their Cromford® Market Index over the past month, while 10 have declined.

Fountain Hills is easily the biggest movers in favor of sellers. Glendale and Gilbert are once again the primary locations moving in favor of buyers.

Despite the continuing deterioration, 11 out of 17 cities are still seller's markets. We have 3 cities (Goodyear, Cave Creek and Surprise) that are balanced, while the remaining 3 are buyer's markets.

Buckeye and Maricopa swapped places at the bottom of the table. Both have a large inventory of for-sale homes which gives buyers an advantage in negotiations.