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.

Market Update 5/2024

 The latest S&P / Case-Shiller® Home Price Index® numbers were published this Tuesday.

The new report covers home sales during the period January to March 2024. This means the typical home sale closed in mid February, more than 3 months ago. Please remember that Case-Shiller data is fairly old, even on the day it is released.

A big turn-around has taken place in the last 2 months. We have all 20 cities showing rising prices for last month. The Pacific coast had another remarkably strong month.

Comparing with the previous month's series we see the following changes:

1. Seattle +2.70%
2. San Francisco +2.59%
3. Cleveland +2.40%
4. San Diego +2.23%
5. Boston +1.88%
6. Los Angeles +1.70%
7. Chicago +1.66%
8. New York +1.50%
9. Portland +1.47%
10. Minneapolis +1.34%
11. Denver +1.33%
12. Washington +1.27%
13. Dallas +1.19%
14. Atlanta +1.15%
15. Detroit +1.14%
16. Miami +0.96%
17. Charlotte +0.96%
18. Las Vegas +0.92%
19. Phoenix +0.53%
20. Tampa +0.50%

Phoenix has fallen from 14th to 19th place since last month. The national average increase month to month was 1.29%, so Phoenix under-performed significantly against that benchmark.

Comparing year over year, we see the following changes:

1. San Diego +11.1%
2. New York +9.2%
3. Cleveland +8.8%
4. Los Angeles +8.8%
5. Boston +8.7%
6. Chicago +8.7%
7. Miami +8.2%
8. Seattle +7.8%
9. Detroit +7.7%
10. Las Vegas +7.7%
11. Charlotte +7.5%
12. Washington +7.0%
13. Atlanta +6.1%
14. Phoenix +4.9%
15. San Francisco +4.9%
16. Tampa +3.8%
17. Dallas +3.6%
18. Minneapolis +3.3%
19. Portland +2.2%
20. Denver +2.1%

Phoenix stayed at 14th place, and is therefore still in the bottom half on a year over year basis. 

All 20 of the cities are again showing positive price movement from one year ago with Denver and Portland at the bottom. Southern California and the North are in the lead.

The national average is +6.5% year over year. Phoenix is below that percentage, and in a similar situation to last month.

Cromford Daily Observation ~ 

The typical 30-year fixed mortgage rate has been varying between 7% and 7.25% since May 6, which is better for buyers than the 7.25% to 7.5% range that we saw between April 11 and May 6.

Despite the better rates, demand has stayed weak and even weakened a little further. The number of listings under contract across all types and areas within the ARMLS database is 8,779. This is down 7% from the 9,441 we saw on April 27. It is also down almost 10% from this time last year.

As we approach the hottest months of the year, when demand tends to fall anyway, this weakness is not encouraging. 

Supply continues to rise, although slowly and the current trends are suggesting continued deterioration for sellers. It would not be a surprise if demand were to fall enough to match the supply of active listings over the next several weeks.

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I can offer a more positive assessment with a simple bifurcation of the market over vs. under $800K:

Up to $800K Listings Under Contract - our best barometer of sales - activity is off 12.5% Year-over-Year ~

$800K plus Listings Under Contract are up 2.2% Year-over-Year ~

Further, as you go up in price range there is a year-over-year increase in demand.

In fact, the $1.5 plus market is up 11% year-over-year ~

In sum, there's an inverse relationship between price and demand - as you go up in price range, demand increases.

Takeaways ~

• That last line is a good market summation - 'as you go up in price range, demand increases'.
• This bifurcation has been with us for some time as the rise in interest rates have impacted affordability.
• Since inventory is increasing, this spells opportunity for those who can manage the rates e.g. knowing they can always refinance if rates moderate (in an election year).
• And for the more resilient luxury sector, well, money continues to move to Arizona!

AZ Real Estate Market Update - Holding On!!

 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 +0.1%, down from +0.8 last week and continuing the downward trend that started last week.

We have only 5 cities showing an increase in their Cromford® Market Index over the past month, while 12 have declined. This is also less positive than last week.

Paradise Valley, Fountain Hills and Goodyear are the biggest movers in favor of sellers. Tempe, Glendale, Gilbert and Maricopa are the primary locations moving in favor of buyers.

Now that Chandler is losing steam, Fountain Hills has a chance to replace it at the top of the table.

11 out of 17 cities are seller's markets. We have 2 cities (Goodyear and Surprise) that are balanced, while 4 are buyer's markets.

AZ Market Actually Balanced In Total BUT.......location matters.

 The Cromford® Market Index for all areas and types has declined a little further over the last week and dropped below the 110 mark, meaning we officially classify the market as balanced.

The decline has been very slow so there is no likelihood of anyone feeling the difference from one week to the next. However supply keeps creeping higher and demand remains very weak.

There is also a big difference between areas like Chandler and Gilbert which remain under firm control by sellers and areas like Maricopa and Buckeye where buyers have a strong advantage due to the plentiful supply, which includes a large number of newly built homes.

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The 'official' classification of a balanced market (Cromford Market Index +/- 100) is the product of your primary year-to-date taking point:

 'YTD we're experiencing a steady and largely disproportionate increase in inventory relative to demand.' 

Presently general demand is off 10% (without parsing price range).

Here is the CMI graph so you can see the aforementioned trend ~

Bifurcation ~

Looking at the market below $1M we have Demand off 11% year-over-year...

.Demand in the $1M plus market is up just over 7%. 

So, while bifurcation continues it's less pronounced in the luxury sector because 'money is moving to the valley' together with an inherently more resilient higher end sector e.g. 53% of transactions over $1.5M are cash.

Takeaways ~

Beyond the basic one line summary characterizing the market - 

• 'The broad increase in inventory relative to demand is giving us a relatively balanced market (supply vs. demand).'

As usual, price point and location matter mightily.

• The above graphs show the 18% spread between the down 11% market under $1M vs. the plus 7 market over $1M

Mastery is the art of creating distinctions,

Interesting to see AZ in the affordability index rankings....

 The latest S&P / Case-Shiller® Home Price Index® numbers were published this Tuesday.

The new report covers home sales during the period November 2023 to January 2024. This means the typical home sale closed in mid December, more than 3 months ago. Please remember that Case-Shiller data is fairly old, even on the day it is released.

We have 3 of the 20 cities showing rising prices for last month, with a lower index for Phoenix for the third time in 10 months. 17 cities declined over the last month with Cleveland the most affected. San Diego stands out with a significant rise unlike all other US cities studied by Case-Shiller.

Comparing with the previous month's series we see the following changes:

1. San Diego +1.8%
2. Washington +0.5%
3. Los Angeles +0.1%
4. Dallas -0.0%
5. Miami -0.1%
6. Atlanta -0.1%
7. San Francisco -0.1%
8. Charlotte -0.1%
9. Las Vegas -0.1%
10. Tampa -0.2%
11. Portland -0.2%
12. Dallas -0.2%
13. New York -0.3%
14. Denver -0.5%
15. Chicago -0.5%
16. Phoenix -0.5%
17. Boston -0.5%
18. Minneapolis -0.6%
19. Detroit -0.7%
20. Cleveland -0.9%

Phoenix has dropped from 12th to 16th place since last month. The national average increase month to month was -0.1%, so Phoenix fell well below that standard.

Comparing year over year, we see the following changes:

1. San Diego +11.2%
2. Los Angeles +8.6%
3. Detroit +8.2%
4. Charlotte +8.1%
5. Chicago +8.0%
6. New York +7.6%
7. Miami +7.5%
8. Boston +7.0%
9. Cleveland +5.9%
10. Atlanta +6.4%
11. Washington +6.3%
12. Las Vegas +5.6%
13. Tampa +4.6%
14. Phoenix +4.6%
15. San Francisco +4.5%
16. Seattle +4.4%
17. Minneapolis +3.1%
18. Dallas +2.9%
19. Denver +2.7%
20. Portland +0.9%

Phoenix remained in14th place once again, and is still in the bottom half on a year over year basis. All 20 of the cities are now showing positive price movement from one year ago with Portland once again doing relatively poorly. Southern California is now showing the highest annual appreciation, closely followed by Detroit, Charlotte and Chicago.

The national average is +6.0% year over year. Phoenix is therefore below that percentage once more, in contrast to last month.

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The brains behind our top tier Collateral Analytics 5-year Forecasting tool, who has said the top weighted factor in projecting future appreciation in their 'bank grade' algorithm is affordability.

So, through that lens the latest Case-Shiller® data showing Phoenix a bit below average in current appreciation (albeit 3-month old data) is not a negative - particularly in an era of higher interest rates. 

Taking a closer look at affordability statewide I found this interesting graph, where we see Arizona 2nd only to Michigan in 'The Most Affordable...for Home Buyers and frankly we'll take Arizona over Michigan, right:)

Note the 'key metrics', as they include home additional affordability factors beyond just Av $/Sq Ft.

Consistency keeps chuggin' along...

 The latest S&P / Case-Shiller® Home Price Index® numbers were published this Tuesday.

The new report covers home sales during the period October to December 2023. This means the typical home sale closed in mid November, more than 3 months ago. Please remember that Case-Shiller data is fairly old, even on the day it is released.

We have 3 of the 20 cities showing rising prices for last month, with a lower index for Phoenix for the second time in 10 months. 17 cities declined over the last month with Minneapolis the most affected.

Comparing with the previous month's series we see the following changes:

1. Miami +0.3%
2. Las Vegas +0.2%
3. Los Angeles +0.1%
4. Washington -0.0%
5. New York -0.0%
6. Atlanta -0.1%
7. Charlotte -0.1%
8. Chicago -0.2%
9. Tampa -0.3%
10. Denver -0.5%
11. Seattle -0.5%
12. Phoenix -0.6%
13. Detroit -0.7%
14. Cleveland -0.7%
15. Dallas -0.7%
16. San Diego -0.8%
17. Boston -0.8%
18. San Francisco -0.9%
19. Portland -1.0%
20. Minneapolis -1.0%

Phoenix has dropped from 11th to 12th place since last month. The national average increase month to month was -0.4%, so Phoenix fell just below that standard.

Comparing year over year, we see the following changes:

1. San Diego +8.8%
2. Los Angeles +8.3%
3. Detroit +8.3%
4. Chicago +8.1%
5. Charlotte +8.0%
6. Miami +7.8%
7. New York +7.6%
8. Cleveland +7.4%
9. Boston +7.2%
10. Atlanta +6.3%
11. Washington +5.1%
12. Las Vegas +4.2%
13. Tampa +4.1%
14. Phoenix +3.8%
15. San Francisco +3.2%
16. Seattle +3.0%
17. Minneapolis +2.9%
18. Denver +2.3%
19. Dallas +2.2%
20. Portland +0.3%

Phoenix remained in 14th place, and is still in the bottom half on a year over year basis. All 20 of the cities are now showing positive price movement from one year ago with Portland once again doing relatively poorly. Southern California is now showing the highest annual appreciation, closely followed by Detroit and Chicago.

The national average is +3.0% year over year. Phoenix is therefore exceeding that percentage, in contrast to last month.

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I usually feel obliged to make the point that Case-Shiller data inherently has that 3-month lag...so, well, there I said it:)

 3 factors to pay attention to right now: 

1. We're at the beginning of the year with inventory (Supply) generally increasing relative to Demand, particularly in the higher price ranges. 

The takeaway, which is always the takeaway, is pay attention to the specific supply vs. demand trends in the submarket you're working in. The broad brush is often contradicted at the street level where decisions are made. Specialization is where you create value. Always!

2. Interest rates are our boogeyman. And while there is somewhat of a consensus that rates will moderate this year, keep in mind prognosticators historically get it wrong - suggesting we keep fingers and toes crossed for lower mortgage rates ahead and... 

Since we can't 'bank' on that (pardon the pun), best to adapt to the cards on the table in facilitating my clients getting from 'where they are to where they want to be'. It can be a mistake to let unreliable prognostication lead to procrastination because...

3. Time is not only of the essence, it's usually the enemy. Modest appreciation continues. That can motivate and should be factored into decision-making.