Listing Success Rate - Much More Accurate Than Average Days On Market

Listing Success Rate is one of the most revealing and reliable housing market indicators but is rarely measured other than by the Cromford® Report. In contrast average days on market is comparatively dull and meaningless yet measured and reported almost everywhere. We recommend ignoring average days on market. It might be interesting for a specific single listing, but the statistical average reveals little useful information about the state of the market.

Our month-to-date listing success rate is 71% which is nothing special, but at least it is above the long-term average of 68%. But It is also below last year at this time when we measured 75%. This tells us that the market is close to normal and not improving much. However we may not feel like it as close to normal, because between 2011 and 2022 the market stayed above normal for almost the entire period. Normal feels much worse than 2011-2022. Also we have not had much experience of normal in the last 24 years. It has mostly been better or worse than normal.

Those who were active between 2006 and 2011 will realize how much worse it was back then, when the listing success rate stayed below 61% and often fell below 40%. Far more listings failed than succeeded for a full 5 year period.

We can also see how unusually strong the market was from 2020 to 2022 when the listing success rate exceeded 90% for long periods.

Studying the data reveals that listing success is generally much higher than average for the lower end of the market and much lower for the higher end. Right now the success rate for listings of $2 million and above is 50.6% while that for those priced between $250,000 and $400,00 is around 79%. However properties priced extremely cheaply, under $200,000, have a low success rate because there is usually some serious disadvantages causing them to be priced so far below the median home price. Today we measure a 56% success rate for these.

Be careful of paying too much attention to listing success rate when you are looking at a small sample size, such as a single ZIP code or small city. These numbers fluctuate wildly and provide little useful information. The same caution applies to a any small area such as a subdivision. You need a decent amount of data to apply statistical principles.

Over the past 90 days we can rank the large cities as follows:

1. Buckeye 79.5%
2. Peoria 77.9%
3. Chandler 77.7%
4. Queen Creek 77.1%
5. Gilbert 75.9%
6. Avondale 75.9%
7. Glendale 73.7%
8. Maricopa 74.5%
9. Surprise 72.3%
10. Mesa 72.6%
11. Fountain Hills 72.2%
12. Tempe 71.9%
13. Goodyear 71.2%
14. Phoenix 71.1%
15. Scottsdale 65.7%
16. Cave Creek 60.8%
17. Paradise Valley 39.3%

Market Slows Declines and Balances - Interest Rates May Continue This Trend

 A 'balanced market' is when supply (inventory) and demand (sales) are in relative balance.

It's actually quite rare, as shown in chart below:

So here's the current snapshot in more detail:

BUT, hold the phone...

We can 'see' it by city (if you can sort the colors) - but the merits of the chart below is in the trend line and how parsing by city, just on the face of it, suggests that, while the trend is roughly the same, there are significant differences in city markets that will impact buyer and seller decision-making:

You can see it more clearly in the Friday CMI updates, where I've annotated the demarcation between sellers, balanced and buyers markets:

Takeaways 

• While we could say it's a 'balanced market', once again that broad brush is inadequate to the task of accurately reflecting market conditions and thereby the implications for buyers and sellers.
• Client conversations can be enhanced in being informed by the CMI 'context' .

Continued Declines : (

 Jul 26 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities ~

At first sight this looks bad. We have only 2 cities showing an increase in their Cromford® Market Index over the past month, half as many as last week. Avondale and Queen Creek have reversed course leaving Scottsdale and Maricopa alone. 15 have declined, so the vast majority have deteriorated for sellers. However most of these only fell by a small percentage. Former high-fliers Tempe, Gilbert and Chandler show the biggest falls.

After a second look, things look a lot better. The average change in CMI over the past month is -5.4%, a smaller fall than the -6.7% we saw last week. The rate of decline has definitely changed direction and this is a positive sign for the market. Things are deteriorating more slowly.

9 out of 17 cities remain seller's markets over 110, though that looks unlikely to last much longer for Tempe and Gilbert. We have 2 cities that are balanced, while the remaining 6 are buyer's markets. 3 cities still remain over 140.

One of the largest markets by dollar volume (Scottsdale) has improved by 6% over the last month. Given that we are in the middle of the slowest season for luxury homes, this is another encouraging sign for that market.

_____________________

Interesting week, right. 'Multiple' new forms to incorporate (pun intended). Lots of uncertainty. All of us looking for the silver bullet talk tracks that will give us confidence moving forward. We speculate on winning strategies. You see the evidence that your leadership is distilling the best information available for education and re-education with all hands on deck to facilitate managing these changes. 

There is the controversial term from the Chinese that Crisis is a dangerous opportunity. Seems fitting.

I believe Russ Lyon Sotheby's International Realty is positioning itself as the shining light on the hill.

My personal opinion: 

To the extent we can articulate to our sellers the efficacy of offering co-broke, we sustain relative normalcy and the 'sand in the gears' will clearly be most easily mitigated. With decades of historical precedent, I believe it remains the best opportunity for successful outcomes for our clients. I believe the key is being able to articulate why it has worked so well for all parties. More on that to come.

Conversely, the thought of our buyers having to come to the closing table with cash to compensate us for our work on their behalf is the choke point of resistance. We're trying to be like the duck that looks so serene moving across the water, but paddling like crazy below the surface to find safe harbor. Let's be honest, this is a tough nut to crack. 

We don't have a crystal ball. All we can do is speculate on how this is going to play out and plan accordingly.

It will be an evolution. 

It will likely 'cull the herd'...with less competition from those that don't adapt and fall by the wayside being in part, the opportunity.

Adapt and prosper: 

As we traverse these uncharted waters the starting place for successfully adapting is the 'talk track' within us.

This video helped me today. I trust it will you as well:

'Our words are a tool for the mind to create a reality.' Dr. Joe Dispenza

https://youtu.be/C5Y2pwI3Lzs?si=YFpFDGaaKgUKpKZv

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.

____________________

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.

______________________

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.

______________________

'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.