By Mike Bodeen · 3 May 2021
Doesn’t Feel that Way on the Street…
We’ve stated in the past that there will come a point in time where the Phoenix Metro Real Estate market will begin to cool – it’s inevitable! We’ve also stated that whereas demand for homes for sale remain constant, the supply of homes for sale remains terribly low.
On the street, there does not seem to be any frenetic let-up. Multiple offers, homes on the market for just days before going under contract, huge price increases, seemingly weekly. In fact, one west valley builder the other day increased pricing by $40,000 on their moderately priced (300k to 500k) homes.
If you’ve been watchers of the Cromford Index that we send you each Monday, you will see that the index is slowly decreasing. Per the Cromford Report dated May 1st, the “Cromford Market Index” (CMI) hit its peak for all areas and types back on March 11th – at 514.0.” It has fallen since then to 474 (still an absurdly high number).
One supply trend that might emerge could be a rash of owners and investors putting their homes on the market wanting to “sell high.”
Owners, before you begin to freak out, and buyers, before you pop the champagne cork, understand what normal is – 100. 100 is a balanced market that was last achieved 7 years ago in 2014. (see chart below)
This interesting mathematical index (CMI) is “designed to be a leading indicator of changes in the market between buyers and sellers.” Most other stats show us what’s happening now in the present by looking at listings for sale and under contract. We can see the past by observing past comparable sales. But seeing future market trends largely is guess work except via this math index.
The key index we will continue to watch is the Cromford Supply Index (CSI). Because demand has been fairly constant, supply is what could significantly change the market – and that doesn’t seem to be in the cards, at least for the near term.
One the other hand, one supply trend that might emerge shortly could be a rash of owners and investors putting their homes on the market at the same time as the traditional media begins to figure out the new present course. How would that affect our market? I could see a leveling out of the market but not any significant price drop. And this leveling may just be a short interval while the market gets a breather – which it surely needs!
Market data referenced in this article comes from The Cromford Report.