AZ Market Update

Feb 15 We have 12 cities showing an increase in their Cromford® Market Index over the past month, while 5 have deteriorated and a few more have started to decline over the last 2 weeks. Scottsdale, Paradise Valley, Fountain Hills, Surprise and Goodyear are moving in a direction that is favorable to buyers. Doing the same over the past week is Buckeye, while among the secondary cities, Anthem, Apache Junction, Arizona City, Casa Grande, Gold Canyon, Laveen, Litchfield Park, Sun City West and Tolleson all saw their CMI readings fall last week, though not by a large amount.

There has been an average increase of 5.3% in the Cromford® Market Index for the 17 cities, down from the 8.1% we recorded last week. We are still reporting a positive change over the month but the trend is definitely weakening and this is not what we expect to see once the Super Bowl is over. That event usually fires the starting pistol for the housing market, but it is not exactly racing out of the blocks in 2024.

We still see weakness in the top end of the market. Demand remains relatively healthy but supply is much stronger than in 2023, especially for homes over $2 million. Cave Creek is doing better, but is recovering from very weak 4Q of 2023.

The healthiest segment is the mid-range, especially in locations closer to the center of Greater Phoenix. This includes Phoenix itself, plus Chandler, Gilbert, Glendale, Mesa, Tempe, Avondale and Peoria. Several of the most distant and more affordable areas are getting rather more supply than seller's would like. A prime example is Casa Grande.

10 out of 17 cities are seller's markets. We have 3 cities that are balanced and 4 are buyer's markets, with Goodyear joining Queen Creek, Buckeye and Maricopa.

Feb 1 The chart is no longer all-green and the situation is getting interesting. We still have 15 cities showing an increase in their Cromford® Market Index over the past month, but a few of these have seen a decline in the most recent week. These include Scottsdale, Surprise and Maricopa.

There has been an average increase of 10.5% in the Cromford® Market Index for the 17 cities, down from the 12.4% we recorded last week. The reason is that supply is mounting rapidly in the more expensive locations and also in some of the cheapest and most distant areas from Central Phoenix. Faring very well over the last month are mid-range areas that are not too far from the center of the valley. These include Glendale, Tempe, Chandler, Gilbert and Peoria, along with Phoenix itself. These markets are looking remarkably strong and price increases are to be anticipated here.

It is a different story at the top end of the market, which has been flooded with new listings over the past month. The higher up the price range you go, the more the supply has increased. Paradise Valley has more single-family homes available now than at any time since November 2020. Carefree has the most homes available since July 2020 while Rio Verde has the most since December 2017. Some sellers in these up-scale areas are facing stiff competition from other sellers and it would not be surprising if we see significant price cuts among some of these listings. We have 71 single-family homes priced at $10 million or more. Given that we have never seen more than 29 such listings closed in a single 12-month period, this is a lot of supply. Sellers may need to be either very patient or flexible.

10 out of 17 cities are seller's markets. We have 4 cities that are balanced and 3 that remain buyer's markets.

Among the secondary cities, Anthem, Apache Junction and Tolleson are out-performing by a long way, but El Mirage, Litchfield Park, Sun City West, Sun Lakes and Laveen are weakening and Gold Canyon is already weak at 80.2.

Casa Grande is very weak indeed and has the lowest CMI at 67.8 and trending lower. Buyers are very much in control in Casa Grande.

Jan 25 Yet another all-green chart with 17 cities showing an increase in their Cromford® Market Index over the past month.

There has been an average increase of 12.4% in the Cromford® Market Index for the 17 cities, a strong rise but down slightly from yje 12.6% we recorded last week. The drop in interest rates that started in October is bringing more offers for homes listed for sale. However there are also far more new listings arriving on the market than this time last year, which is stopping the market from heating up too fast. Year to date we have seen 7,467 new listings. This is up more than 22% from 2023 and even up 13% from 2022 and 10% from 2021. Nobody should be complaining about a lack of fresh supply any more, especially in the higher price ranges.

Demand is improving even faster, with 7,428 listings under contract, up 41% compared with the beginning of 2024. The monthly sales rate is still stuck around 4,000 because that depends on contracts signed during December which were unusually weak. We should start to see improving closing volumes in February.

Leading the pack once again are Gilbert, Glendale, Surprise, Phoenix and Peoria. The laggards include Goodyear, Scottsdale, Fountain Hills and Paradise Valley. The top end of the market is seeing a lot of new supply.

10 out of 17 cities are seller's markets. We have 4 cities that are balanced and 3 that remain buyer's markets, with Buckeye and Maricopa seeing a large amount of competition with supply from new home builders.

With demand and supply both increasing, we should see a recovery in transaction volumes and firm pricing, without the risk of runaway appreciation. However sentiment remains uncertain and volatile, so it would be wise not to look away for very long, or the situation may catch you by surprise. Of course, the Cromford® Report will not be looking away at all. We remain obsessed with this stuff.

Jan 18 Another all-green chart with 17 cities showing an increase in their Cromford® Market Index over the past month.

There has been an average increase of 12.6% in the Cromford® Market Index for the 17 cities, a rapid rise and even more positive than the 10% increase we recorded last week. The implication is that the drop in interest rates started in October is finally bringing more offers for homes listed for sale. As is normal in January, new listings are also arriving in stronger numbers, but the total supply remains well below normal. In addition the demand appears to rising at a significantly faster rate than the supply.

Leading the pack this week are Gilbert, Glendale, Surprise, Phoenix and Peoria. The laggards include Maricopa, Goodyear and Paradise Valley, but even these are higher than last week.

10 out of 17 cities are seller's markets. We have 4 cities that are balanced and only 3 that remain buyer's markets, with Cave Creek escaping that zone over the last week.

Sales volume remains very low, but closings are always very week in January due to the dearth of new contract signings in December. The precursor of a recovery is strong growth in new contracts. These numbers are by no means amazing but they do seem to be increasing at a healthy pace and in a pattern reminiscent of a normal sellers' market. Moderate optimism seems to be in order and this is reflected in the most recent home builder confidence survey. The NAHB / Wells Fargo Housing Market Index has jumped from a very weak 34 in November to 37 in December and 44 in January. A year ago it stood at only 31, so home builder sentiment is trending higher fast but is yet to reach the heights of last Summer when it stood in the mid-50s.

Jan 11 In a development that will bring joy to sellers and dismay to housing-crash forecasters, all 17 cities are now showing an increase in their Cromford® Market Index over the past month.

There has been an average increase of 10% in the Cromford® Market Index for the 17 cities, significantly more positive than the 6% increase we recorded last week. The trend in favor of sellers is accelerating as listings go under contract at a faster rate and supply remains well below normal..

Leading the charge are Fountain Hills, Gilbert, Glendale and Surprise. The laggards include Tempe, Maricopa, Cave Creek, Avondale, Buckeye and Paradise Valley, but even these are now improving for sellers.

9 out of 17 cities are seller's markets. We have 4 cities that are balanced and 4 that remain buyer's markets.

Last week we recommended mild to moderate optimism for the month of January, and this can be modified to remove the reference to mild. It is a good start to the year and transaction volumes appear likely to start improving if this trend holds. We will be examining annual sales counts and looking for stability followed by a gentle increase.

Jan 4 The same 4 cities as last week are showing red, and the same 13 cities are seeing their Cromford Market Index increase since December 4. However, there has been an average increase of 6.0% in the Cromford® Market Index for the 17 cities, significantly more positive than the 2.0% increase we recorded last week. The means the trend in favor of sellers is starting to accelerate.

Fountain Hills, Surprise, Glendale, Queen Creek and Gilbert are seeing the biggest improvement of 11% or more.

9 out of 17 cities are now seller's markets. We have 4 cities that are balanced and 4 that are buyer's markets. Maricopa is still trailing but it starting a recovering trend having hit a low of 63.7 on December 25.

The very mild optimism that was the order of the day in December is starting to look well-justified. We recommend mild to moderate optimism for the month of January, at least as far as market balance is concerned. Transaction volumes remain subdued but are more likely to recover if the market balance stays favorable to sellers.

Dec 14 There has been an average decline of 6.7% in the Cromford® Market Index for the 17 cities above over the last month. This is an improvement over the 9.9% decline we saw last week, but the average CMI is still significantly lower than a month ago.

We are watching to see which cities start to move in a positive direction, and this week Scottsdale has joined Goodyear and Chandler. But others, like Paradise Valley, Cave Creek, Maricopa, Glendale and Phoenix are still showing double-digit percentage declines over the last month.

Given how much interest rates have fallen since October - and the typical 30-year fixed rate is down to 6.62% today - everyone seems to be expecting the housing market to react very positively. Indeed home-builder's stocks have been on a rampage. Our housing market numbers tell a much less exciting story. Demand has edged slightly higher in quite a few places, but given the extremely low monthly sales rates, it would take a very long time to get back to normal at the current rate of improvement. Supply normally declines sharply between Thanksgiving and New Year's Eve, but in 2023, it is barely declining at all. The market reaction to the lower rates is so-far underwhelming.

9 out of 17 cities are still seller's markets, though Tempe, Mesa and Avondale are only a tad higher than the balanced zone. We have 3 cities that are balanced and 5 that are buyer's markets. Maricopa stands out as the weakest market of the 17 with buyers have a strong negotiation advantage in that city, thanks to its plentiful supply.

Dec 7 There was an average decline of 9.9% in the Cromford® Market Index for the 17 cities above. This is an improvement over the 13.1% decline we saw last week, but it is still a negative move. We a watching to see which cities start to move in a positive direction. So far we have Goodyear which has raised its CMI an impressive 13% and is now back in the balanced zone after spending 55 days as a buyer's market. Chandler has also shown an improvement over the last month, but this is a less impressive 2%. However it gets credit for staying at the top of the table and its lead over Fountain Hills has opened up significantly.

The remaining 15 cities have all moved down, with Paradise Valley collapsing by 26% and now below 100. Cave Creek, Glendale and Maricopa are also heavily down and the all-important Phoenix is down 15%. Demand is clearly picking up, but not as energetically as you might expect after almost 100 basis points have been lopped off the 30-year fixed mortgage rate. We hear that purchase applications for mortgages jumped 35% last week, but this is from an extremely low level.

A few cities have seen their CMI move higher in the last week: Surprise, Buckeye, Avondale, Queen Creek, Mesa and Scottsdale. However, some of this is due to the usual seasonal weakening of supply and cannot be fully credited to stronger demand.

9 out of 17 cities are still seller's markets with Paradise Valley, Goodyear and Peoria in the balanced zone while Cave Creek, Surprise, Buckeye, Queen Creek and Maricopa are all buyer's markets. Maricopa and Buckeye have dropped below 70, so buyers have a strong advantage in these locations.

So in summary. we are seeing gradual improvement in the demand trend, and supply is no longer increasing in most areas.

Nov 23 There was an average decline of 15.2% in the Cromford® Market Index for the 17 cities above. This is an improvement over the 16.1% decline we saw last week, but not a very big one.

The majority of cities were worse than average, including Paradise Valley, Cave Creek,Glendale, Phoenix, Surprise, Mesa, Peoria, Maricopa, Queen Creek, Avondale, Scottsdale and Buckeye.

Goodyear stands out as the only major city that saw its CMI improve over the last month. Also doing relatively well are Tempe, Fountain Hills and Chandler.

10 out of 17 cities are still sellers markets with Peoria and Cave Creek in the balanced zone while Surprise, Buckeye, Goodyear, Queen Creek and Maricopa are all buyers' markets. Maricopa and Queen Creek are below the 80 level and Buckeye has dropped below 70.

We are seeing a little improvement in the demand trend, but supply continues to increase in most areas, which is unusual for the third week of November.

Nov 16 There was an average decline of 16.1% in the Cromford® Market Index for the 17 cities above. This is slightly less bad than the 16.3% decline we saw last week.

Well above average declines in CMI can be seen in Cave Creek, Buckeye, Mesa, Scottsdale, Glendale, Paradise Valley, Surprise and Phoenix. The slowest declines are to be found in Goodyear and Tempe. In fact Goodyear has started to see its CMI rise over the past week.

10 out of 17 cities are still sellers markets with Peoria and Cave Creek in the balanced zone while Surprise, Buckeye, Goodyear, Queen Creek and Maricopa are all buyers' markets. Maricopa and Queen Creek are below the 80 level and Buckeye has dropped below 70.

Nov 9 - Based on the numbers in this table. the market is still weakening at a fast rate, with an average decline of 16.3% in the Cromford® Market Index for the 17 cities above. This is worse than the 15.8% decline we saw last week.

Well above average declines in CMI can be seen in Cave Creek, Buckeye, Mesa, Scottsdale, Paradise Valley, Surprise and Phoenix. The slowest declines are to be found in Gilbert, Goodyear and Tempe.

10 out of 17 cities are still sellers markets with Peoria and Cave Creek in the balanced zone while Surprise, Buckeye, Goodyear, Queen Creek and Maricopa are all buyers' markets. Maricopa has joined Queen Creek and Buckeye below the 80 level. Among the secondary cities, Casa Grande and Gold Canyon are also below 80 while Litchfield Park is below 90.

Tolleson, Laveen, Sun Lakes, Anthem, El Mirage and Apache Junction are the strongest of the secondary cities, all with CMIs over 180.

Despite the above, we are just starting to see a slight tick-up in some of the listings-under-contract numbers, as the market reacts to the very recent decline in mortgage rates since the start of November.

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