Thursday, August 11, 2022 / by Bryan Baylon
The average monthly change in CMI was -29%. This is another slight improvement on last week when the reading was -31%. Once again it is a large deterioration in a very short time, but there are more signs that the trend is slowing at last. Supply is growing more slowly and in a few areas has stopped growing entirely, at least for a moment. Demand is still very weak, but in a few areas it is stabilizing or even increasing slightly.
In the last week we saw an average change in CMI of -5.7%, and all 17 cities still declined. But if the negative weekly decline continues to reduce, we will eventually find one or more cities showing some improvement.
We have 6 cities in a buyer's market - Surprise, Tempe & Gilbert have joined Buckeye, Queen Creek and Maricopa. The reduced number of buyers now have a strong negotiating advantage with a large number of active listings to select from. However this negotiating power is not yet universally reflected in weaker closed prices. In particular, Queen Creek (which includes San Tan Valley) is maintaining strong closed price numbers, especially considering how unbalanced demand and supply have become. This is unlikely to last.
Above these 6 we have Chandler, Peoria, Glendale, Phoenix, Mesa and Avondale in a balanced market where the buyers and sellers have no particular advantage. This leaves 5 cities that are statistically in the seller's market zone with a CMI over 110. Only one of these is a large market - Scottsdale. One of them (Cave Creek) saw a relatively modest decline in their CMI over the last month of 9%.
The bottom 13 cities saw CMI declines of 24% or more but now there are none worse than -38%. The housing market is still deteriorating for sellers but it is getting worse at a significantly slower rate.
The top four, Fountain Hills, Paradise Valley, Scottsdale and Cave Creek are in a stronger position with supply still less than demand. However, Scottsdale prices have reacted more swiftly than the low-priced areas and averages and medians are weaker than you might expect. This pattern does not apply to Fountain Hills, which is not only still over 200 but is seeing very few signs of price weakness.
Market insights provided by The Cromford Report.