Thursday, July 14, 2022 / by Bryan Baylon
The average monthly change in CMI was -34%. This is the same as last week. The rate of decline in the CMI readings over the past two months is easily the fastest we have ever witnessed.
The negative trend remains extremely powerful. Supply is still growing at roughly 1,000 listings a week while demand is still weakening despite some (possibly temporary) relief in the mortgage rates. We now have 1 city (Buckeye) which is a buyer's market and 2 cities (Maricopa and Queen Creek) that are in the balanced zone between 90 and 110. It is just a matter of days before Maricopa and Queen Creek become buyer's markets and their time in the balanced zone will have been very short indeed. Peoria, Tempe, Gilbert, Chandler, Surprise and Phoenix are all just a week or two away from a balanced market as they all dropped close to 40% in the last month. Based on current trends, these 6 cities will probably be buyer's markets before the end of August.
Things are different in Paradise Valley where there has been very little increase in supply and the 7% fall in its CMI is entirely due to a drop in demand. Fountain Hills and Cave Creek are also seeing declines in their CMI, but at roughly half the rate of the average city in the valley.
Only 5 cities are now over 150. A month ago we had 15.
Buyers are much more aware of the dramatic change in the market than are sellers. New sellers will need to take time to understand just how different market conditions are today compared with 3 months ago. They should not expect multiple bids. They should plan to market their property, not just sell it.
With the Federal Reserve considering a 1% rise in the federal funds rate in their July meeting, demand could drop even lower next month if mortgage rates move sharply higher again.
Market incites provided by the Cromford report.