Thursday, June 23, 2022 / by Bryan Baylon
This table is a little worse than we were expecting. Of course we anticipated all 17 cities would be in the red, but we thought it was possible that the rate of decline might ease up. Instead the CMIs are falling at the same rate that we measured last week, which is -35% per month. It goes without saying that this is a very negative indicator for the entire market.
As in all previous downturns, the worst affected spots tend to be the lower-priced outer areas, such as Maricopa, Queen Creek (especially the unincorporated Pinal County areas that make up San Tan Valley) and Buckeye. Buckeye is one week away from a balanced market and if the trend continues without hesitation, three or four weeks away from a buyer's market. The supply of active listings in Buckeye is now higher than the long-term average. Demand is falling, but only slowly. It is the supply of homes for sale in Buckeye that is starting to get out of hand. Up 9% in just the last 7 days and up 374% from this time last year. With the latest increases in mortgage rates, we could see another step down in demand in Buckeye and things could then get really ugly for sellers.
The situation looks hardly any better in Queen Creek and Maricopa. Maricopa's supply now exceeds its long term average and it is less than 2 weeks away from a balanced market. Queen Creek remains well below its long term average for active listings, but the situation is deteriorating rapidly for sellers. Available active listings are up 209% from last year and up an astonishing 347% from three months ago.
Among the higher-end areas, Cave Creek seems to have lost more of its mojo than Fountain Hills, Scottsdale or Paradise Valley. We still have 7 cities with CMI readings over 200, but this will not last long if current trends persist. Only Paradise Valley looks likely to stay above 200 for any length of time. Supply in Paradise Valley has so far stayed quite low compared with all other areas.
The largest percentage CMI declines are to be found in Avondale, Glendale, Gilbert, Phoenix, and Chandler, all down 40% or more and representing a huge percentage of our total market. Peoria, Goodyear and Surprise are all 37% down, so not significantly better.
The chance of a balanced market within a couple of months is now very high and the chance of entering a buyer's market a short time later is increasing with every day. The speed of change is unprecedented and dangerous to both participants and forecasters. With another 75 basis point increase in the Federal Funds Rate suggested for July, the bad news for the housing market just keeps coming.
Market incites provided by the Cromford report.