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May 21, 2022 Market Update

Saturday, May 21, 2022   /   by Bryan Baylon

May 21, 2022 Market Update

The Greater Phoenix market continues to provide plenty of reasons to be worried. Another domino is wobbling and looks like it might be getting ready to fall - the listing success rate. Below is the weekly chart for all areas & types.
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At the moment we are just under 90%, a very strong number. However, if we look at the last 5 weeks, a clear weakening trend has started. A similar trend developed in 2005 between June and July. By the end of 2005 we were down to just 63% - meaning that 1 in 3 homes listed failed to sell. We cannot say this will happen in 2022. But if it were going to happen, the first signs of the success rate problem would look like just the chart above.

A similar downward trend started during the summer last year, but frenetic buying by investors, particularly large investors, pulled the nose of the airplane back up and we ended 2021 with a strong success rate of just over 90%. This does not look as likely in 2022. It would be advisable to watch this chart like a hawk. 2005 was a year full of red flags waving. 2006 was a full scale bubble burst. People now talk of the 2008 crash, but that was only when Wall Street woke up and entered a full-on panic. The real estate market was in dire straits as early as the middle of 2006 and 2007 was truly dreadful.

The problem that we faced in 2006 was compounded by all the foreclosures that piled up in 2007. This was largely because so many homeowners had little or no equity in 2006 so by 2007 they had negative equity and no reason to avoid foreclosure. At the moment, we have a more positive situation with a much higher percentage of homeowners having significant equity. They should be motivated to protect rather than abandon that equity. That gives us a reason to be less worried, but extreme vigilance is the order of the day. Those who refinanced and took a little too much cash out over the last 2 years are more exposed than most.

Market incites provided by the Cromford report.
Keller Williams Northeast Realty - The Baylon Group
Bryan Baylon
2005 W. Happy Valley Rd #150
Phoenix, AZ 85085

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