Monday, May 23, 2022 / by Bryan Baylon
May 23, 2022 Market Update
Every leading indicator is pointing to a sharp slowdown in the Greater Phoenix housing market. Supply has increased very quickly over the last 2 months while demand is much weaker than it was in March.
Prices are much slower to react to a change in the market, especially closed sale prices. However prices for homes under contract react 1 to 2 months earlier than closed prices. Even sooner than that we would expect to see weakness in asking prices. This is now starting to appear as sellers gradually lose confidence. Some sellers will be in denial for many months yet, and will risk over-pricing their home in current market conditions. Others will be more reactive and make sure their asking pricing is competitive.
Here is a chart showing daily average price per square foot for 4 measures:
- List prices for active listings as of May 23
- List prices for listings under contract as of May 23
- List prices for closed listings during the last month (Apr 23 - May 22)
- Sale prices for closed listings during the last month (Apr 23 - May 22)
We can see that the average $/SF for active listings (the blue line) has not managed to break through $365 and is now showing signs of retreating below $360. The maximum was $364.81 achieved on April 27. This is probably going to be the top.
The green line is for listings under contract and has not yet shown any weakness. However, it is not showing much willingness to move above the current level of $313 to $314. This is probably close to the top, though we are by no means certain of this.
The closed prices are still blissfully unaware of the change in market conditions. The sale price per sq. ft. remains higher (at around $305) than the list price (around $300). However if the green line starts to drift lower we would expect the red and brown lines to do the same. Eventually the red line will drop below the brown line in a signal that market has returned to normal.
The remarkable speed of the change in the market is reflected in the fact that the Cromford® Market Index has dropped over 100 points in the last month.
Market incites provided by the Cromford report.
