Monday, May 9, 2022 / by Bryan Baylon
May 9, 2022 Market Update
The Cromford® Market Index was the first indicator to sound the alarm about the current market direction. However we can now see several other early indicators fall like a sequence of dominoes toppling over.
The first we would like to highlight is days of inventory - 365 times the number of active listings divided by the annual sales rate.
While all the numbers are low in absolute terms, the 2022 line is shooting skywards like a missile. This tells us that supply is increasing very quickly relative to demand.
At 24 days, inventory remains very low at the moment, but we have seen in the past (specifically in 2005) that 24 in April can grow to 82 by year end and over 200 the following summer. I am NOT saying this is going to happen in 2022 and 2023, but I am saying this trend needs to be watched very closely. A balanced market will have about 120 to 135 days of inventory and if we get more than 150 days we will be in a buyer's market, one where prices will tend to fall rather than rise.
My advice is to keep watching days of inventory like a hawk and react appropriately.
Market incites provided by the Cromford report.
