Thursday, September 29, 2022 / by Bryan Baylon
The number of cities with an improved CMI over the past month has increased to 6. Glendale, Mesa and Gilbert have joined Scottsdale, Tempe and Chandler but Paradise Valley has turned around and headed down again. Fountain Hills is down by the highest percentage, with Surprise and Goodyear just behind.
A mixed picture but the average monthly change in CMI was just -1.5%. This is the smallest monthly deterioration since the downturn started in March and another improvement on the week before when the reading was -2.5%. The deterioration has slowed markedly during the past six weeks but it has not stopped completely. The average decline over the last week was 0.7%, but this is not good news as it is larger than the last 2 weeks.
The situation in Phoenix, Scottsdale, Glendale and the inner Southeast Valley (Tempe, Mesa, Chandler and Gilbert) is noticeably better than in the areas further out. The inner areas are seeing demand fall less and supply grow slower.
Interest rates are now far higher than they were at the start of September and we anticipate weak contract signings as a result. However the supply of new listings keeps getting weaker and it appears higher rates are discouraging sellers almost as much as buyers.
The biggest problem this creates is a lack of transaction volume. This is not good for agents, brokers, mortgage lenders or title and escrow professionals. Appraisers, insurers and home inspectors will also be facing low volumes compared with the last 10 years. Their mood is likely to be very downbeat.
However the downward pressure on pricing is far less than it might be if new listings were flooding the market. iBuyers are still facing excessive inventory and selling it off cheaply, but compared with the overall market, their holdings are far lower than the huge foreclosure wave that hit us between 2007 and 2011.
This might not seem too positive a picture, but remember that we are at the despair phase of the housing cycle. Even the tiniest signs of progress will be swamped by negativity during this phase.
Market insights provided by the Cromford Report.