🤞For now, the market is still not crashing but rather is more in a really hardcore standoff. A standoff that could last quite a ways. It’s not all doom and gloom though, recently, multiple things swung in Greater Phoenix’s favor. 📉 Via using data from CromfordReport.com, a leading real estate data company in Arizona, we keep regular tabs on the market. Using what is called the Cromford Market Index (CMI), we get to look at not only the OVERALL Greater Phoenix Area’s market health, we can look at each of the 17 cities measured cities.
Is it still becoming more of a buyer’s market? Yes, just not at such a fast of a pace. In fact, last week, for the first time in MONTHS, the overall CMI went up a very small notch.🛑Before we get too excited, these improvements were aided by small interest rate decreases over last couple of weeks as well as less people selling in holidays. There’s a million other factors we could dive into in regards to Arizona real estate but for this report we’re going to keep it to the following indicators.
The latest jobs report was 💪. Sadly, it gives FEDS more power to bring more pain. We can expect a basis point increase of 50 points in couple of weeks. This is ⬇️ from 75 basis point increases each month over the last 4 months. However, could the 💪 jobs report give the FED power to make it another 75?
Some say not until 2024 but many are betting by Q4 2023 they could start lower and hit in the 5s.
There were 1,149 SFR permits in Oct. 2022, down 53% year over year. What is interesting is that permits for Multi Family are up 30% year over year with 15,925 YTD. That is the most in Arizona history and shows our valley is evolving.
In Cromford Report’s “Contract Ratio”, a score of 21-40 is warm. Today we are at 32.7. The average for the Valley of the Sun is 70. In summary, while we are way lower than the average and it may feel like this market is 🥶, the feeling is exaggerated by everyone being used to such a hot market over the last several years. It seems acceptance and psychology will be as important to the market healing as rates are.
Because of such a huge reduction in SFR permits, by the time the FED lowers rates, will Greater Phoenix real estate agents have another prob on their hand as in little inventory? It could be. Especially by then prices will have stabilized it could be the perfect recipe for us having an entirely new prob. No homes to sell!