By Paul Maryniak
Chandler is quickly becoming a homebuyers’ market or at least achieving a balance between supply and demand, a leading analyst of the Phoenix Metro housing market reports – but whether that brings new hope for buyers is another matter.
The Cromford Report said Chandler and the entire region are seeing demand dip and inventory rising sharply – sending the Phoenix Metro area into territory not seen for well over two years.
That change means that the rise in home prices has slowed to a crawl and sellers no longer are in the catbird seat in sales negotiations – often putting buyers at the mercy of bidding wars, foregoing inspections or making other concessions in a desperate effort to secure a home.
While a sudden flood of new listings might be welcome by prospective buyers, the Cromford Report said that they may be in for more heartache. The only difference is that at least some sellers will be grabbing their crying towels along with them as they watch their homes spend weeks on the for-sale lists.
The Cromford Report and national real estate experts have noted that while the inventory of resale and new homes has been rising dramatically for the past month, demand for them is dropping sharply as buyers remain discouraged by prices at record levels and rising interest rates.
“In summary, prices have stopped rising but are still much higher than last year while sales volumes are dramatically lower than last year,” it said, adding that there has been more volatility with re-sales than new homes.
Stating “it is predominantly the wealthy who are involved in the market at the moment” and that “most ordinary buyers are priced out,” the Cromford Report gave a gloomy assessment of the current Valley housing market.
“The last two months have been dismal for the Greater Phoenix housing market, with demand fading sharply and supply growing at one of the fastest paces we have ever witnessed,” it said two weeks ago. “Either trend would have been negative but with both coming together, we have had a very chilly wind blowing through the market.
“For many weeks, we have been looking for some convincing sign of the relaxation of one or both of these trends,” it continued. “We have not found any. Instead, over the last week, the situation has turned significantly worse, at least from a seller’s viewpoint. And it is worse from both a demand and a supply perspective.”
It observed last week that the market here “hit the brakes so hard it has skidded off the road” because demand has fallen sharply while listings are skyrocketing.
Realtor.com, an affiliate of the National Association of Realtors, said “Affordability will continue to remain a challenge for anyone looking to buy in the current market, as mortgage rates and home prices are not expected to drop this year; Thankfully, they aren’t anticipated to grow as rapidly or significantly as they did earlier this year, though.
“One strong positive is that the number of homes for sale is likely to increase as the year continues, meaning more options for buyers,” it continued.
The Cromford Report based its predictions of the trend in the Phoenix Metro market on a variety of data it uses to compile the Cromford Market Index. The figures it arrives at each of the 17 major submarkets in the Valley indicate how close each community is to a balanced market, with numbers above 100 indicating a sellers’ market and numbers below 100 favorable for buyers.
For all of 2021 and the first three months of this year, its CMI showed numbers at times exceeding 500 – indicating markets heavily tilted toward sellers as supply shriveled.
But the latest CMI shows a starkly different picture, with those figures falling between 31% and 42% from the previous month in 16 Valley municipalities.
For Queen Creek, the Cromford Report in June 2021 listed the town’s CMI at 398. Last week, it listed Queen Creek’s index rating at 107.
Gilbert has fallen from 490 in July 2021 to 137 while Mesa has dwindled from 433 a year ago to 161.
The Cromford Report noted that a wisp of panic among people trying to sell their homes before losing any advantage in the marketplace appears to be settling down.
“The brighter sign is that the number of new listings over the past seven days is down from the extreme high of the week before,” it said on June 30. “At some point the seller stampede may run out of new sellers. This is not happening yet, but at least the rate at which sellers are joining the stampede is slowing.”
Still, a few days earlier, it also said, “More homes are being listed for sale than at any time since 2011.”
But it added, “We are not seeing forced selling, like we experienced during the foreclosure wave from 2007 to 2011. This is people electing to sell because they fear a fall in home prices. That fear is likely to be self-fulfilling. When so many attempt to make it to the exit door ahead of everyone else, people get hurt.
“We do not pretend to know how much prices will fall in numeric or percentage terms, but the latest data suggests that it is already impossible for home prices to rise under the current market conditions,” it said. “As people get more anxious to dispose of their housing assets, price cuts are growing in number and size. The very top and bottom of the market are least affected, but the mid-range, where the vast majority of transactions occur, is experiencing a big freeze.
“When a buyer’s strike and a seller’s stampede occur at the same time, the market stalls in mid-flight. A price correction becomes unavoidable. The Federal Reserve has stated that they want to see a ‘reset in the housing market,’ and it looks increasingly likely that their wish will come true.”