Current Market Outlook for MAy 2020

Dated: May 9 2020

Views: 295

The Cromford Market Index (CMI):

  • 100 is balanced, below 100 is a buyer’s market, above 100 is a seller’s market
  • On 2/5/2020 we were at 215.1
  • On 3/20/2020 we were at 241
  • Today we are at 146.2
  • When it is at 100 property values increase at the rate of inflation.
  • Our supply is 55.3, 44.7% under where we should be.
  • Our demand has decreased to 80.9 (below normal) from it’s peak of 107.5 on 3/20/2020 (7.5% above normal)
  • As long as the CMI is above 110, prices will continue to rise, just at a slower rate
  • As of the week of April 19th the dramatic free fall has started slowing
  • Avondale (227.3) and Glendale (209.6) are the only 2 cities with a CMI over 200 as of 4/30/2020
  • Gilbert rounds out the top 3 with a CMI of 199.0
  • Paradise Valley’s 111.7 CMI is at the lowest, keeping PV in an appreciating market

Price Appreciation:

  • Price is a lagging indicator
  • In order to gauge the actual price response, it will be another 6-8 weeks of watching closings to see the price response to COVID
  • Vacancies cause the biggest risk to real estate values
  • AirBNB’s lost a lot of value, is a riskier investment, and will be our biggest challenge (since REOs are low)
  • Forbearance keeps people in their homes
  • When inventory and demand both drop at the same time prices do not decrease
  • Prices are currently not dropping
  • Dr. Lawrence Yun, the chief economist of NAR is quoted saying, “More temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise.”
  • Market share by price range is changing, cheaper houses are selling more because so many luxury homes were pulled off the market

Final Thoughts:

  • 3 weeks in a row things are going well (3 weeks you can see trends)
  • escrow falls outs have stopped
  • Costs to the seller are going up, seller concessions
  • Sales volume is suffering, you can’t sell houses that were never on the market
  • Lots of data showing that things are good, ignore all that the bad news.
  • Lean into what you know.

 

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Audrey Anthony

With a passion for hands on learning, I consequently wear many hats in this industry. In order to do this, I have trained myself to be able to adapt to many different situations, many different perso....

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