Home prices might be in a downturn says Cromford report. The Cromford Report is a tool real estate agents pay for to see how the market is doing on a day-to-day basis in the Arizona housing market.
CROMFORD REPORT-“Every leading indicator is pointing to a sharp slowdown in the Greater Phoenix housing market. Supply has increased very quickly over the last 2 months while demand is much weaker than it was in March.
Prices are much slower to react to a change in the market, especially closed sale prices. However, prices for homes under contract react 1 to 2 months earlier than closed prices. Even sooner than that, we would expect to see weakness in asking prices. This is now starting to appear as sellers gradually lose confidence. Some sellers will be in denial for many months yet and will risk over-pricing their home in current market conditions. Others will be more reactive and make sure their asking pricing is competitive.
Here is a chart showing the daily average price per square foot for 4 measures:
the moment we are just under 90%, a very strong number. However, if we look at the last 5 weeks, a clear weakening trend has started. A similar trend developed in 2005 between June and July. By the end of 2005 we were down to just 63% – meaning that 1 in 3 homes listed failed to sell. We cannot say this will happen in 2022. But if it were going to happen, the first signs of the success rate problem would look like just the chart above.
A similar downward trend started during the summer last year, but frenetic buying by investors, particularly large investors, pulled the nose of the airplane back up and we ended 2021 with a strong success rate of just over 90%. This does not look as likely in 2022. It would be advisable to watch this chart like a hawk. 2005 was a year full of red flags waving. 2006 was a full scale bubble burst. People now talk of the 2008 crash, but that was only when Wall Street woke up and entered a full-on panic. The real estate market was in dire straits as early as the middle of 2006 and 2007 was truly dreadful.
The problem that we faced in 2006 was compounded by all the foreclosures that piled up in 2007. This was largely because so many homeowners had little or no equity in 2006 so by 2007 they had negative equity and no reason to avoid foreclosure. At the moment, we have a more positive situation with a much higher percentage of homeowners having significant equity. They should be motivated to protect rather than abandon that equity. That gives us a reason to be less worried, but extreme vigilance is the order of the day. Those who refinanced and took a little too much cash out over the last 2 years are more exposed than most.
Another thing to take into consideration is that home prices are up. The interest rates and prices shown below are for a 500K home with a borrower having a 700 credit score. I am a wholesale mortgage lender so I am not afraid to show my rates with how much they cost unlike big companies like rocket mortgage. companies like that want to get all of your information first so they can bug you into a loan. I give the facts and let you choose the lender that is right for you. I work with big banks as well as small banks. this chart was pulled from United wholesale Mortgage today at 11:15 am
Another Indicator that we may be in a slight downturn comes from nerdwallet.com which shows interest rates rising at a rapid pace. With all this being said if you are considering selling your home in Arizona you should consider doing it sooner than later. with the economy being uncertain right now you might want to get out while the getting is good.
