Real Estate Market Update - July 22

Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

The average change in CMI over the past month is -6.7%, a smaller fall than the -7.2% we saw last week. The rate of decline has changed direction and this is a mildly positive sign for the market.

We have 4 cities showing an increase in their Cromford® Market Index over the past month, with Scottsdale joining Avondale, Queen Creek and Maricopa. 13 have declined, so the majority have still deteriorated for sellers. The 4 improving cities have only risen by a small percentage, so nothing much to celebrate there.

We have a long list of cities that moved substantially in favor of buyers: Tempe, Gilbert, Glendale, Chandler, Fountain Hills and Paradise Valley. The Southeast Valley features strongly in this list.

9 out of 17 cities remain seller's markets over 110. We have 2 cities that are balanced, while the remaining 6 are buyer's markets. However only 3 remain over 140 and 2 of these are falling swiftly.

Mortgage rates are currently in a slow downward trend, which is likely to improve demand, if only gradually. Supply is much higher than last year, but still well below normal by long-term standards.

We have a balanced and rather insipid market overall, with volumes stuck at very low levels, which is not good for real estate professionals. However the idea that we are poised for some sort of drastic market correction is ludicrous. None of the conditions necessary for significant price falls are in place. Mortgage delinquency is low, sellers are motivated but not desperate and supply is not running far ahead of demand, as it did in 2006.

The increasing flexibility from sellers that a balanced market brings will cause list prices to fall, but is not likely to have much effect on final closing prices. The present weakness in pricing is a seasonal effect which almost always brings us an unfavorable sales mix between June and September. This is because the luxury market is only half-awake during these months, while investors remain very active.