Today’s Jeopardy Answer: February 2011.
Today’s Jeopardy question? When was the last time the Phoenix Metro real estate market was as balanced as it is today?
So, what exactly does a “Balanced Market” mean anyway and what is the Cromford Market Index? It might help for our readers to know. According to the Cromford Market Index (Michael Orr of ASU).
Cromford Market Index™ is a value that provides a short term forecast for the balance of the market. It is derived from the trends in pending, active and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyer’s market, while values above 100 indicate a seller’s market. A value of 100 indicates a balanced market.
The Cromford Index is showing “99” (as of 2/6/15), a balanced market. But why doesn’t it feel that way? I think the answer to that question has to do with how we view the market and whether we are looking from the eyes of a buyer or a seller.
Actually, the market is probably as healthy as it’s ever been and positive for both buyers and sellers. For sellers or prospective sellers, the latest data from Michael Orr of the Cromford reports states the following for “normal” sales – not distressed, as in bank owned, pre-foreclosure, or short sale:
- Active Listings – down 5% from 22,872 to 21,750
- UCB (Under Contract) Listings – up 38% from 1,825 to 2,519
- Pending (Also Under contract) Listings – up 14% from 4,404 to 5,036
- Days of Inventory – down from 138 to 132
- Months of Supply – down from 6.1 to 5.6 months
For buyers, the market is still very good, but if you see the above numbers benefitting sellers, we know that the opposite is true also – that we’re seeing a swing away from buyer advantage. According to the Index, we’ve been in a Buyer’s market since December of 2013, but it could easily swing above the line to a Seller’s Market. I believe that trend will continue and our balanced market will head north into Seller positive territory.
At an open house this past Saturday for one of our sellers, Jonathan and I had 14 groups though plus 4 Realtor showings. This resulted in two offers that we’re currently negotiating with the possibility of receiving another offer today. The result of multiple offers usually results in a seller getting the highest price possible for that home, or even above asking price. These sales then become the new “comps” (aka comparable sales) for new listings, which in turn drives prices up.
Our market can change rapidly and judging from what we’re seeing on the street, coupled with these supply numbers, we may not remain hanging in the “balance” for long.