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(602) 492-2897

Not Expecting This!

By Eric Karlene - September 22, 2020

 

Seasonally things start to slow down a little bit after the kids go back to school. When I saw this report, I was actually surprised. I thought things would be leveling off. I follow the Cromford report daily to see what changes are happening in the market. This is what they posted today.

"I have to admit I was not expecting the daily CMI chart to look like this:

Having reached a plateau at 342 and facing a large percentage rise in new listings compared with September 2019, I was expecting to see a decline starting in early September. But even if you have been tracking the market closely for 16 years, it can still surprise you. Demand has continued to increase despite its already high level. This has not only soaked up the new supply it has prevented the active listings without a contract from growing except in a few small areas.

As a consequence, the CMI keeps making new record highs, today's being 346.1. This comfortably exceeds the highest point in 2005 (312.9). In April 2005, the CMI started a long and continuous descent to eventually reach its nadir at 26.5 in October 2007. Today's situation is unlike 2005 in many significant ways, but I would still expect a little steam to come out of the boiler to relieve the pressure. In most years we see a noticeable increase in active listing counts between September and the beginning of December. 2020 has been different from normal in so many ways, so we do not know if this pattern will repeat. In theory, the rapid rise in prices which is now taking place, should make homes less affordable and damp down some of the buyer enthusiasm. On the other hand, many buyers may see the price increases and decide that if they wait it will only get harder to get the home they want.

So we do not know if the CMI will keep hanging up there like Wile E. Coyote running off the edge of a cliff, continue another leg upwards or start to obey the natural laws of economic gravity. The only thing we do know is that a CMI of over 200 means home prices must rise a great deal from where they are in the immediate future."

- Michael Orr, Cromford Report September 21, 2020

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