Seems like there is so much negative news out there in the market right now. Wether it's the stock market, broader economy or the REAL ESTATE MARKET. One day, things look terrible - the stock market drops 460 points after the jobs data comes out as being anemic. The next day, we have some gains in the stock market because some other news comes out as being better than expected - whiplash back and forth so much that it makes your head hurt. I don't know how the stock market gyrates so much or what causes the gyrations.
My focus honestly is on the REAL ESTATE MARKET and specifically the PHOENIX metro area. This includes Phoenix, Scottsdale, Chandler, Tempe, Cave Creek, and the surrounding cities. In general, we can say that I try to find out what's happening in Maricopa county.
At TEAM ADVANTA REAL ESTATE, we work with buyer's and seller's throughout MARICOPA county. This is a large area and it's important for me to know how the PHOENIX REAL ESTATE MARKET is trending and how prices are going. Are prices increasing, are prices staying flat or are prices going down. You'll be surprised to hear that it all depends on what city and even within cities, which neighborhood.
This in general is good news because it shows that the broader REAL ESTATE MARKET isn't dropping as a whole. When everything is falling, it means that there is no market demand and that good and bad homes are dropping in value. Today, a home that is priced well, presented well and marketed properly, sells. At TEAM ADVANTA REAL ESTATE, we've been successful in selling non-distressed homes (short sales) in this market. This means that there are buyer's out there buying well priced homes.
To keep on top of the PHOENIX REAL ESTATE MARKET, I read the Cromford Market Report. The Cromford Report™ provides detailed information to track the history and current status of the Greater Phoenix residential resale market. It also offers unique insight into the real estate market's future direction. It's a great report on the basic fundamentals of real estate in the Phoenix Market.
The Cromford Report provides four indicators or Indices that give a quick recap for the health of the REAL ESTATE MARKET. These are as follows;
- The Cromford Index™ is a set of market indicators that we use to measure the balance of supply and demand. It can be applied to the whole market or to any subset, provided that subset is large enough to be meaningful. It compensates for seasonal factors and measures supply and demand based on long term historical trends.
- The Cromford Supply Index™ (CSI) represents the supply position. Values above 100 indicate an excess of supply of unsold homes compared to historic norms for the market being considered. Values below 100 indicate a shortage of homes on the market. A reading of 100 indicates balance.
- The Cromford Demand Index™ (CDI) represent the demand for homes. Values above 100 indicate higher than normal demand and values below 100 indicate lower than normal demand. "Normal" is defined by the historical data for the market under consideration. A reading of 100 represents balance.
- The Cromford Market Index™ (CMI) is a single value that indicates the balance of the residential resale market. Values below 100 indicate a market that favors buyers. Values above 100 indicate a market that favors sellers. A value of 100 is equally balanced.
These indexes are calculated for the whole market (all areas and types) in the monthly line charts below.
Below are the four Indexes in graphical form.
The above Demand Index shows that the REAL ESTATE MARKET demand has increased substantially from a low in the beginning of 2007. Values above 100 show a higher than normal demand for homes and values below 100 show a lower than normal demand for homes. If you notice, the Demand Index today is even higher than 2005.
The Cromford Supply Index shows that the REAL ESTATE MARKET supply is on a downward trend. Values below 100 show a shortage of supply and values above 100 show an excess supply of homes on the market . My experience from hitting the streets daily with buyer's and sellers, demonstrates this data also. Since early party of 2011, the demand has continued to increase while supply has decreased i.e. less homes coming on the market from REO properties. We are today below the 100 Index mark which means that there is a shortage of homes on the market.
The broader Cromford Market Index shows that the REAL ESTATE MARKET is on the mend. Values above 100 shows a market that favor's seller's while below 100 shows a market that favor's buyers. I've been saying for the past 6-8 months, it's no longer a buyer's market. I've expereinced this first hand working with buyer's and sellers - many more multiple offers for homes, difficult to offer below list price. The worst is over right now and I think the market is on the mend. We're no where near the heady 2005 years but it shows that things are getting better in real estate.
Lastly, when you look at different cities, the cromford market index shows that while the trend is towards the REAL ESTATE MARKET getting better, not all cities mend at the same time. The SCOTTSDALE REAL ESTATE MARKET seems to have faired better than the other cities while Tempe was a buyer's market for much longer than the other markets. As you can see, real estate tends to flow and eb in the same direction i.e. getting better but the timing can vary. The good news is that while there was quite a bit of diversion in 2009 and early 2010, by late 2010, the market improved across the markets and it's now a seller's REAL ESTATE MARKET. Woo hoo!
I hope this helps to get a better understanding of where the REAL ESTATE MARKET is headed (the right direction - up). At TEAM ADVANTA REAL ESTATE, we review this data monthly to get an idea of where the market is headed. It's important for us because it really helps us to better advise our clients, price homes properly and in general provide better service to our clients.
As always, if you have any questions, just give us a call. We're here to support you, answer any questions you have and be a resource.
Best of luck!
Deepak Verma
Team Advanta Real Estate
(602) 295-0810
Comments(1)