https://youtu.be/V7WbOYx7_xI?t=475 March’s show with predictions min 35-39
May 1 – Supply has been arriving in greater quantities over the past few weeks, This applies to both rental and for-sale listings.
The most dramatic rises are in rentals. There were 2,550 new rental listings created in the last 4 weeks, which is up 45% from the same 4 weeks of 2021. For 2022 year-to-date we have seen 26% more new listings (10,072 versus 7,995).
Residential for-sale listings added over the last 28 days number 10,476, up from 10,387 in the same period of 2021, a 0.9% increase. Year to date we have seen 40,198, down from 40,580 last year.
The problem for the market is that this extra supply is coming just as demand is dropping fast.
The for-sale active listing count (excluding UCB and CCBS) across all areas & types has jumped 27% in just 4 weeks. This is even faster than we experienced in April 2005. That’s a scary percentage, even though the absolute numbers remain small. If this growth rate persists through May and June, the market will be very different by July.
April 30 – Although the market is cooling, prices are still on a strong upward trajectory that will be maintained for several months at least. Supply is increasing while demand is falling, but the gap is so large that it will take a long time for these two elements to achieve balance, even if the current trend continues.
The price increases over the past 2 years have been extremely large, but should not be surprising to Cromford® Report subscribers, given the very high levels reached by the Cromford® Market Index since mid-2020. They will of course be surprising to followers of the CoreLogic Monthly Home Price Insights reports, who have forecast that price increases would be very weak from mid-2020 onwards. In fact in June 2020 they told us that home prices would fall by 6.6% by June 2021. A year later in June 2021, they projected that prices would rise by 3.2% by June 2022. It is hard to imagine anyone being more consistently inaccurate in forecasting home prices.
Here is what has actually happened over the past 2 years:
|City||Monthly Avg Sales Price Week 17 2020||Monthly Avg Sales Price Week 17 2022||Change|
Red flag warning. The housing market is changing more rapidly with rising supply and falling demand. While it remains far above normal for now, the Cromford® Market Index is dropping fast.
We can clearly see that the CMI is accelerating downwards. Although it remains above 400, representing a very hot market, the downward trend is so powerful it appears possible that it will drop below 300 within a matter a weeks rather than months. It is not possible to predict the CMI, as it is designed to be the very earliest indicator of market changes. We do not know when this decline will bottom out.
Last year we saw a similar but less intense fall during June. However, investors and iBuyers filled the gap left by the fading owner-occupier demand and kept inventory at low levels. The CMI bottomed out well above 340 and staged a second rally.
April is supposed to be one of the best months for the market, but new contract signings are significantly lower than last year. This means active listings are staying active longer and inventory is starting to build in most (but not all) segments. At the moment the number of homes for sale remains very far below normal, but we have seen before how it can increase sharply if more sellers emerge just as demand is declining.
There are a sequence of market indicators that fall like dominoes when a major change occurs in the market. The CMI is specifically designed to be the first of those dominoes. We will be reporting on the state of those confirming indicators over the course of the next few weeks and we advise subscribers to pay close attention. Do not pay attention to prices. They will continue to rise for many months, since they are trailing indicators of market conditions.
This is probably one of those important times when early action may be required. If you are over-extended in your real estate investments, I advise a large increase in caution right now.