All indicators that look at supply and demand are dropping fast:
* 27 days of inventory compared to 19 a month ago, the highest we have seen since November 2020.
* Contract ratio, which compares active listings to listings under contract down to 136. That means for every 100 listings there are 136 under contract. That’s the lowest contract ratio we have seen since August of 2020. Still a high number – around 60 is “normal” – but a far cry from the 332 we saw last April, and a 36% drop in just one month.
* Pending listings down 5% over the last month and down 14% compared to last year.
Buyers are hitting the brakes HARD. The impact of this relative “screeching halt” in our sizzling hot market insanity won’t be felt for a few months. Home prices are still going up, but we will start to see a much slower pace in appreciation. Eventually, it will be more obvious that the advantage is shifting away from the seller and we might actually see something much closer to a balanced market by the end of the year.
Those “normal” market conditions will be unrecognizable. The last balanced market in Phoenix was in 2014. In December 2018, we saw something close and, to be honest, it was a bit freaky. “Why is this modestly priced home in Gilbert with a pool still not sold?!!!” But it was short-lived…a blip. It’s very likely, however, that the market shift this time lasts longer than a few weeks.
To be very clear, sellers, get ready for closing cost assistance, throwing in a home warranty, and “gasp” allowing buyers generous access to showings rather than the 90 minute open house nonsense we see now. A normal market is a healthy direction, but not nearly as fun for entitled sellers and lazy Realtors. #ToughLove