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Read last week’s newsletter here → "March 22nd || Money As-Is"
Meme, tweet, & fact of the week
April Fools' Day dates back to 1582, when France switched from the Julian calendar to the Gregorian Calendar, as called for by the Council of Trent in 1563. In the Julian Calendar, as in the Hindu calendar, the new year began with the spring equinox around April 1.
tl;dr
Phoenix’s supply has reached 2011 levels.
The average mortgage rate is 6.76%
Phoenix
Today the overall Cromford Supply Index reached 100 for the first time since May 29, 2011 - almost 14 years ago. So it is fair to say we no longer have a housing shortage. It is also fair to say we would not have an excess supply if it were not for demand being far weaker than normal. Our overall measure of demand (the Cromford® Demand Index) is about 19% below normal. The implication is there are about 24% more homes for sale than we need for the present number of buyers active in the market. Given that we are in the middle of the peak buying season, this is a serious concern.
It is a good time to be a buyer from the point of view of negotiation power, but buyers tend to lose motivation if they start to sense prices in decline. Closed prices have been holding up very well, with the top end of the market doing some very heavy lifting. But there is obvious weakness in the leading indicators of price - among the active listings and listings under contract. There is now a danger that we might enter a negative feedback loop with a deflationary cycle taking hold. Confidence that they are not paying too high a price is a strong element of a buyer's positive mentality and we are now in more danger of losing that confidence than we have been in the last 15 years.
Significantly lower mortgage interest rates could help a lot, but desire for these still seem a little unrealistic given the persistence of inflation above the Federal Reserve target. We can still hope for a pleasant surprise, but we cannot depend on it.
The Cromford Market Index is a gauge of Phoenix’s Supply and demand metrics. 100 is considered a balanced market. Anything higher than the 100-point benchmark is considered a seller’s market. Anything below 100 is considered a buyer’s market.
As of March 28th, the CMI has decreased to 80.6. Down 1 point from last week.
Supply has increased by 1.5 points and demand has increased by 2 basis points
Rates
Average interest rate: 6.76%
1-week rate change: +4 basis points
YoY change: -21 basis points
S&p500 vibe check
