This week, we discuss the “Contract Ratio” and 90 days from a frenzy to balanced market.
The Contract Ratio is tool we use to determine how "hot" a market is. It specifically measures the number of completed sales contracts relative to the supply of active listings. It is defined as 100 x (Pending Listings + UCB Listings) / Active Listings Excluding UCB. The higher the number the greater the buying activity relative to supply. If this number rises, then it is a sign of growing contract activity and a positive signal for sellers. Conversely a falling number is a sign of a weakening market - either supply of active listings is increasing, or contract activity is slowing, or both.
In a balanced market for normal market segments, the value of the Contract Ratio is usually between 30 and 60. When it lies below 20 the market can be considered "slow" or a "cold market". Above 60 can be considered a "hot market" and when it moves above 100, we regard this as evidence of a "buying frenzy". In high-end luxury market segments, the normal level is lower, usually lying between 15 and 25.
The above chart is the Contract Ratio through July 1st. The chart shows just this week we entered the "Balanced Zone" between 30 and 60, confirming just how far and how fast the market has cooled in the last three months.
Four months ago, we had the third highest reading (262.6) ever recorded for the Phoenix market. In April this had moved down to 230.1, still very hot.
The decline between April and June of this year is unprecedented - faster and more violent than long time real estate market watchers have ever witnessed. This is due to a very rapid decline in demand coupled with an explosive rise in supply. This week’s tale of the tape demonstrates this as we were seeing our Active supply in Corte Bella consistently between the 5-6 homes at any one time. For the last week of June, we have 16 Active homes in our supply.
At 59.8, the Contract Ratio is currently the lowest since March 2019, and unfortunately, the trend indicates that it has further to fall.
The Contract Ratio is telling us we are already in a balanced market. If it drops below 30 then it will indicate a cold market with a significant surplus of sellers over buyers. We have not experienced a market like that since April 2009. Onward….
Below is the tale of the tape for the last week of June:
ACTIVE LISTINGS:
· 22425 N Los Gatos Dr., Quinta Model, 1,283/sf., 2/1.75, Corner Lot - $429,000*
· 22516 N San Ramon Dr., Quinta Model, 1,283/sf., 2/2, Golf Lot - $459,999*
· 13105 W Junipero Dr. Arcada Model, 1,684/sf., 2/2 - $489,900*
· 13510 Nogales Dr., Arcada Model, 1,684/sf., Private lot - $505,000*
· 22713 N Pico Dr., Arcada Model, 1,636/sf., 2/2, Remodeled - $556,000
· 13432 W Los Bancos Dr., Encanto Model, 2,095/sf/. 2/2, - $599,000*
· 12959 W. Rincon Dr., San Marco Model, 1,904/sf., 3/2 - $600,000
· 12839 La Vina Dr., Encanto Model, 2,095/sf., 3/2 - $625,000
· 13544 W Figueroa Dr., Encanto Model, 2,095/sf., 2/2, MBR Remodel - $629,500*
· 22823 N Las Gatos Dr., Encanto Model, 2,095/sf., 3/2 - $675,000
· 12847 W Panchita Dr., Alameda Model, 2,726/sf., 3/2.5, Nicely updated - $749,000
· 13232 W Los Bancos, Figueroa Model, 2,784/sf., 2/2.5,3 car garage - $795,000***
· 12832 W Rincon Ct., Cambria Model, 2,470/sf., 2/2, Pool – $799,900***
· 13417 La Vina Dr., Cambria Model, 3/2, Open space behind, Pool - $825,000
· 13307 W Rincon Dr., Figueroa Model, 2,784/sf., 2/2.5, Golf Course, Pool - $897,000
* New listing this week
** Temporarily off market
*** Price reduction
COMING SOON
· None.
UNDER CONTACT ACCEPTING BACKUPS:
· 13354 W Junipero Dr., San Marco Model, 1,904/sf., 3/2, Oversized lot, Pool - $623,500
UNDER CONTRACT CONTINGENT ON BUYER SALE:
· None.
PENDING LISTINGS:
· 12930 W Micheltorena Dr., Arcada Model, 1,612/sf., 2/2, Recent remodel - $550,000
· 23325 N De La Guerra Dr., San Marco Model, 1,904/sf., 2/2, Private lot, Pool - $623,500
· 22516 N Padaro Dr., San Marco Model, 1,904/sf., 2/2, 2.5 car garage, Pool - $625,000
· 13005 W Panchita Dr., Cambria Model, 2,690/sf., 3/2, Casita - $699,995
· 23227 N Cardenas Dr., Mirada Model, 2,840/sf., 3/3.5, Casita - $739,000
· 22410 N Del Monte Ct., Mirada Model, 2,559/sf, 3/2.5, Golf Course, Water - $925,000
SOLD LISTINGS (06/01/22 - 06/30/22):
· 22450 N San Ramon Dr., Bellita Model, 1,154, 2/1.75, Golf Course - $490,000
· 13418 W Nogales Dr., Montecito Model, 1,351/sf., 2/2, Corner Lot - $492,000
· 13755 W Nogales Dr., Arcada Model, 1,660/sf., 2/2 - $524,500
· 12903 W La Vina Dr., Encanto Model, 2,066/sf., 3/2 - $615,000
· 12944 W Quinto Dr., Encanto Model, 2,095/sf., 3/2 - $660,000
· 22914 N Hank Raymond Dr., Granada Model, 3,027, 3/2, Golf Course - $850,000
· 13219 W Junipero Dr., Figueroa Model, 2,784/sf., 3/2.5, Golf Course - $940,000
I am a Corte Bella resident. I may not be the listing agent on the above properties. If you or someone you know is interested in touring one of these properties, I would be happy to arrange a showing.
The information contained herein is believed to be accurate however you are encouraged to confirm this information before relying upon it.
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