Cromford Report Market Update 5/5/2020

Cromford Report accounts are only available to licensed Realtors who are members of ARMLS, to sign up and learn more go to

The Cromford Market Index:

Available on the main page of the Cromford Report: (without a subscription)

The Cromford Market Index (CMI):

  • 100 is balanced, below 100 is a buyer’s market, above 100 is a seller’s market
  • On 2/5/2020 we were at 215.1
  • On 3/20/2020 we were at 241
  • Today we are at 146.2
  • When it is at 100 property values increase at the rate of inflation.
  • Our supply is 55.3, 44.7% under where we should be.
  • Our demand has decreased to 80.9 (below normal) from it’s peak of 107.5 on 3/20/2020 (7.5% above normal)
  • As long as the CMI is above 110, prices will continue to rise, just at a slower rate
  • As of the week of April 19th the dramatic free fall has started slowing
  • Avondale (227.3) and Glendale (209.6) are the only 2 cities with a CMI over 200 as of 4/30/2020
  • Gilbert rounds out the top 3 with a CMI of 199.0
  • Paradise Valley’s 111.7 CMI is at the lowest, keeping PV in an appreciating market

Price Appreciation:

  • Price is a lagging indicator
  • In order to gauge the actual price response, it will be another 6-8 weeks of watching closings to see the price response to COVID
  • Vacancies cause the biggest risk to real estate values
  • AirBNB’s lost a lot of value, is a riskier investment, and will be our biggest challenge (since REOs are low)
  • Forbearance keeps people in their homes
  • When inventory and demand both drop at the same time prices do not decrease
  • Prices are currently not dropping
  • Dr. Lawrence Yun, the chief economist of NAR is quoted saying, “More temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise.”
  • Market share by price range is changing, cheaper houses are selling more because so many luxury homes were pulled off the market


*Today’s drop in demand is NOT due to changes in the market. It is an outside stimulus which pushes all indications that the recovery will be quick*

  • Factors that influence demand:
    • Interest Rates
    • Appreciation/Deprecation (affordability)
    • Relocation (inbound)
    • Employment/Income
    • Loose/Tight lending practices
    • Population growth
    • Consumer sentiment (biggest factor)
  • Right now consumer sentiment is driving everything. Fear overrides logic.
  • Unemployment is creating fear.


  • In March Arizona had a net job loss of 7400
  • Teachers are government employees. think about everything in the schools. all teachers technically unemployed
  • Historically unemployment was $240 a week, not a lot and forces people to get back to work right away.
  • State is now providing extra support, with an additional $600 a week, works out to be nearly $44,000 annually
  • Why would someone take a job that pays less than $840 a week? When that benefit goes away we will see a huge rebound for unemployment numbers and people will go back to work
  • 1099 independent contractors are now receiving unemployment benefits, this has never been available before, complicates the numbers since there is nothing to compare these numbers with
  • Majority of jobs lost are in accommodations, arts, and recreation
  • Since 2011 AZ has brought in tons of new industries, we are more diversified giving us more stability, as some areas are still hiring while others are letting people go.
  • In 2008 when the market crashed the majority of AZ jobs were based in real estate and hospitality.


  • As of Q4 Phoenix metro was 65% affordable (meaning that normal people can afford 65% of houses on the market)
  • When the market crashed in 2008, we were 27% affordable
  • Watch for increased buyer demand from out of state relocation. People are looking to leave the more expensive cities likes NYC, Seattle, San Francisco and the Bay Area


  • What Affects Supply?
    • New home construction
    • appreciation/depreciation (equity)
    • Vacation rental vacancies
    • Foreclosures
    • relocation (outbound)
    • marriage/illness/death/job losses/tragedy
    • Consumer sentiment (biggest driver) how people feel
  • Anything that causes people to combine households, leaves a vacancy, that grows inventory
  • Inventory increased by 32.4% in the past 5 weeks (since 3/14), still 23% below where we were this time last year
  • First week of April saw a 9% dip in new listings hitting the market
  • The largest inventory increases we saw was 65% in the $250,000-$300,000 range, year over year
  • Highest price cities have smallest increases in inventory

Under Contract:

  • In the first 6 weeks of the pandemic, new pendings dropped by 39.1%
  • Since April 5th we are up nearly 32% in number of new contracts written and accepted
  • We are 25.4% below where were at the end of April 2019 for pendings
  • Orange line is back on market, we had 2 weeks of large escrow falls outs and now we are back to normal
  • Real estate is picking up. These closing are now 6-8 weeks out.
  • Transactions are taking a little longer close
  • Half of all properties listed and put under contract during the pandemic took 21 days to sell
  • Properties asking $500,000-$1,000,000 had the largest increases

Contract Ratio:

  • What is in escrow getting ready to close compared to what we have on the market
  • May 2nd was 71. Indicating for every 100 active listings, there are 71 properties in escrow
  • March 7th was 117 (for every 100 active listings, there were 117 properties in escrow INSANE)
  • April 18th was the lowest at 66
  • Scottsdale and the more expensive zip codes are selling more slowly
  • New home construction slowed
  • Now AIRBNBs are coming on the market and they are in great condition, they are selling fast.
  • 27% of everything that closed in April was over asking. Crazy appreciation was starting
  • The market has already turned, the headlines are way behind

Sales Volume & Price:

  • Year to date sales volume is down 1.3% from 2019
  • April was down 27% in monthly sales volume, could go as low as 35-38%
  • Real estate values are holding steady
  • The longer sellers are on the market the more they will likely drop prices.
  • Luxury market would be doing price reductions but since so many cancelled they are having few price reductions
  • Complaints have increased against appraisals. We got low appraisals in January and February, the thing that has changed, is how people feel about it (consumer sentiment)
  • Before COVID (BC) the buyer usually came up with the extra money as sellers would not come down
  • Today buyers may not be as willing to come up to meet the appraisal price and sellers have to be more willing to come down
  • Seller concessions
    • 25% of all closings the first week of January had seller concessions
    • 18% the first week of April
    • 23.1% the first week of May
    • Before prices increase, seller concessions decrease
  • Price per square foot has dropped from $163 to $163 in the under $500,000 range, due to the increased sales of lower dollar properties
  • Price per square foot has dropped from $186.75 to $186.50 in all price ranges

55+ Communities:

  • 55+ is suffering a lot
  • Mostly out of state relocation
  • Highest risk of COVID
  • Once travel restrictions are lifted expect recovery
  • Likely to be the last market segment to recover
  • No data available in the Realtor Cromford Report account (focuses on trends, not enough separate data on the subdivision level)
  • Cromford Public, which does not include MLS data, includes data in 55+
  • Cromford Public is $240 a year and does not require ARMLS membership

Final Thoughts:

  • 3 weeks in a row things are going well (3 weeks you can see trends)
  • escrow falls outs have stopped
  • Costs to the seller are going up, seller concessions
  • Sales volume is suffering, you can’t sell houses that were never on the market
  • Lots of data showing that things are good, ignore all that the bad news.
  • Lean into what you know.

copyright 2020 by Sarah Perkins

Published by Sarah Perkins

Sarah Perkins is an award winning account executive and has been in title sales since 2004. As the Director of Industry Research & Senior Account Executive, Sarah’s role is to bring real estate transactions to Navi Title. Sarah supports her clients by helping them navigate the ever-changing real estate space through thorough research and understanding of current trends impacting today’s home buyers and sellers.

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