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Market Summary for the Beginning of November

Starting with the basic ARMLS numbers for November 1, 2018 and comparing them with November 1, 2017 for all areas & types:

  • Active Listings (excluding UCB): 17,953 versus 18,646 last year - down 3.7% - but up 6.7% from 16,819 last month

  • Active Listings (including UCB): 21,3113 versus 22,403 last year - down 4.9% - but up 5.0% compared with 20,303 last month

  • Pending Listings: 4,770 versus 5,646 last year - down 15.5% - and down 8.2% from 5,195 last month

  • Under Contract Listings (including Pending, CCBS & UCB): 8,128 versus 9,403 last year - down 13.6% - and down 6.3% from 8,679 last month

  • Monthly Sales: 7,315 versus 7,422 last year - down 1.4% - but up 3.4% from 7,073 last month

  • Monthly Average Sales Price per Sq. Ft.: $165.35 versus $150.55 last year - up 9.8% - and up 2.6% from $161.23 last month

  • Monthly Median Sales Price: $262,000 versus $246,000 last year - up 6.5% - and up 0.8% from $260,000 last month

The supply of active listings without a contract rose 6.7% during the month of October, while total active listings increased by 5.0%. These are much bigger increases than we saw in October 2017 (2.7% and 2.8% respectively) so there has once again been a definite improvement in available supply. This was not due to an increase in new listings, in fact we saw 3% fewer new listings during October compared with 2017. Instead, we saw a sharp drop in demand meaning that far fewer listings went under contract during the month. We can see the drop in demand quite clearly from the pending listing count and under contract count, both down substantially from last year and suggesting that we will also see lower sales counts for November and December.

At first the sales count of 7,315 seems quite respectable. However, October had the maximum number of working days - 23 - so we were expecting far more closings. October had 22 working days so we dropped our closing run-rate by around 6% compared to this time last year. This is another sign of weakening demand.

Price cuts are getting more common - we saw the highest number of price cuts during the week beginning October 21 since February 2015. Sellers are clearly having to adjust their expectations lower now that buyer enthusiasm is fading.

Despite the lower demand, prices surged much higher during October with the average $/SF rising 2.6% in a single month. Not only are home values still rising, the sales mix contains a rich mix of higher end homes and entry-level homes are scarce. This trend still has momentum.

The big question is whether the drop in demand is a short-term event or the start of a longer-term downtrend. We saw a more extreme downtrend in the second half of 2013 which kept the market constrained throughout 2014. However demand bounced back in 2015 and we enjoyed a lengthy period of positive momentum between early 2015 and mid-2018. We are now entering a period of change once more and the Cromford® Market Index is moving rapidly towards a more balanced market. At 142.2 as of November 1, it seems almost certain that it will drop further over the next few week, but whether it falls all the way back to 110 (indicating a balanced market) or even below 90 (indicating a buyer's market) is impossible for us to foretell at the moment.

We will just have to watch the CMI carefully, both for the amount of the fall and the speed with which it happens.

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