Key notes from The Cromford Index (Market Summary for beginning of September)

• “During August we saw supply start to stabilize and demand get a tiny bit weaker.
•  The market balance moved just a bit in favor of sellers, but there is almost no momentum left in that trend.
• Appreciation of around 5% seems to be the order of the day. This may not appear to be a big number but in a deflationary climate a 5% climb should be interpreted as rather impressive. It is mostly down to supply shortages at the low end, with a sprinkling of strong demand in a few luxury markets.
• We did see the usual seasonal price weakness from the end of June through the beginning of September, but that short term trend is gradually giving way to a resumption of the longer term upward trend. Indications are that sales prices will move moderately higher over the next 4 months.
• It is good for Phoenix that Arizona’s economy is not dependent on the commodity and raw materials business. Our copper mines are in bad financial shape with copper prices sinking ever lower due to weak demand from Asia.
• There was some concern expressed that stock market volatility could affect the housing market, though there has been little evidence of any correlation between the two over the past 50 years. The only exception was in 2007 through 2008 when the housing market collapsed following the excessive money supply between 2003 and 2006. This brought the stock market to its knees. It does not tend to happen the other way round, especially when there is a chronic shortage of housing.
•  A deflationary cycle will make our homes look more expensive to foreigners, but our real estate market depends very little on demand from foreign countries. Canada has supplied most of the foreign home buyers in the past few years but in the last 3 months only 163 Maricopa County homes were purchased by Canadians. That compares with 1,498 in the peak of 2011. This huge percentage drop has not caused us any serious problems, even though the Canadian demand is not likely to come back any time soon.
• All in all, our local housing market looks like it is in strong shape to take everything the world economy can throw at it. “