If you want to know what the Contract Ratio is, please see below.

For now, the important take-away is that the county-wide contract ratio for January and February 2019 are still lagging 2018.

What does that mean to you? If you are thinking of selling, price aggressively.

If you are thinking of buying, you have a little bit of an advantage.

You won’t be able to negotiate the price down by 10%, but you are looking at sellers who should know (if they have a good agent) that the market is a little soft for them right now.

Call us at 602-456-9388 for more details.

Definition: The Contract Ratio indicates how “hot” a market is.

It specifically measures the number of completed sales contracts relative to the supply of active listings.

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.

Our friends at the Cromford Report were correct when they predicted the current weakness in prices and their mid-month data may be showing the prices could start going up again.

Watch this space. This story is not over yet.

For now, here is an extended excerpt from the Report.

“Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next month.

For the monthly period ending March 15, we are currently recording a sales $/SF of $171.77 averaged for all areas and types across the ARMLS database. This is up 2.5% or $4.16 from the $167.61 we now measure for February 15. Our forecast range mid-point was $169.20, with a 90% confidence range of $165.82 to $172.58. The actual result was higher than the mid-point but within the 90% confidence range.

On March 15 the pending listings for all areas & types shows an average list $/SF of $174.59, down 0.6% from the reading for February 15. Among those pending listings we have 97.4% normal, 1.0% in REOs and 1.6% in short sales and pre-foreclosures. This mix is similar to last month and has far fewer distressed properties than the historical average.

Our mid-point forecast for the average monthly sales $/SF on April 15 is $170.73, which is 0.6% below the March 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $167.32 to $174.14.

The average $/SF was stronger than predicted over the last 2 months, but this was largely due to the mix of homes that closed. High end homes were more strongly represented in January and February. The average $/SF for pending listings has fallen back a little as the mix reverts to normal. The overall price trend continues to move higher, as is normal for the spring season.”