Phoenix Resale Transactions Jump in February

Foreclosure activity makes up bulk of resale transactions in greater Phoenix area

MESA, Ariz. – February 2009 resale activity experienced an upsurge of 8,510 resale homes recorded sold, while there were 6,960 recorded sales in January and 4,675 sales for a year ago. However, foreclosure activity in February 2009 represented 51 percent (4,295 transactions), while there were 4,215 traditional market transactions.

Foreclosure transactions represent home owners losing their property to successful individual bidders or the lender of record. For February 2008, there were 1,985 sales in foreclosure or 42 percent on the month’s recordings.

For February 2009, foreclosure activity differed throughout the Valley such as 48 percent in Surprise, 51 percent in Glendale and 40 percent in Scottsdale. Even in response to hiatus and mortgage modification programs, foreclosure activity did not slow.

“Due to the time it takes to record transactions, some slowing might still be evident in the next few months,” said Jay Q. Butler, director of Realty Studies in Arizona State University’s Morrison School of Management and Agribusiness at the Polytechnic campus. “However, the fundamental problem remains that an extremely weak economy is leading to mounting job losses that could severely impact the ability of a troubled household to have the needed income to qualify for one of the possible programs or even have the needed income to maintain ownership.”

The declining prices have piqued interest for potential investors and owner-occupants, especially in the lower income ranges. For the traditional market, the median price in February was $133,000 ($230,000 for February 2008), while the foreclosed properties had a median price of $164,470 ($193,440 for February 2008).

The fundamental reason why the median price for foreclosed homes is higher than traditional transactions is more expensive homes were foreclosed on in February, such as nearly 20 homes over $1 million (only 8 homes in January), and 7 percent of the foreclosures were in the $300,000 range (4 percent in January). Another reason is that for the last year, slightly more than 30 percent of the traditional sales were foreclosed homes that were sold again with a median price markdown of 15 percent. The markdown varied throughout the Valley ranging from 44 percent in Maryvale to 17 percent in Avondale to 9 percent in Tempe.

Since the Greater Phoenix area is so large, the median price can range significantly. For February 2009 in North Scottsdale, the median price for a foreclosed property was $405,035 ($443,470 in January), while the traditional market was $511,765 ($489,000 in January). In South Scottsdale the splits were $200,000 ($195,350 in January) and $195,000 ($221,450 in January), respectively.

In Maryvale, traditional transactions were $39,900 ($41,000 in January) and foreclosures were $118,655 ($81,730 in December), while in Union Hills it was $205,000 ($220,000 in January) and $199,850 ($186,780 in January), respectively. For February 2009, Paradise Valley had a median square footage of 4,100 and a median price of $1,050,000.

While lower prices can greatly improve affordability, they can adversely impact many owners and potential sellers whom are watching their limited equity erode, as prices decline to and even below existing debt level. Rapidly declining value can be another issue in some of the mortgage modification programs which require a limited decline in value from the purchase and financing of the home.

Within the 940 total recorded sales for February 2009, the townhouse/condominium market had 490 foreclosed properties. For a year ago, there were 700 total transactions with 150 being foreclosures. In February 2009, the median price for foreclosed properties was $128,395, while the traditional market stood at $121,000. Last year, the respective splits were $149,800 and $170,000.

The median square footage for a single-family home recorded sold as foreclosed in February was 1,680, and 1,715 square feet for a market transaction home. For a year ago, the foreclosed market was at 1,725 square feet, and the traditional market stood at 1,770 square feet. In the townhouse/condominium sector, the median square footage for a foreclosed unit was 1,070 square feet (1,090 square feet for year ago), while the traditional market unit was 1,165 square feet (1,090 square feet for a year ago).

Realty studies
Realty Studies is associated with the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus. Realty Studies collects and analyzes data concerning real estate in the greater Phoenix metropolitan area. Realty Studies is a comprehensive and objective source of real estate information for private, public and governmental agencies. Its director, Dr. Jay Q. Butler, may be reached at (480) 727-1300 or e-mail him at Jay.Butler@asu.edu. To subscribe to RSS feed for Realty Studies news, visit http://www.poly.asu.edu/realty/rss.html.

About ASU Polytechnic
Arizona State University offers technical and professional programs that provide a project based, hands-on learning experience for students at the Polytechnic campus in Mesa. Programs are available in business administration, education, arts and sciences, technology and engineering. Visit us online at www.poly.asu.edu.