Greater Phoenix resale market in January comparable to 2002 levels
February 12, 2008 · Published By Admin
Greater Phoenix resale market in January comparable to 2002 levels
MLS Listings of Phoenix Real Estate
MESA, Ariz. — The resale home market did not start the new year with a bang. The 3,350 recorded sales is below last year’s 4,520 sales and the record of 9,360 sales set in January 2005. However, it is very comparable to the 3,345 recorded sales of January 2002.
“Due to the holidays, January is not one of the better sales months, but frequently represents the start of the home buying process,” said Jay Butler, director of Realty Studies in the Morrison School of Management and Agribusiness at ASU’s Polytechnic campus. “The end of the home buying process that started in January is traditionally seen in the March or April recorded sales numbers. A key question concerning the market expectations is will the homebuyer begin the traditional return to the market in January.”
Although there is a large inventory of available homes, buyers, for many reasons, appear reluctant to take advantage of the market. The first issue is that most buyers have to be sellers, which is difficult in this market. While interest rates are low, higher underwriting guidelines for all loans and limited capital availability for non-conforming loans (above $417,000) have made it difficult for people to obtain the needed financing. Finally, many of the vacant homes are in submarkets that current buyers do not want due to travel congestion, higher energy costs, lack of area amenities and uncertainty about the future appreciation in the area. Thus, the problems of 2007 resale housing market continue into the new year and could hamper the market in the coming months.
The median home price opened the year at $230,000, which is below the $232,000 of December 2007 and last year’s $260,000. It represents a continuation in declining median price, which started at $265,000 in July 2007. This is the lowest monthly median home price since $221,000 in April 2005, but better than the $194,000 reported in January of 2005.
Last year, 40 percent of the resale homes sold for more than $300,000, while it was 32 percent for January 2008. Because financing is more available in the conforming mortgage market and inventory of available homes is high due to foreclosure activity and desperate sellers, homes selling for under $200,000 have increased from last year’s 16 percent to a current 34 percent of the local resale housing market. The most evident impact of lower prices is improved affordability.
The combination of declining interest rates (5.8 to 5.6 percent) and lower prices caused the monthly payment to decrease from last year’s $1,300 to $1,120. While improving affordability based on lower home prices can greatly benefit buyers, it adversely impacts many owners and potential sellers who are watching their limited equity erode, as prices decline to and even below existing debt level. Thus, lower prices affect the ability and desire to continue owning the home and even overall confidence in the economy, which puts additional strain on the local housing market.
Changes in median prices can vary tremendously throughout the Valley. For the western suburbs the median price has fallen 15.4 percent from last year’s $235,890 to $199,500. On the other hand, homes in the East Mesa area have gone from last year’s $238,500 to $248,130. While some areas have declining prices, other areas are increasing or remaining fairly stable, especially the mature neighborhoods that are close to freeways, retail and schools. Since the greater Phoenix area is so large, the median price can range significantly from $625,000 ($620,000 in December) in North Scottsdale to $161,900 ($165,000 in December) in the Maryvale area of the city of Phoenix.
With 640 recorded sales, the townhouse/condominium market was comparable to the 635 sales of December, but well below last year’s 850 transactions. This housing sector tends to be popular with seasonal visitors, investors and people seeking affordable housing. Unlike the single-family market, the median home price increased from $167,000 in December 2007 to $174,500 and is similar to last year’s $175,000. However, it is below the record of $184,950 set in May 2007. The underlying reasons can run the gamut for the return of the seasonal visitor, international investors, and new households satisfying their initial housing needs.
The median square footage for a single-family home recorded sold in January 2008 was 1,800 square feet, which is larger than the 1,700 square feet for a year ago. The larger size demonstrates that buyers are able to take advantage of lower prices to upgrade their housing. In the townhouse/condominium sector, the median square footage was 1,120 square feet, which is larger than the 1,110 square feet reported a year ago.
- In contrast to January 2007, recorded sales in the city of Phoenix decreased from 1,305 sales to 895 sales, while the median sales price decreased to $199,875 from $225,000 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $161,900 ($165,000 in December) in the Maryvale area to $290,000 ($297,000 in December) in the Union Hills area. The townhouse/condominium sector decreased from 300 to 215 sales, while the median price increased from $150,500 to $165,750.
- While the Scottsdale resale home market declined from 360 to 250 recorded sales, the median sales price also decreased from last year’s $550,000 to $545,000. The median resale home price is $625,000 ($620,000 in December) in North Scottsdale and $240,000 ($279,000 in December) in South Scottsdale. The townhouse/condominium sector in Scottsdale decreased from 190 to 140 sales, while the median sales price remained at $272,500.
- The Mesa resale housing market declined from 475 to 355 sales, while the median price fell from $235,000 to $209,880 ($212,000 in December). The townhouse/condominium sector also fell from 110 to 95 sales, with the median home price decreasing from $165,000 to $145,000.
- Glendale decreased from 335 to 220 sales, and the median sales price decreased from $239,450 to $210,000 ($209,365 in December). The townhouse/condominium sector decreased from 40 to 15 sales, with the median sales price decreasing from $139,150 to $123,000.
· For the city of Peoria, the resale market declined from 225 to 130 sales, while the median price increased from $260,000 to $261,450 ($232,000 in December). The townhouse/condominium sector decreased from 25 to 15 sales, and the median price went from $161,000 to $145,000.
- In comparison to a year ago, the Sun City resale market declined from 80 to 60 sales, with the median sales price decreasing to $164,500 from $190,000. Resale activity in Sun City West decreased from 40 to 35 sales, and the median sales price decreased from $238,725 to $234,160. The townhouse/condominium market in Sun City decreased from 45 to 35 recorded sales, and the median home price decreased from $133,500 to $122,000. In Sun City West, activity declined from 15 to 5 sales, while the median sales price increased from $151,000 to $167,500.
- The resale market in Gilbert decreased from 280 to 220 sales, and the median sales price decreased from $319,000 to $283,775 ($260,025 in December). The townhouse/condominium market remained at 10 sales as the median sales price decreased from $195,750 to $174,500.
- For the city of Chandler, the resale market fell from 330 to 215 recorded sales, while the median sales price went from $305,000 to $256,750 ($260,000 in December). The townhouse/condominium market declined from 30 to 20 sales, and the median sales price declined from $178,000 to $130,000.
§ The resale market in Tempe decreased from 100 to 65 sales, with the median sales price decreasing from $282,950 to $253,545 ($264,250 in December). The townhouse/condominium sector was stable at 35 sales, but the median sales price decreased from $201,000 to $167,000.
- The highest median sales price was in Paradise Valley at $1,108,455, with a median square foot house of 3,010 square feet.
· In the West Valley, the following communities represent 13 percent of the resale market.
o Avondale remained at 90 sales with the median price moving from $243,950 to $204,120 ($203,000 in December).
o El Mirage decreased from 65 to 40 sales, while the median home price went from $202,000 to $164,255 ($160,000 in December).
o Goodyear went from 70 to 85 sales, while the median price decreased from $260,000 to $240,380 ($235,530 in December).
o Surprise stayed at 205 sales, but the median price moved from $247,235 to $210,500 ($218,350 in December).
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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
ASU’s Polytechnic campus, located in southeast Mesa, offers bachelor and graduate degree programs, unparalleled by other Arizona state universities, through the Morrison School of Management and Agribusiness, the School of Applied Arts and Sciences, the School of Educational Innovation and Teacher Preparation, and the College of Technology and Innovation. Visit us online at http://www.poly.asu.edu
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