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2005 Resale Market Closes More Than 8 Percent Ahead of 2004 Record


January 13, 2006

MESA, AZ — The 2005 Greater Phoenix resale home market continued to expand as it moved from 102,115 recordings in 2004 to 110,835 recorded sales. While a new sales record was established, the resale market has been slowing from 10,700 sales recorded in August 2005 to 6,480 sales in December.

Further, the last three months of 2005 have been below the last months of 2004. In 2004, October had 8,755 sales, November 9,525 sales and December 8,040 sales, while the corresponding months in 2005 were 8,420 sales, 7,195 sales and 6,480 sales. Thus, the last few months have shown a return to a more normal or sustainable level.

Since the 55,370 recorded sales in 2000, the local resale housing market has been consistently setting new records for activity. In a rapidly growing area like Greater Phoenix, new records should be expected. However, the local resale housing market since 1997 has been fairly stable, representing 7 percent of the single-family inventory, while the current sales activity represents 11 percent of inventory.

The townhouse/condominium housing sector was also very strong with 21,290 recorded sales in contrast to the previous record of 18,835 sales for 2004. This activity represented 18 percent of the townhouse/condominium inventory, while it stood at 13 percent in 2000.

While sales activity increased 8.5 percent over the previous year, the median home price increased 37.5 percent from $174,815 in 2004 to $240,500. For the year, the median home price increased from $194,000 in January to $260,000 for December or a 34 percent increase. The record median home price was $263,000 set in September and November. The range was significant from $600,000 in North Scottsdale to $153,500 in the Maryvale area to $117,500 in the Sky Harbor area.

In the townhouse/condominium sector, the median sales price increased 31 percent from $114,530 to $150,000. For 2005, the median price moved from $125,000 in January to $164,000 in December, with the record being $165,000 in November.

The median square footage for a single-family home sold in 2004 was 1,685 square feet, while it was reported as 1,640 square feet in 2005. In the townhouse/condominium sector, the median square footage decreased from 1,150 square feet to 1,120 square feet.

While 2004 and 2005 have been very dynamic housing markets, there have been mounting concerns about many issues, especially affordability. A fundamental component of the economic development of the area has been the relative affordability of housing, especially when compared to California and the national housing market. While the local market is still well below most of the California market, it is now well above the national median sales price of $215,900.

Although low mortgage interest rates have been very important in sustaining the market, the rapid increase in the median home price has greatly increased the monthly payment. Based on 85 percent loan-to- value, the mortgage payment would have been $845 in 2004 (with interest at 5.5 percent) to $1,175 for 2005 (with interest at 5.6 percent). The 2005 resale affordability index is 84, while it was 114 for 2004. A lower index value indicates less affordable single-family homes, but does not take into account alternative housing forms such as townhouse/condominiums or manufactured housing.

"While improved affordability is important for the continued economic development of the area, declining homes price could seriously impact many households, especially those who have used the increasing values to finance a desired lifestyle," said Jay Q. Butler, director of the Arizona Real Estate Center at Arizona State University's Polytechnic campus.

  • In contrast to 2004, recorded sales in the city of Phoenix improved from 27,075 to 31,465 sales for 2005, while the median sales price increased from $139,500 to $189,500. The median price ranged from $309,000 in the Union Hills Area to $165,000 in the Metrocenter area to $117,500 in the Sky Harbor area. In the townhouse/condominium sector, sales activity improved from 5,090 to 6,520 sales and the median sales price moved from $99,500 to $126,000.
  • Scottsdale slowed from 9,485 sales to 8,515 sales. The median sales price, however, continued its strong upward movement from $385,000 to $525,000. The median sales price in North Scottsdale improved from $435,000 to $600,000, while it moved from $189,900 to $280,000 in South Scottsdale. The townhouse/condominium sector in Scottsdale grew from 4,325 recorded sales to 4,430 sales; with the median sales price increasing from last year's $175,000 to $242,900.
  • The resale market in the city of Mesa also expanded from last year's 12,310 sales to 13,165 sales. The median price increased from $158,000 to $220,000. The townhouse/condominium sector also grew from 2,835 sales to 3,425, while the median home price increased from $99,900 to $128,700
  • Sales activity in the Glendale resale home market increased from 7,695 sales to 8,390 sales, while the median sales price increased from $158,900 to $221,900. The townhouse/condominium sector also improved from 725 sales to 1,055 sales and the median sales price increased from $84,420 to $107,000.
  • In comparison to 2004, the Sun City West resale market decreased from 1,065 sales to 940 sales, while the median sales price increased from $165,000 to $224,000. In Sun City, sales activity also declined from 2,065 sales to 1,900 sales while the median sales price increased from $136,925 to $185,000. The townhouse/condominium market in Sun City slowed from 1,160 to 1,130 sales, but the median sales price increased from $87,000 to $124,950. In Sun City West, sales activity moved from 380 sales to 315 sales, with the median sales price increasing from $120,000 to $160,000.
  • The resale market in Gilbert moved from 6,310 to 6,715 sales. The median sales price improved from $205,000 to $292,000. In the townhouse/condominium market, recording activity grew from 250 to 310 sales and the median price increased from $129,900 to $182,500.
  • For the city of Chandler, the resale market improved from 7,280 to 7,800 sales, while the median sales price increased from $186,000 to $271,650. The townhouse/condominium sector increased from 790 sales to 950 sales while the median sales price moved from $113,460 to $155,000
  • The resale market in Tempe expanded from 2,530 sales to 2,630, while the median sales price moved from $182,000 to $250,000. The townhouse/condominium sector also grew from 1,180 sales to 1,360, with the median sales price going from $117,000 to $162,000
  • The highest median sales price was in Paradise Valley at $1,320,000 with a median square foot house of 3,570 square feet
  • Although mostly known as new home markets, the resale housing market in the West Valley has been growing from 9 to 11 percent of the local resale housing market:
    • Avondale — 2,145 ($163,000) to 2,785 ($239,900) sales,
    • El Mirage — 1,340 ($134,900) to 1,870 ($199,000) sales,
    • Goodyear — 1,900 ($183,000) to 2,225 ($260,000) sales, and
    • Surprise — 3,685 ($164,900 ) to 4,905 ($240,195) sales.