ASU report: Challenges remain for Phoenix-area housing market
Though the number of home resales in the Phoenix-area housing market is actually higher than normal for this time of year, foreclosures still appear to be driving the market. The latest Realty Studies report from the W. P. Carey School of Business at Arizona State University shows two-thirds of the activity in the Valley housing market remained foreclosure-related in October, and the current recovery is full of challenges.
"Typically, a housing recovery happens in a growing economy and with declining interest rates," says associate professor of real estate Jay Butler, author of the new report. "However, the current recovery is limited with the possibility of higher rates and a continuing weak job market. Further, the housing tax credit could be dissipating the pent-up demand for new buyers to get into the market, weakening their influence in the future."
Butler adds that all of these foreclosures will eliminate some households from being able to obtain financing to buy a "move-up" home. Others may be "seriously limited by declining neighborhood values [on their current homes] and restrictive debt amounts."
The level of home resales is bucking the usual trend for this time of year. Historically, fewer people move after the summer ends. However, this October, the Valley recorded more than 6,100 home resales. That's about the same as September, but way up from about 4,500 last October. Still, a big portion of the transactions this October were sales of previously foreclosed property – a whopping 45 percent.
More than 3,800 homes were newly foreclosed on during October of this year. That's up from the September foreclosure rate of more than 2,900.
The median single-family home price in the Valley in October was $143,000, up from September's median price of $140,000, but still way below last October's median of $167,000.
"For the last year, approximately half of the home resales in the Phoenix area were foreclosed homes that were sold again with a median price markdown of 19 percent," says Butler.
Butler's full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/realestate/Phoenix-Resale-Market-Reports.cfm. More analysis is also available from Knowledge@W. P. Carey, the business school's online resource and biweekly newsletter, at http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1831.