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Greater Phoenix Resale Home Market Comparable to '03-'04 Sales Trends


May 11, 2006

MESA, Ariz. - Following a very typical pattern, the greater Phoenix resale market slowed in April 2006 with 5,980 sales. This is a decrease from the 7,264 sales for March 2006 and well below last year's 8,735 sales. So far in 2006, there have been 23,960 recorded sales, while it stood at 36,060 sales in 2005 year-to-date.

This is the weakest April since April 2000 with 4,870. Historically, the activity in April represents a lull from the end of the holidays and preparation for the stronger months ahead, especially May and June. While it was very unlikely that the market could have sustained the level of 2005, the current level of activity is very comparable to that recorded in the years of 2003 and 2004.

The primary news of the last year's housing market was the rapid rise in the median home price from $194,000 in January to $260,000 in December. However, since the record of $263,000 was set in September, the growth rate had been disappearing with the median price being up slightly in April to $264,900 from $263,000 in March and last year's $221,000.

Along with a higher median home price, mortgage interest rates are higher than a year ago. Thus, affordability continues to be an issue. The average 30-year mortgage for April 2005 was 5.6 percent, while it was 6.0 percent for April 2006. Based on an 85 percent loan-to-value, the monthly mortgage payment for the median price home increased from $1,080 to $1,350.

When purchasing a home for investment or occupancy, the rapid growth in price that has been so evident in the last year is somewhat soothing to the uncertainty of the buying decision, according to Jay Q. Butler, director of the Arizona Real Estate Center at Arizona State University's Polytechnic campus.

"However, if home prices continue to be stable or even decline in some areas, potential buyers may be increasingly reluctant to make the purchasing decision, because future appreciation is much more uncertain," said Butler. "Further, current owners, especially investors, may want to bring homes to a good market, in order to lock any current appreciation."

With interest rates, especially short-term ones, continuing to increase and stable home appreciation, there is increasing concern about the ability of some homeowners to maintain their homes. This may be especially evident for those that have used some of the more creative financing instruments, such as option payment plans and initially low interest rate adjustable mortgages.

Since the greater Phoenix area is so large, the median price can range significantly from $663,750 ($700,000 in March) in North Scottsdale to $147,500 ($150,000 in March) in the Sky Harbor area of the city of Phoenix.

For April 2006, 16 percent of all recorded sales were for homes priced from $125,000 to $199,999, 43 percent for $200,000 to $299,999 and 38 percent for homes priced over $300,000.

During the last few years, the townhouse/condominium market has had increased popularity for owner-occupancy, especially for young and minority households, and investors. However, sales activity followed a pattern similar to the single family market with a decrease from 1,750 sales for March 2006, to 1,390 sales for April, which also was below last year's 1,670 sales. So far in 2006, there have been 5,625 sales, compared to 6,745 sales recorded a year ago. Further, the median home price increased to the record $175,000, while it was $142,000 for a year ago.

The median square footage for a single-family home recorded sold in April 2006 was 1,625 square feet, which is smaller than the 1,650 square feet reported a year ago. In the townhouse/condominium sector, the median square footage was 1,105 square feet, which is smaller than 1,160 square feet reported a year ago.

  • In contrast to April 2005, recorded sales in the city of Phoenix decreased from 2,490 sales to 1,890 sales, while the median sales price remained at to $220,000, but increased from last year's $174,000. Since Phoenix is a geographically large city, the median prices can range significantly such as $147,500 in the Sky Harbor area to $330,000 in the Union Hills area. The townhouse/condominium sector decreased from 470 to 445 sales while the median price increased from $123,250 to $153,970.
  • While the Scottsdale resale home market declined from 695 to 460 recorded sales, the median sales price continued its upward movement by increasing from $475,000 a year ago to $593,000, while it was $595,000 in March 2006. The median resale home price is $663,750 ($700,000 in March) in North Scottsdale and $320,000 ($319,250 in March) in South Scottsdale. The townhouse/condominium sector in Scottsdale also decreased from 350 to 300 sales, but the median sales price increased from $239,950 to $275,000.
  • The Mesa resale housing market declined from 1,070 to 660 sales, while the median price increased from $195,250 a year ago to $245,900 ($243, 500 in March). The townhouse/condominium sector also fell from 280 to 215 sales, while the median home price increased from $117,500 a year ago to $160,000.
  • Glendale decreased from 580 to 490 sales, but the median sales price increased from $200,000 to $250,000 ($250,000 in March).The townhouse/condominium sector remained at 60 sales, while the median sales price increased from $106,000 to $134,000.
  • For the city of Peoria, the resale market fell from 365 sales to 250 sales, while the median price moved from $236,000 to $275,500 ($282,000 in March). The townhouse/condominium sector stayed at 45 sales and the median price went from $116,000 to $165,000.
  • In comparison to a year ago, the Sun City resale market fell from 160 to 100 sales, the median sales price increased to $186,700 from $178,500. Resale activity in Sun City West also fell from 90 to 70 sales, but the median sales price increased from $208,700 to $250,000. The townhouse/condominium market in Sun City declined from 110 to 65 recorded sales, while the median home price increased from $116,000 to $130,000. In Sun City West, activity fell slightly from 35 to 20 sales, but the median sales price increased from $143,000 to $165,800.
  • The resale market in Gilbert decreased from 475 to 310 sales, but the median sales price increased from $270,000 to $339,000 ($322,500 in March). The townhouse/condominium market fell from 35 to 10 sales as the median sales price increased from $155,000 to $209,900.
  • For the city of Chandler, the resale market slowed from 595 to 405 recorded sales, while the median sales price increased from $253,340 to $295,000 ($295,000 in March). The townhouse/condominium market declined from 70 to 45 sales and the median sales price increased from $140,500 to $184,450.
  • The resale market in Tempe decreased from 200 to 160 sales, with the median sales price increasing to $275,000 ($288,400 in March) from $222,000. The townhouse/condominium sector slowed from 75 to 70 sales and the median sales price increased from $146,900 to $189,500.
  • The highest median sales price was in Paradise Valley at $1,525,000 with a median square foot house of 3,305 square feet.
  • In the West Valley, the following communities represent 9 percent of the resale market, which is down from the 11 percent of a year ago.
    • Avondale fell from 220 to 140 sales with the median price moving from $217,450 to $260,000 ($256,000 in March 2006).
    • El Mirage decreased from 160 to 90 sales, while the median home price went from $174,900 to $219,900 ($220,000 in March).
    • Goodyear declined from 200 to 100 sales, while the median price increased from $230,500 to $298,200 ($281,000 in March).
    • Surprise decreased from 395 sales to 230 sales, with the median price increasing from $220,000 a year ago to $250,000 ($255,500 in March).