Greater Phoenix resale home market experiences increase in activity in October

November 08, 2006

MESA, Ariz. — The local single-family resale market had a slight upturn in October 2006, as recorded sales rose to 4,985 transactions from 4,875 sales in September, but still well below the 8,420 recorded sales of last year. This is the lowest monthly level for October since 4,860 sales were reported in 2001. So far in 2006, there have been a total of 57,375 sales, while it stood at 97,165 sales in 2005 year to date. 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 2003 year to date, with 60,720 sales.

Although the median home price improved slightly from $256,900 in September to $257,000, it was again below last year’s $259,900. The record to date was June 2006 at $267,000. For October 2006, 15 percent of all recorded sales were for homes priced from $125,000 to $199,999, 46 percent for $200,000 to $299,999 and 35 percent for homes priced more than $300,000. Last year, the recorded sales distribution was 21 percent for homes priced from $125,000 to $199,999, 39 percent for $200,000 to $299,999 and 36 percent for homes priced more than $300,000.

Since the Greater Phoenix area is so large, the median price can range significantly from $635,000 ($678,000 in September) in North Scottsdale to $170,000 ($159,500 in September) in the Sky Harbor area of the city of Phoenix.

Although the median home price showed a decrease from a year ago, mortgage interest rates are higher than a year ago — 5.7 percent versus 6.0 percent for October 2006. Thus, affordability continues to be an issue. Based on an 85 percent loan-to-value, the monthly mortgage payment for the median price home increased from $1,280 to $1,315.

“Even though mortgage interest rates have been declining for the last few months, limited home appreciation and household income continues to raise concern about the ability of some homeowners to maintain their homes,” said Jay Butler, director of the Arizona Real Estate Center at Arizona State University’s Polytechnic campus. “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.”

Over the last few years, the townhouse/condominium market has had increased popularity for owner-occupancy, especially for young and minority households, and investors. Sales activity showed a decrease from 930 sales for September 2006 to 915 sales for October, which was below last year’s 1,715 sales. So far in 2006, there have been 12,195 sales, while 18,290 sales were recorded a year ago. The median home price increased from $173,500 in September to $175,000, while it was $162,000 for a year ago.

The median square footage for a single-family home recorded sold in October 2006 was 1,640 square feet, which is larger then the 1,595 square feet for a year ago. In the townhouse/condominium sector, the median square footage was 1,120 square feet, which is bigger than the 1,105 square feet reported a year ago.

In contrast to October 2005, recorded sales in the city of Phoenix decreased from 2,520 sales to 1,550 sales, while the median sales price increased to $222,000 from $207,515 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $170,000 in the Sky Harbor area to $313,000 ($317,000 in September) in the Union Hills area. The townhouse/condominium sector decreased from 575 to 340 sales, while the median price increased from $130,000 to $152,000.

The Scottsdale resale home market declined from 575 a year ago to 420 recorded sales, and the median sales price decreased from last year’s $559,000 to $548,500 ($580,000 in September 2006). The median resale home price is $635,000 ($678,000 in September) in North Scottsdale and $300,000 ($320,000 in September) in South Scottsdale. The townhouse/condominium sector in Scottsdale also decreased from 325 to 190 sales, but the median sales price increased from $245,000 to $253,350.

The Mesa resale housing market declined from 1,015 to 555 sales, while the median price fell from $245,000 to $235,000 ($240,000 in September). The townhouse/condominium sector also fell from 260 to 100 sales, while the median home price decreased from $154,100 to $153,000.

Glendale decreased from 690 to 420 sales, but the median sales price increased from $242,000 to $248,000 ($247,810 in September). The townhouse/condominium sector also declined from 85 to 55 sales, while the median sales price increased from $128,500 to $141,000.

For the city of Peoria, the resale market fell from 405 sales to 195 sales, with the median price dropping from $265,000 last October to $257,500 ($265,000 in September).The townhouse/condominium sector slowed from 50 to 30 sales and the median price increased to $162,450 from $149,500.

In comparison to a year ago, the Sun City resale market fell from 145 to 80 sales, the median sales price decreased to $209,950 from $220,000. As resale activity in Sun City West fell from 65 to 35 sales, the median sales price decreased from $245,000 to $234,450. The townhouse/condominium market in Sun City declined from 70 to 40 recorded sales, while the median home price improved very slightly from $144,950 to $145,000. In Sun City West, activity fell from 15 to 10 sales and the median sales price decreased from $172,500 to $160,950.

The resale market in Gilbert decreased from 485 to 270 sales, but the median sales price increased from $324,950 to $328,000 ($318,500 in September). The townhouse/condominium market fell from 20 to 10 sales as the median sales price increased from $219,700 to $234,900.

For the city of Chandler, the resale market slowed from 540 to 345 recorded sales, while the median sales price increased from $295,500 to $298,000 ($292,500 in September). The townhouse/condominium market declined from 100 to 30 sales and the median sales price improved from $174,000 to $189,900.

The resale market in Tempe decreased from 195 to 95 sales, with the median sales price increasing to $296,500 ($283,950 in September) from $275,000. The townhouse/condominium sector slowed from 115 to 50 sales and the median sales price increased from $189,900 to $189,950.
The highest median sales price was in Paradise Valley at $1,737,500 with a median sized home at 3,755 square feet.

In the West Valley, the following communities represent 10 percent of the resale market, which is the same as a year ago.

Avondale fell from 190 to 140 sales with the median price moving from $256,000 to $247,000 ($247,000 in September)

El Mirage decreased from 155 to 70 sales, while the median home price went from $222,500 to $205,000 ($209,500 in September 2006)

Goodyear declined from 165 to 80 sales, while the median price decreased from $285,000 to $275,000 ($273,000 in September 2006)

Surprise decreased from 305 sales ($259,900) to 190 sales ($237,000), while it was $239,000 in September