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Greater Phoenix resale home numbers remain stagnant


August 09, 2007

MESA, Ariz. - The local resale housing market continues its uninspiring trend. With 4,330 recorded sales in July 2007, the activity was close to June’s 4,910 recorded sales and was well below last year’s 5,545 transactions. While the current level of activity brings much needed stability, the 2007 year-to-date total of 33,510 homes is well below the 41,835 for 2006 year to date and 68,235 sales for 2005 year to date.

As the resale market follows a more traditional pattern, there are increasing risks that the market could move even lower, driven by geopolitical risks and tighter mortgage underwriting guidelines. Both of these factors could make it increasingly difficult for people, wanting to buy, but are not able to obtain needed financing. Increasing inventories of new homes and foreclosures are providing a competitive and attractive alternative to the resale home in many areas of the market.

“New home builders have been aggressively pursuing buyers through incentives such as specially priced up-grades, free pools and gift cards, thus, the 2007 resale housing market is showing signs of increasing weaknesses that could drive it below the current expectations of it being a good year,” said Jay Butler, director of Realty Studies in ASU’s Morrison School of Management and Agribusiness at the Polytechnic campus.

Much like the ever-increasing sales activity of the last few years, the rapid improvement in prices has disappeared. The median home price in July was $265,000 in comparison to $263,145 for June and last year’s $264,900. For July 2007, 17 percent of all recorded sales were for homes priced from $125,000 to $199,999, 41 percent for $200,000 to $299,999 and 41 percent for homes priced over $300,000. Last year, the distribution was 14 percent of all recorded sales were for homes priced from $125,000 to $199,999, 45 percent for $200,000 to $299,999 and 38 percent for homes priced over $300,000. Since the greater Phoenix area is so large, the median price can range significantly from $697,500 ($692,750 in June) in North Scottsdale to $185,000 ($191,500 in June) in the Maryvale area of the city of Phoenix.

Because mortgage interest rates decline slightly from last year’s 6.4 percent to 6.2 percent and home prices remained fairly stable, the monthly payment decreased slightly from last year’s $1,410 to $1,380. Even though mortgage interest rates have been declining over the last year, they have been in an upward trend for the last few months creating mounting concerns about the ability of some homeowners to acquire or maintain their homes. In response to issues raised in the subprime market underwriting guidelines have been tightening, making it more difficult for potential buyers to qualify for a mortgage.

Although townhouse/condominium units have retained some popularity with seasonal visitors, investors and people seeking affordable housing, this housing sector has continually fallen from the 1,350 sales in March to 980 sales, while there were 1,125 sales for a year ago. With slower sales, the median home price decreased slightly from $181,250 in June to $181,000 in July, while it was $179,000 for July 2006.

The median square footage for a single-family home recorded sold in July 2007 was 1,750 square feet, which is larger than the 1,650 square feet for a year ago. The larger size further demonstrates the role of the move-up sector in the local housing market. In the townhouse/condominium sector, the median square footage was 1,105 square feet, which is smaller than the 1,090 square feet reported a year ago.

  • In contrast to July 2006, recorded sales in the city of Phoenix decreased from 1,705 sales to 1,155 sales, while the median sales price increased to $225,000 from $223,000 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $185,000 in the Maryvale area to $330,000 ($343,000 in June) in the Union Hills area. The townhouse/condominium sector decreased from 385 to 310 sales while the median price increased from $143,000 to $168,200.
  • While the Scottsdale resale home market declined from 435 to 340 recorded sales, the median sales price increased from last year’s $580,000 to $600,000. The median resale home price is $697,500 ($692,750 in June) in North Scottsdale and $315,000 ($316,000 in June) in South Scottsdale. The townhouse/condominium sector in Scottsdale fell from 230 to 210 sales, with the median sales price decreasing from $260,000 to $250,000.
  • The Mesa resale housing market declined from 610 to 460 sales, while the median price fell from $249,900 to $242,000 ($235,000 in June). The townhouse/condominium sector also fell from 150 to 125 sales, and the median home price decreased from $163,250 to $155,500.
  • Glendale decreased from 455 to 305 sales and the median sales price decreased from $249,000 to $238,500 ($243,480 in June). The townhouse/condominium sector decreased from 55 to 35 sales, while the median sales price increased from $145,000 to $150,000.
  • For the city of Peoria, the resale market declined from 270 to 200 sales, while the median price moved from $270,000 to $264,950 ($255,000 in June). The townhouse/condominium sector increased from 20 to 25 sales, and the median price dropped from $180,000 for a year ago to $176,500.
  • In comparison to a year ago, the Sun City resale market remained at 75 sales, while the median sales price decreased to $199,500 from $204,000. Resale activity in Sun City West declined from 40 to 35 sales, with the median sales price decreasing from $240,000 to $230,000. The townhouse/condominium market in Sun City improved from 45 to 50 recorded sales, while the median home price decreased from $139,450 to $134,000. In Sun City West, activity fell from 15 to 10 sales and the median sales price decreased from $176,750 to $152,950.
  • The resale market in Gilbert decreased from 310 to 300 sales and the median sales price decreased from $335,000 to $314,500 ($297,000 in June). The townhouse/ condominium market improved from 10 to 15 sales as the median sales price decreased from $215,000 to $199,900.
  • For the city of Chandler, the resale market fell from 380 to 340 recorded sales, while the median sales price went from $300,500 to $308,375 ($288,000 in June). The townhouse/condominium market stayed at 40 sales and the median sales price declined from $177,500 to $165,000.
  • The resale market in Tempe decreased from 160 to 155 sales, with the median sales price decreasing from $286,000 to $283,810 ($289,000 in June). The townhouse/ condominium sector dropped from 90 to 75 sales and the median sales price decreased from $197,750 to $189,000.
  • The highest median sales price was in Paradise Valley at $1,822,500 with a median square foot house of 3,885 square feet.
  • In the West Valley, the following communities represent 9 percent of the resale market.
    • Avondale fell from 125 to 90 sales with the median price moving from $259,900 to $222,500 ($239,000 in June).
    • El Mirage decreased from 80 to 50 sales, while the median home price went from $220,000 to $180,000 ($195,500 in June).
    • Goodyear went from 85 to 80 sales, while the median price decreased from $295,000 to $248,750 ($299,000 in June).
    • Surprise decreased from 200 sales a year ago to 185 sales, with the median price decreasing from $253,500 to $234,900 ($230,000 in June).