Greater Phoenix resale market continues slowing trend in September

October 10, 2006

MESA, Ariz. - In September 2005, the local resale home market began to slow down with 9,815 recorded sales leading to 4,875 recorded sales in September 2006. This is the lowest monthly level since 4,090 sales were reported in February 2003, and the lowest September since 2000, with 4,134 sales. So far in 2006, there have been a total of 52,390 sales, while it stood at 88,750 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 the years of 2003 year to date, with 55,435 sales.

For the first time in the last 10 years, the year-to-year median home price has declined from last year's $263,000 to $256,900, while it was $264,900 in July 2006. The record to date was June 2006 at $267,000.

For September 2006, 14 percent of all recorded sales were for homes priced from $125,000 to $199,999, 46 percent for $200,000 to $299,999 and 37 percent for homes priced over $300,000. Last year, the distribution of all recorded sales was 29 percent for homes priced from $125,000 to $199,999, 34 percent for $200,000 to $299,999 and 32 percent for homes priced over $300,000.

Since the Greater Phoenix area is so large, the median price can range significantly from $678,000 ($661,000 in August) in North Scottsdale to $159,500 ($120,500 in August) 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 — 5.5 percent versus 6.0 percent for September 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 $1,270 to $1,325.

"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 Q. 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 1,100 sales for August 2006 to 930 sales for September, which was below last year's 1,770 sales. So far in 2006, there have been 11,280 sales, while there were 16,575 sales a year ago. The median home price increased from $170,000 in August to $173,500, while it was $160,000 for a year ago.

The median square footage for a single-family home recorded sold in September 2006 was 1,620 square feet, which is the same as reported a year ago. In the townhouse/condominium sector, the median square footage was 1,090 square feet, which is smaller than 1,105 square feet reported a year ago.

In contrast to September 2005, recorded sales in the city of Phoenix decreased from 2,870 sales to 1,605 sales, while the median sales price increased to $223,000 from $212,000 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $159,500 in the Sky Harbor area to $317,000 ($350,500 in August) in the Union Hills area. The townhouse/condominium sector decreased from 575 to 335 sales while the median price increased from $136,900 to $152,000.
While the Scottsdale resale home market declined from 660 to 340 recorded sales, the median sales price increased slightly from last year's $540,000 to $580,000, while it was $598,500 in August 2006. The median resale home price is $678,000 ($661,000 in August) in North Scottsdale and $320,000 ($330,000 in August) in South Scottsdale. The townhouse/condominium sector in Scottsdale also decreased from 375 to 170 sales, but the median sales price increased from $245,000 to $252,250.
The Mesa resale housing market declined from 1,185 last September to 555 sales, while the median price fell from $243,500 to $240,000 ($240,000 in August). The townhouse/ condominium sector also fell from 285 to 135 sales, while the median home price increased from $141,000 to $155,000.
Glendale decreased from 780 to 400 sales, but the median sales price increased from $240,000 to $247,810 ($255,000 in August).The townhouse/condominium sector also declined from 95 to 45 sales, while the median sales price increased from $117,500 to $139,000.
For the city of Peoria, the resale market fell from 470 sales to 190 sales, while the median price moved from $281,155 to $265,000 ($270,000 in August). The townhouse/condominium sector slowed from 40 to 20 sales and the median price went from $155,500 to $169,500.
In comparison to a year ago, the Sun City resale market fell from 150 to 75 sales, the median sales price decreased to $206,500 from $210,500. As resale activity in Sun City West fell from 60 to 30 sales, the median sales price decreased from $240,650 in August to $215,000, while it was $240,000 for a year ago. The townhouse/condominium market in Sun City declined from 80 to 50 recorded sales, while the median home price declined from $136,000 to $132,000. In Sun City West, activity fell from 20 to 10 sales, but the median sales price increased from $164,950 to $165,000.
The resale market in Gilbert decreased from 565 to 265 sales, and the median sales price decreased from $325,000 to $318,500 ($320,000 in August). The townhouse/condominium market fell from 25 to 10 sales as the median sales price increased from $199,000 to $215,000.
For the city of Chandler, the resale market slowed from 715 to 315 recorded sales from a year ago, while the median sales price decreased from $295,000 to $292,500 ($308,000 in August). The townhouse/condominium market declined from 85 to 45 sales and the median sales price declined from $184,900 to $176,000.
The resale market in Tempe decreased from 225 to 130 sales, with the median sales price increasing to $283,950 ($299,950 in August) from $275,120 a year ago. The townhouse/condominium sector slowed from 110 to 50 sales and the median sales price increased from $180,000 to $182,250.
The highest median sales price was in Paradise Valley at $1,625,000 with a median square foot house of 3,500 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 235 to 120 sales with the median price moving from $260,000 to $247,000 ($254,325 in August).
- El Mirage decreased from 185 to 75 sales, while the median home price went from $223,000 to $209,500 ($212,750 in August 2006).
- Goodyear declined from 185 to 80 sales, while the median price decreased from $278,450 to $273,000 ($280,000 in August).
- Surprise decreased from 415 sales ($256,990) to 190 sales ($239,000), while it was $250,000 in August.