Greater Phoenix resale market continues sluggish pattern

May 09, 2007

MESA, Ariz. — The local resale home market may seem to be functioning at levels below desired activity, but it is following a very traditional pattern. April recordings at 4,855 sales are below the 5,385 sales recorded in March, but above January (4,520) and February (4,280) sales. April recordings are well below the 5,980 sales of April 2006 and 8,735 sales of April 2005, but comparable to the 4,870 sales of April 2000.<separator></separator> So far in 2007, a total of 19,045 homes have been recorded sold, in contrast to 23,960 for 2006 year to date and 36,060 sales for 2005 year to date.<separator></separator> “While the resale market is tracking near historical norms, the levels should be well below those of the last few years, because the current market lacks the market frenzy to own and/or invest at almost any price and reasoning,” said Jay Q. Butler, director of Realty Studies at Arizona State University’s Polytechnic campus.<separator></separator> “The new home has become a strong competitive and attractive alternative to the resale home in many areas of the market as new home builders have been aggressively pursuing buyers through incentives such as specially priced upgrades, free pools and gift cards. The general expectation is that the 2007 resale housing market should be a good year, but no where near the records,” added Butler. “This tends to assume that there are no negative geopolitical events and that the subprime problem is contained.”<separator></separator> Much like the ever increasing sales activity of the last few years, the rapid improvement in prices has disappeared. The median home price in April was $265,000 in comparison to $265,470 for March and last year’s $264,900. For April 2007, 15 percent of all recorded sales were for homes priced from $125,000 to $199,999, 44 percent for $200,000 to $299,999 and 41 percent for homes priced more than $300,000. Last year, the distribution was 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 more than $300,000.<separator></separator> The increase in the higher price levels demonstrates how the importance of the move-up market emerges in a slowing market. Since the greater Phoenix area is so large, the median price can range significantly from $683,000 ($713,500 in March) in North Scottsdale to $132,000 ($145,950 in March) in the Sky Harbor area of the city of Phoenix.<separator></separator> Because mortgage interest rates decline slightly from last year’s 6.0 percent to 5.8 percent and home prices remained stable, the monthly payment decreased slightly from last year’s $1,350 to $1,320. 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. 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.<separator></separator> Because townhouse/condominium units are popular with seasonal visitors, it is not unusual to observe an improvement in the early months of the year. Thus, April had 1,305 sales, in comparison to 1,350 for March and 1,390 sales for a year ago. The median home price increased from $181,000 in March to a record $184,950.<separator></separator> The median square footage for a single-family home recorded sold in April 2007 was 1,695 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 1,085 square feet, which is smaller than the 1,160 square feet reported a year ago.<separator></separator><ul><li> In contrast to April 2006, recorded sales in the city of Phoenix decreased from 1,860 sales to 1,280 sales, while the median sales price increased to $225,000 from $220,000 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $132,000 in the Sky Harbor area to $329,500 ($336,000 in March) in the Union Hills area. The townhouse/condominium sector decreased from 430 to 415 sales while the median price increased from $150,275 to $165,000. </li></ul> <ul><li> The Scottsdale resale home market declined from 460 a year ago to 400 recorded sales, with the median sales price decreasing from last year’s $593,000 to $557,500. The median resale home price is $683,000 ($713,500 in March) in North Scottsdale and $333,000 ($323,000 in March) in South Scottsdale. The townhouse/condominium sector in Scottsdale remained at 300 sales and the median sales price decreased from $275,000 to $264,450. </li></ul> <ul><li> The Mesa resale housing market declined from 660 to 530 sales, while the median price fell from $245,900 to $234,510 ($242,700 in March). The townhouse/condominium sector also fell from 215 to 185 sales, while the median home price decreased from $160,000 to $158,000. </li></ul> <ul><li> Glendale decreased from 480 to 330 sales, and the median sales price decreased from $250,000 to $245,000 ($248,250 in March). The townhouse/condominium sector remained at 60 sales, while the median sales price increased from $134,000 to $136,250. </li></ul> <ul><li> For the city of Peoria, the resale market was stable at 250 sales, while the median price moved from $275,000 to $257,915 ($270,000 in March). The townhouse/condominium sector decreased from 45 to 25 sales and the median price went from $165,000 to $200,000. </li></ul> <ul><li> In comparison to a year ago, the Sun City resale market remained at 115 sales, while the median sales price increased to $210,000 from $200,000. As resale activity in Sun City West stayed at 55 sales, the median sales price decreased from $250,000 to $222,000. The townhouse/condominium market in Sun City declined from 65 to 60 recorded sales, while the median home price increased from $130,000 to $136,000. In Sun City West, activity remained at 20 sales and the median sales price decreased from $165,800 to $164,700. </li></ul> <ul><li> The resale market in Gilbert decreased from 310 to 285 sales and the median sales price decreased from $339,000 to $295,195 ($295,500 in March). The townhouse/condominium market improved from 10 to 15 sales, as the median sales price decreased from $209,900 to $207,500. </li></ul> <ul><li> For the city of Chandler, the resale market fell from 405 to 375 recorded sales, while the median sales price went from $295,000 to 297,950 ($293,850 in March). The townhouse/condominium market increased from 45 to 60 sales, but the median sales price declined from $184,450 to $179,975. </li></ul> <ul><li> The resale market in Tempe decreased from 160 to 120 sales, with the median sales price increasing from $275,000 to $285,000 ($278,750 in March). The townhouse/condominium sector moved from 70 to 75 sales and the median sales price decreased from $189,500 to $184,200. </li></ul> <ul><li> The highest median sales price was in Paradise Valley at $1,637,500 with a median square foot house of 3,615 square feet. </li></ul> <ul><li> In the West Valley, the following communities represent 10 percent of the resale market. <ul><li> Avondale fell from 135 to 90 sales, with the median price moving from $260,000 to $233,975 ($232,280 in March). </li><li> El Mirage decreased from 90 to 50 sales, while the median home price went from $219,900 to $199,000 ($213,750 in March). </li><li> Goodyear went from 100 to 95 sales, while the median price decreased from $298,200 to $265,000 ($255,000 in March). </li><li> Surprise increased from 230 sales to 235 sales, with the median price falling from $250,000 a year ago to $246,060 ($241,500 in March). </li></ul></li></ul>