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Greater Phoenix Resale Market Cools Its Heels in July


August 12, 2004

SOURCE: Dr. Jay Q. Butler, Arizona Real Estate Center, 480/965-5455, Jay.Butler@asu.edu

MESA, Ariz. - The Greater Phoenix resale market appeared to have taken a summer respite, with 8,525 sales recorded in July - a 27 percent decline from the 11,665 sales recorded in the previous month, but still well ahead of the 6,320 sales a year ago in July 2003. This has brought the year-to-date total to 56,745 sales, well above the year-to-date 41,200 sales in 2003 and 36,195 in 2002.

Most of these sales represent decisions made several months ago when mortgage rates where rising and expected to go even higher. Even as the Federal Reserve has raised interest rates, the enigmatic stock market and the anemic economic recovery has actually allowed 30-year mortgage rates to decline from 5.9 percent in May to 5.7 percent in July. Thus, lower rates may provide some additional impetus to the resale home market in the coming months. Although the home-buying appetite seems insatiable, concerns such as the struggling job market could impact the future income of owners and buyers alike.

With concerns over the median wage of many jobs being generated in the local economy, the main housing issue has become affordability. This is related to the income capability of a household to acquire and support ever more expensive housing. Higher interest rates and home prices, combined with static incomes, could adversely impact the affordability of housing - leading to a slower pace of activity. Further, consumers with low-rate mortgages have little incentive to move and thus provide some additional stimulus to the market. While sales activity slowed from its record pace, the median home price has increased to a new monthly record of $176,000. The previous record was $175,000 for June, compared to only $160,000 a year ago. It is true that higher prices benefit current owners with value and appreciation that support refinancing or equity build-up to acquire bigger or better homes. On the other hand, however, higher prices make it increasingly difficult for potential owners to acquire and maintain a first home.

Since the Greater Phoenix area is so large, the median price can range significantly - from $444,000 in North Scottsdale to $108,000 in the Sky Harbor area of Phoenix. During July 2004, 44 percent of all recorded sales were for homes priced from $125,000 to $199,999 and 19 percent for homes priced over $300,000.

The resale townhouse/condominium market followed a comparable pattern, with 1,495 sales in July - down from the record 2,040 recorded sales for June, but well ahead of last year's 1,120 recorded sales. This brought the YTD total to 10,775 sales, compared to 8,505 for 2003 and 7,885 for 2002. The median price for this housing sector continued to slip from record $114,000 in May to $111,500 in July, compared to $105,000 a year ago.

The median square footage for a single-family home recorded sold in July was 1,725, which is larger than the 1,705 square feet reported a year ago. In the townhouse/condominium sector, the median square footage was 1,140, which is smaller than 1,175 square feet reported a year ago.

  • In comparison to July 2003, recorded sales in the city of Phoenix increased from 1,645 to 2,205 sales, while the median sales price increased from $130,000 to $144,900. Since Phoenix is a geographically large city, the median prices can range significantly - from $108,900 in the Sky Harbor area to $213,910 in the Union Hills area. The townhouse/condominium sector improved from 265 to 435 sales, while the median price rose from $92,550 to $96,900.
  • The Scottsdale resale home market improved from 670 to 820 recorded sales. The median sales price continued its rising trend, increasing from $324,950 to $389,000. The median resale home price is $444,000 in North Scottsdale and $190,000 in South Scottsdale. The townhouse/condominium sector in Scottsdale improved from 260 to 355 sales, while the median sales price increased from $158,000 to $163,840.
  • The Mesa resale housing market grew strongly from 790 to 1,060 sales, while the median price rose from $145,925 to $159,220. The townhouse/condominium sector improved from 190 to 210 sales, while the median home price increased from $94,900 to $98,000.
  • Glendale improved from 580 to 635 sales and the median sales price increased from $144,250 to $162,000. The townhouse/condominium sector remained at 50 sales, while the median sales price rose from $79,500 to $93,000.
  • In comparison to a year ago, the Sun City resale market increased from 125 to 135 sales, with the median sales price rising from $119,000 to $135,000. Resale activity in Sun City West improved from 70 to 75 recorded sales and the median sales price increased from $151,200 to $165,000. The townhouse/condominium market in Sun City slowed from 80 to 75 recorded sales, while the median home price increased from $80,750 to $83,500. In Sun City West, sales remained stable (20 sales) while the median sales price rose from $107,500 to $110,000.
  • The resale market in Gilbert was better as activity moved from 450 to 530 sales and the median sales price increased from $175,000 to $212,000. The townhouse/condominium market declined from 25 to 20 sales as the median sales price rose from $119,500 to $130,000.
  • For the city of Chandler, the resale market expanded from 570 to 680 recorded sales, while the median sales price increased from $165,000 to $184,895. The townhouse/condominium market improved from 50 to 70 sales and the median sales price increased from $102,000 to $109,900.
  • The resale market in Tempe improved from 195 to 230 sales, with the median sales price rising from $173,000 to $186,900. The townhouse/condominium sector increased from 100 to 110 sales, while the median sales price rose from $106,560 to $119,700.
  • The highest median sales price was in Paradise Valley at $985,000, with a median square footage of 3,640.
  • In the West Valley, the following communities represent 9 percent of the Greater Phoenix resale market, compared to 6 percent a year ago.
    • Avondale grew from 95 to 190 sales, with the median price increasing from $145,000 to $163,125.
    • El Mirage improved from 40 sales (median price $119,900) to 110 sales ($134,000).
    • Goodyear moved from 80 to 170 sales, while the median price increased from $165,000 to $172,330.
    • Surprise increased from 140 sales (median price $140,000) to 300 sales ($165,000).