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Greater Phoenix Resale Market Picks Up Pace in October


November 10, 2004

MESA, Ariz. - The Greater Phoenix resale market showed some improvement in October, reporting 8,755 sales compared to September's 7,780 sales. The October total is higher than last year's 5,285 sales. The 2004 year-to-date total of 84,550 homes already exceeds the YTD record 73,785 homes sold in 2003 and 62,625 in 2002.

In midst of the continuing record activity, there is mounting concern about the affordability of housing. Since January, the median home price has increased from $156,000 to another monthly record in October at $180,000, up from $179,500 in September and $154,000 a year ago. The resale affordability index is 100, down from 124 a year ago. The last time the resale affordability index stood at 100 was in 1989 when the median price was $78,000, but the effective interest rate then was 11 percent. An index value of 100 or higher means the typical home buyer is able to afford a median-priced resale home at the current financing, based on the current median resale price and household income.

In remembering the late 1970s and 1980s, the question is whether the market can be sustained - especially the continuing rise of home prices. The increasing number of rental properties has resulted in extreme competition based on lower rents and even concessions. Rental difficulties could lead to fewer future buyers and more homes on the market. For owner-occupants, higher interest rates combined with stable income and higher home prices will adversely impact the affordability of housing, leading to a potential slowdown of activity. Additionally, people with low-interest mortgages have little incentive to move and thus provide some additional stimulus to the market

Since the Greater Phoenix area is so large, the median price can range significantly, for example, $457,250 in North Scottsdale and $105,000 in the Sky Harbor area of Phoenix. In October, 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.

With 1,540 sales in October, the resale townhouse/condominium market exceeded the 1,345 units sold in September and the 1,100 units sold a year ago. This brought the YTD total to 15,545 sales, which exceeds the YTD record of 14,690 units for 2003 and 13,300 units for 2002. The October median home price increased from $114,000 in September to $117,000 in October - well above last year's $103,945.

The median square footage for a single-family home recorded sold in October 2004 was 1,665, slightly larger than the 1,650 square feet reported a year ago. In the townhouse/condominium sector, the median square footage was 1,130, which is smaller than 1,175 square feet reported a year ago.

In comparison to October 2003, recorded sales in the city of Phoenix increased from 1,570 to 2,445 sales, while the median sales price rose from $128,000 to $146,000. Since Phoenix is a geographically large city, the median prices can range significantly - for example, $105,000 in the Sky Harbor area and $239,000 in the Union Hills area. The townhouse/condominium sector improved from 315 to 480 sales, while the median price increased from $91,000 to $105,900.

The Scottsdale resale home market improved from 490 to 745 recorded sales. The median sales price continued its upward trend, from $320,000 to $412,500. The median resale home price is $457,250 in North Scottsdale and $209,000 in South Scottsdale. The townhouse/condominium sector in Scottsdale improved from 245 to 360 sales, while the median price increased from $152,000 to $183,000.

The Mesa resale housing market grew strongly from 640 to 1,040 sales, while the median price rose from $142,000 to $165,000. The townhouse/condominium sector improved from 160 to 225 sales, but the median home price declined from $100,115 to $99,500.

Glendale improved from 460 to 645 sales and the median sales price increased from $140,500 to $158,750. The townhouse/condominium sector grew slightly from 50 to 70 sales, while the median sales price rose from $82,500 to $82,750.

In comparison to a year ago, the Sun City resale market grew from 130 to 165 sales, with the median sales price increasing from $122,750 to $148,400. Resale activity in Sun City West declined from 90 to 80 recorded sales, but the median price increased from $152,000 to $182,000.The townhouse/condominium market in Sun City fell from 80 to 70 recorded sales, while the median home price rose from $82,500 to $90,000. In Sun City West, activity declined from 30 to 20 sales, but the median sales price increased from $100,500 to $118,750.

The resale market in Gilbert was better as activity increased from 310 to 570 sales, and the median price increased from $176,250 to $220,000. The townhouse/condominium market remained at 20 sales as the median sales price rose from $121,000 to $125,000.

For the city of Chandler, the resale market expanded from 460 to 620 recorded sales, while the median sales price increased from $165,000 to $196,450. The townhouse/condominium market slowed from 65 to 60 sales, but the median sales price rose from $103,500 to $118,550.

The resale market in Tempe improved from 150 to 215 sales, with the median price rising to from $170,000 $185,500. The townhouse/condominium sector increased from 70 to 95 sales, while the median sales price increased from $111,900 to $122,450.

The highest median sales price was in Paradise Valley at $876,000, with a median square footage of 3,290.

In the West Valley, the following communities represent 10 percent of the resale market, compared to 6 percent a year ago:

  • Avondale grew from 80 to 215 sales, with the median sales price rising from $151,500 to $170,000.
  • El Mirage improved from 50 sales (median price $119,000) to 150 sales ($141,000).
  • Goodyear's market grew from 80 to 185 sales; the median price rose from $173,000 to $195,500.
  • Surprise increased from 115 sales (median price $142,450) to 315 sales ($178,500).