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Greater Phoenix Resale Market Posts Best November on Record


December 09, 2004

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

MESA, Ariz. - The Greater Phoenix resale market continued its upward trajectory, tracking 9,525 sales in November compared to 7,780 sales in September and 8,755 sales in October. This is the best November on record, well ahead of last year's 5,540 sales. The torrid pace for 2004 has brought the year-to-date total to 94,075 sales, well beyond the previous record of 73,785 homes sold in for the entire year of 2003.

In the midst of the continuing record activity, concern is mounting about the affordability of housing. Between January and November of this year, the median home price rose from $156,000 to $184,900. This compares to $158,000 in November 2003. Based on an 85 percent loan-to-value and an interest rate of 5.5 percent, which is unchanged from a year ago, the monthly payment last year would have been $760, while it is now $895.

In remembering the late 1970s and 1980s, real estate analysts question whether the market can be sustained, especially the ever-higher 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. Further, people with low-interest mortgages have little incentive to move, thus effectively slowing the market even further.

Since the Greater Phoenix area is so large, the median price can range significantly from $467,950 in North Scottsdale to $99,375 in the Sky Harbor area of Phoenix. Forty-four percent of all recorded sales in November were for homes priced from $125,000 to $199,999, and 19 percent for homes priced above $300,000.

With 1,775 sales for November, the resale townhouse/condominium market exceeded the 1,540 units sold in October and the 1,035 units for a year ago. This brought the YTD total to 17,315 sales, which already breaks the record of 14,690 units for 2003 and 13,300 units for 2002. The November median home price rose from $117,000 in October to $119,900, which is well above last year's $105,000.

The median square footage for a single-family home recorded sold in November was 1,660, slightly larger than the 1,655 square feet reported a year ago. In the townhouse/condominium sector, the median square footage was 1,130, which is smaller than 1,180 square feet reported a year ago.

In comparison to November 2003, recorded sales in the City of Phoenix increased from 1,620 sales to 2,565 sales, while the median sales price increased from $129,500 to $150,000. Since Phoenix is a geographically large city, the median prices can range significantly - for example, $99,375 in the Sky Harbor area to $245,000 in the Union Hills area. The townhouse/ condominium sector improved from 290 to 500 sales, while the median price rose from $91,500 to $110,000.

The Scottsdale resale home market improved from 525 to 810 recorded sales. The median sales price continued its upward trend, increasing from $322,000 to $430,000. The median resale home price is $467,950 (650 sales) in Scottsdale and $210,000(160 sales) in South Scottsdale. The townhouse/ condominium sector in Scottsdale improved from 235 to 390 sales, while the median sales price rose from $152,000 to $186,500.

The Mesa resale housing market grew strongly from 705 to 1,255 sales, while the median price increased from $144,750 to $167,950. The townhouse/condominium sector improved from 140 to 295 sales, while the median price rose from $95,000 to $102,500.

Glendale improved from 440 to 555 sales and the median sales price increased from $145,000 to $168,000. The townhouse/condominium sector doubled, from 40 to 80 sales, while the median sales price rose from $82,750 to $85,000.

In comparison to a year ago, the Sun City resale market increased from 110 to 190 sales, with the median sales price increasing from $126,950 to $150,000. Resale activity in Sun City West decreased from 70 to 110 recorded sales, while the median sales price rose from $145,000 to $187,000. The townhouse/condominium market in Sun City increased from 80 to 95 recorded sales, while the median price rose from $80,000 to $94,900. In Sun City West, activity remained at 30 sales, as the median sales price rose from $108,950 to $124,000.

The resale market in Gilbert improved as sales increased from 305 to 555 and the median price rose from $179,900 to $225,000. The townhouse/condominium market remained at 20 sales as the median sales price increased from $119,950 to $136,450.

For the city of Chandler, the resale market expanded from 475 to 720 recorded sales, while the median sales price increased from $169,500 to $200,000. The townhouse/condominium market improved from 45 to 80 sales and the median sales price rose from $103,750 to $119,000.

The resale market in Tempe improved from 150 to 225 sales, with the median sales price rising from $172,500 to $195,500. The townhouse/condominium sector increased from 60 to 90 sales and the median sales price jumped from $110,000 to $125,000.

The highest median sales price again was in Paradise Valley at $980,000, with a median square footage of 3,540.

In the West Valley, the following communities represent 10 percent of the resale market, compared to 7 percent a year ago:

  • Avondale grew from 100 to 210 sales, with the median price rising from $149,900 to $179,950.
  • El Mirage improved from 40 sales (median price $123,450) to 155 sales ($148,000).
  • Goodyear grew from 70 sales ($168,000) to 185 sales ($189,770).
  • Surprise increased from 160 sales (median price $143,000) to 375 sales ($183,000).