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Greater Phoenix Resale Market Up Slightly in August


September 11, 2006

MESA, Ariz. - With 5,685 recorded sales in August 2006, the local resale home market continued to drift lower. Although this activity is slightly above the 5,545 sales of July 2006, it is well below last year's 10,700 recorded sales. After the reported activity for August 2005, the resale market began to dramatically change from a hyper market to a much slower market. Historically, August is the last of the strong months as the market recedes in activity until at least March of the ensuing year.

This is the weakest August since 4,940 sales were recorded in August 2002. So far in 2006, there have been a total of 47,515 sales, while it stood at 78,935 sales in 2005 year to date. While it was 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 47,255 sales.

Although the record median price was $267,000 in June 2006, the rapid rise in home prices appeared to end in September 2005 with a median price of $263,000. For August, the median home price of $262,500 was a retreat from the $264,900 in July, and was not appreciably above $258,700 last August.

"As the housing market slows, the entry level sector basically disappears, while the move-up market garners a larger share of the remaining activity," said Jay Butler, director of the Arizona Real Estate Center at Arizona State University's Polytechnic campus. "Thus, it is not unusual to see median prices to be fairly stable or even increase as the move-up market works to be satisfied."

For August 2006, 14 percent of all recorded sales were for homes priced from $125,000 to $199,999, 44 percent for $200,000 to $299,999 and 36 percent for homes priced over $300,000.

Last year, the distribution was 20 percent of all recorded sales were for homes priced from $125,000 to $199,999, 38 percent for $200,000 to $299,999 and 36 percent for homes priced over $300,000.

The Greater Phoenix area is so large, so the median price can range significantly from $661,000 ($705,000 in July) in North Scottsdale to $120,500 ($152,000 in July) in the Sky Harbor area of the city of Phoenix.

Although the median home price showed a slight decrease, mortgage interest rates are higher than a year ago, but remained at about 6.4 percent as in July. Thus, affordability continues to be an issue.

The average 30-year mortgage for August 2005 was 5.5 percent, while it was 6.1 percent for August 2006. Based on an 85 percent loan-to-value, the monthly mortgage payment for the median price home increased from $1,250 to $1,365.

"Even though the recent rise in interest rates has slowed, limited home appreciation and household income continues to raise concern about the ability of some homeowners to maintain their homes," said Butler. "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 small decrease from 1,125 sales for July 2006 to 1,100 sales for August, which was below last year's 1,975 sales. So far in 2006, there have been 10,350 sales, while there was 14,805 sales a year ago. The median home price decreased from a record $179,000 in July to $170,000, while it was $159,000 for a year ago.

The median square footage for a single-family home recorded sold in August 2006 was 1,640 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 August 2005, recorded sales in the city of Phoenix decreased from 3,050 sales to 1,760 sales, while the median sales price increased to $224,000 from $223,000 in July, while it was $206,000 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $120,500 in the Sky Harbor area to $350,500 ($312,000 in July) in the Union Hills area. The townhouse/condominium sector decreased from 615 to 395 sales while the median price increased from $136,200 to $152,295.
  • While the Scottsdale resale home market declined from 780 a year ago to 390 recorded sales, the median sales price increased slightly from last year's $555,000 to $598,500, while it was $580,000 in July 2006. The median resale home price is $661,000 ($705,000 in July) in North Scottsdale and $330,000 ($304,425 in July) in South Scottsdale. The townhouse/condominium sector in Scottsdale also decreased from 365 to 205 sales, but the median sales price increased from $245,125 to $266,000.
  • The Mesa resale housing market declined from 1,290 to 645 sales, while the median price remained at $240,000 ($249,900 in July). The townhouse/condominium sector also fell from 325 to 165 sales, while the median home price increased from $138,000 to $159,950.
  • Glendale resale housing market decreased from 855 a year ago to 445 sales, but the median sales price increased from $240,000 to $255,000 ($249,000 in July). The townhouse/condominium sector also declined from 100 to 65 sales, while the median sales price increased from $115,500 to $143,000.
  • For the city of Peoria, the resale market fell from 490 sales to 280 sales, while the median price moved from $264,000 to $270,000. The townhouse/condominium sector slowed from 60 to 25 sales and the median price went from $147,500 to $165,000.
  • In comparison to a year ago, the Sun City resale market fell from 155 to 90 sales, the median sales price increased to $200,000 from $193,600. As resale activity in Sun City West fell from 70 to 50 sales, the median sales price decreased from $240,000 in July to $234,000, while it was $240,650 for a year ago. The townhouse/condominium market in Sun City declined from 85 to 50 recorded sales, while the median home price increased from $138,450 to $139,000. In Sun City West, activity fell from 20 to 15 sales, but the median sales price increased from $160,000 to $175,750.
  • The resale market in Gilbert decreased from 665 to 355 sales, but the median sales price increased from $309,900 to $320,000 ($335,000 in July). The townhouse/ condominium market fell from 45 to 10 sales as the median sales price increased from $196,500 to $210,000.
  • For the city of Chandler, the resale market slowed from 780 to 410 recorded sales, while the median sales price increased from $289,600 to $308,000 ($300,500 in July). The townhouse/condominium market declined from 100 to 40 sales and the median sales price increased from $164,375 to $182,000.
  • The resale market in Tempe decreased from 270 to 155 sales, with the median sales price increasing to $299,950 ($286,000 in July) from $265,000. The townhouse/condominium sector slowed from 140 to 70 sales and the median sales price increased from $176,500 to $179,250.
  • The highest median sales price was in Paradise Valley at $1,675,000 with a median square foot house of 3,470 square feet.
  • In the West Valley, the following communities represent 9 percent of the resale market, which is down from the 11 percent of a year ago.
    • Avondale fell from 280 to 130 sales with the median price moving from $253,000 to $254,325 ($259,900 in July).
    • El Mirage decreased from 200 to 80 sales, while the median home price went from $219,340 to $212,750 ($220,000 in July 2006)
    • Goodyear declined from 195 to 95 sales, while the median price decreased from $283,250 to $280,000 ($295,000 in July).
    • Surprise decreased from 450 sales to 225 sales, with a median price decreasing from $258,345 to $250,000 ($253,500 in July).