Greater Phoenix Resale Market Slows in February, Still Sets Record

March 11, 2005

MESA, Ariz. — Although the 7,935 recorded sales for February 2005 are below the 9,360 recorded in January, it is still a record for February and well above last year’s 5,580 recorded sales. So far in 2005, 17,295 sales have been recorded, in contrast to 10,680 sales for 2004 year to date.<separator></separator>Even though 2004 started out strong, it really did not pick up steam until after March, driving home prices up. While sales activity continues to mount, so does the median sales price as it increased 26 percent from $158,120 in February 2004 to the current $200,000.<separator></separator>In midst of the ever continuing records of activity, there is concern about the affordability of housing. The average 30-year mortgage for February 2004 was 5.2 percent, while it was 5.3 percent in February 2005. Based on an 85 percent loan- to-value, the monthly mortgage payment for the median price home was $740, while it would be $940 for February 2005.<separator></separator>In remembering the late 1970s and 1980s, there are increased concerns about whether the market can be sustained, especially the ever higher home prices, according to Jay Butler, director of the Arizona State University Arizona Real Estate Center at the Polytechnic campus.<separator></separator>"It is becoming increasingly difficult for young and minority households to purchase their first home to enter the housing game and move up to bigger or better housing," says Butler.<separator></separator>The increasing number of rental properties has resulted in extreme competition, based on lower rents and even concessions. Rental difficulties could lead to more homes on the market than the available supply of buyers.<separator></separator>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 reduced level of activity. Further, people with low interest rate mortgages, have little incentive to move to provide some additional stimulus to the market.<separator></separator>Since the Greater Phoenix area is so large, the median price can range significantly from $525,000 in North Scottsdale to $110,000 in the Sky Harbor area of the city of Phoenix. For February 2005, 38 percent of all recorded sales were for homes priced from $125,000 to $199,999 and 24 percent for homes priced over $300,000.<separator></separator>With 1,510 sales for February 2005, the resale townhouse/condominium market followed a similar pattern with a slowing from 1,675 sales for January, but well ahead of last year’s 1,065 sales. For the first time since 2003, the median home price did not increase but remained at $125,000, which is still higher than last year’s $110,000.<separator></separator>The median square footage for a single-family home recorded sold in February 2005 was 1,650 square feet, which is larger than the 1,640 square feet reported a year ago. In the townhouse/condominium sector, the median square footage was 1,130 square feet, which is smaller than 1,200 square feet reported a year ago.<separator></separator>In contrast to February 2004, recorded sales in the city of Phoenix increased from 1,570 sales to 2,235 sales, while the median sales price increased to $160,000 from $128,000. Since Phoenix is a geographically large city, the median prices can range significantly such as $110,000 in the Sky Harbor area to $275,000 in the Union Hills area. The townhouse/condominium sector improved from 305 to 425 sales while the median price increased from $91,490 to $113,690.<separator></separator>The Scottsdale resale home market improved from 515 to 635 recorded sales. The median sales price continued its upward movement by increasing from $340,000 to $469,400. The median resale home price is $525,000 in North Scottsdale and $229,000 in South Scottsdale. The townhouse/condominium sector in Scottsdale improved from 250 to 315 sales, while the median sales price increased from $169,500 to $206,000.<separator></separator>The Mesa resale housing market grew strongly from 655 to 945 sales, while the median price increased from $147,200 to $180,000. The townhouse/condominium sector improved from 155 to 250 sales and the median home price increased from $102,000 to $107,500.<separator></separator>Glendale improved from 380 to 545 sales and the median sales price increased from $146,500 to $175,000.The townhouse/condominium sector grew from 40 to 75 sales, while the median sales price decreased from $82,910 to $81,500.<separator></separator>In comparison to a year ago, the Sun City resale market decreased from 160 to 150 sales, with the median sales price increasing to $159,900 from $127,750. Resale activity in Sun City West declined from 75 to 70 recorded sales and the median sales price increased from $160,000 to $189,900.The townhouse/condominium market in Sun City increased from 75 to 100 recorded sales, while the median home price increased from $79,000 to $110,000. In Sun City West, activity decreased from 35 to 25 sales, but the median sales price increased from $113,000 to $130,000.<separator></separator>The resale market in Gilbert was better as activity moved from 350 to 495 sales, with the median sales price increasing to $251,000 from $183,000. The townhouse/condominium market expanded from 15 to 20 sales as the median sales price increased from $135,000 to $142,750.<separator></separator>For the city of Chandler, the resale market expanded from 385 to 560 recorded sales, while the median sales price increased from $163,500 to $230,000. The townhouse/condominium market improved from 45 to 65 sales and the median sales price increased from $116,250 to $121,750.<separator></separator>The resale market in Tempe improved from 140 to 165 sales, with the median sales price increasing to $198,900 from $163,000. The townhouse/condominium sector increased from 65 to 90 sales and the median sales price increased from $110,000 to $129,950.<separator></separator>The highest median sales price was in Paradise Valley at $972,500 with a median square foot house of 3,305 square feet.<separator></separator>In the West Valley, the following communities represent 10 percent of the resale market, while it stood at 8 percent a year ago.<separator></separator><ul><li>Avondale grew from 105 to 170 sales with the median price moving from $145,230 to $196,000.</li><li>El Mirage improved from 55 sales ($122,685) to 120 sales ($165,300).</li><li>Goodyear moved from 120 to 150 sales, while the median price increased from $171,750 to $208,400.</li><li>Surprise increased from 175 sales ($150,750) to 345 sales ($198,000).</li></ul>