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Greater Phoenix Resale Market Slows in September


October 12, 2004

MESA, Ariz. - The Greater Phoenix resale market slowed considerably in September, recording 7,780 sales compared to 11,275 in August. Third quarter recorded sales totaled 27,850, which is slightly below the second quarter (28,760), but well ahead of last year's 20,560 sales. "Even with this cooling, the 2004 year-to-date total is well on its way to a new record at 75,800 sales in comparison to 55,435 in 2003 and 46,850 in 2002," according to Jay Butler, director of the Arizona Real Estate Center.

"It appears that a significant number of buyers are taking advantage of low mortgage rates to satisfy investment objectives that cannot be fulfilled in other markets, especially the volatile stock market," Butler said. "Their acquisitions include traditional rental properties and homes that can be quickly resold based on rapid appreciation. Driven by owner-occupants and increasingly by investors, the heightened demand has resulted in a diminishing supply of available homes, which in turn causes higher home prices."

Since January, the median home price has risen from $156,000 to $179,500 (a monthly record for September). The median price was $177,500 in August and $157,500 in September 2003. For the third quarter, the median home price was $177,500, compared to $170,000 in the second quarter and $159,500 in September 2003.

There are mounting concerns about whether the current market can be sustained, especially as many recall the Valley's real estate market of the late 1970s and 1980s. The increasing number of rental properties has resulted in extreme competition, with lower rents and even concessions. Rental difficulties could lead to fewer future buyers and more homes on the market. For owner-occupants, higher mortgage rates combined with stable incomes and higher home prices will adversely impact the affordability of housing, leading to a slower level of activity. Further, people, with low-rate mortgages have little incentive to move and thereby provide additional stimulus to the market.

Since the Greater Phoenix area is so large, the median price can range significantly from $440,000 in North Scottsdale to $97,950 in the Sky Harbor area of the city of Phoenix. For third quarter 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.

With 1,345 sales for September, the resale townhouse/condominium market recorded 4,725 sales in the third quarter, which is lower than the 5,515 sales in the second quarter, but well ahead of last year's 3,745 sales. This brought the YTD total to 14,005 sales, compared to 11,125 for 2003 and 9,990 for 2002. The monthly median home price remained at the record $114,000, while it was $102,000 for last year. The median home price increased from $170,000 in the second quarter to $177,500 in the third quarter, compared to last year's $159,500.

The median square footage for a single-family home recorded sold in third quarter 2004 was 1,705, which is larger than the 1,690 square feet, reported a year ago. In the townhouse/condominium sector, the median square footage was 1,140, slightly smaller than 1,145 square feet reported a year ago.

In comparison with third quarter 2003, recorded sales in the city of Phoenix increased from 5,510 sales to 7,315 sales, while the median sales price increased to $145,000 from $130,900. Since Phoenix is a geographically large city, the median prices can range significantly such as $97,950 in the Sky Harbor area to $229,450 in the Union Hills area. The townhouse/condominium sector improved from 970 to 1,340 sales, while the median price rose from $90,990 to $99,500.

The Scottsdale resale home market improved from 2,120 to 2,490 recorded sales. The median price continued to rise, from $325,500 to $385,000. The median resale home price is $440,000 in North Scottsdale and $190,000 in South Scottsdale. The townhouse/condominium sector in Scottsdale improved from 785 to 1,075 sales, while the median price increased from $148,000 to $170,525.

The Mesa resale housing market grew strongly from 2,570 to 3,395 sales, while the median price increased from $147,000 to $159,900. The townhouse/condominium sector grew from 570 to 760 sales, while the median home price rose from $93,000 to $97,900.

Glendale improved from 1,850 to 2,055 sales and the median price rose from $145,000 to $163,000. The townhouse/condominium sector grew slightly from 170 to 175 sales, while the median price increased from $78,500 to $89,900.

In comparison to a year ago, the Sun City resale market increased from 390 to 430 sales, with the median price rising from $120,000 to $136,500. Resale activity in Sun City West declined from 225 to 200 recorded sales, but the median price rose from $140,500 to $166,000. The townhouse/condominium market in Sun City grew from 245 to 250 recorded sales, while the median home price increased from $81,750 to $85,250. In Sun City West, activity remained at 60 sales, as the median sales price increased from $98,500 to $126,500.

The resale market in Gilbert was better as activity moved from 1,460 to 1,790 sales and the median sales price increased from $176,000 to $210,000. The townhouse/condominium market declined from 70 to 60 sales as the median price rose from $120,000 to $135,250.

For the City of Chandler, the resale market increased from 1,795 to 2,105 recorded sales, while the median price rose from $165,000 to $189,900. The townhouse/condominium market slowed from 215 to 200 sales, but the median price increased from $105,950 to $109,950.

The resale market in Tempe improved from 665 to 685 sales, with the median sales price increasing to $185,000 from $168,000. The townhouse/condominium sector grew from 300 to 320 sales, while the median sales price rose from $108,900 to $119,000.

The highest median home sales price was in Paradise Valley at $906,000, with a median square footage of 3,555.

In the West Valley, the following communities represent 9 percent of the resale market, compared to 6 percent a year ago.

  • Avondale grew from 320 to 640 sales, with the median price rising from $152,000 to $165,000.
  • El Mirage improved from 125 sales (median price $120,500) to 385 sales ($134,000).
  • Goodyear moved from 250 to 510 sales, while the median price increased from $161,900 to $184,000.
  • Surprise increased from 500 sales (median price $139,925) to 980 sales ($163,520).