Greater Phoenix Resale Market Turns Up the Heat in August

September 15, 2004

SOURCE: Dr. Jay Q. Butler, Arizona Real Estate Center, 480/965-5455, <a href="mailto:Jay.Butler@asu.edu">Jay.Butler@asu.edu</a><separator></separ… /> Mesa, Ariz. -- As prospective home buyers work to get moved in before the start of school and the holidays, August is traditionally one of the strongest months for home sales, and 2004 was no exception with a near-record 11,275 resale home sales recorded in August. This is well above the 8,525 sales recorded in July, and well above last August's 6,055 sales, but slightly below the record set this June (11,665 sales). So far this year, the Greater Phoenix resale market has had 68,020 sales, compared to 47,255 sales in 2003 and 41,130 in 2002.<separator></separator>The activity is not unique to the Greater Phoenix area but is evident in most real estate markets throughout the United States, and even other countries. The growing concern is the large role that investors play in driving the market. It appears that many are taking advantage of low mortgage rates to acquire properties for rental or a quick turnaround based on rapid appreciation.<separator></separator>With many concerns about the continuing sluggish job market, the main housing issue has become affordability. This is related to the income capability of a household to acquire and support ever more expensive housing. Higher mortgage rates, combined with stable income and higher home prices, will adversely impact the affordability of housing thus leading to potentially slower activity. Further, homeowners with low-interest mortgages have little incentive to move and thereby provide some additional stimulus to the market. Even with sales at a record pace, the median home price has increased to a new monthly record of $177,500. The previous record was $176,000 for July 2004, compared to only $160,560 a year ago. Ever higher prices benefit current owners with higher values and appreciation that make possible refinancing or equity buildup to acquire another home. On the other hand, higher prices make it increasingly difficult for potential owners to acquire and maintain a first home.<separator></separator>Since the Greater Phoenix area is so large, the median price can range significantly from $99,900 in the Phoenix Sky Harbor area to $437,500 in North Scottsdale. In August, 44 percent of all recorded sales were for homes priced from $125,000 to $199,999 and 19 percent of sales were for homes over $300,000.<separator></separator>With the record 2,040 sales set in June, the resale townhouse/condominium market recorded 1,885 sales for August, which was better than the 1,495 recorded sales for July 2004 and last years 1,105 recorded sales. This brought the YTD total to 12,660 sales, compared to 9,610 sales in 2003 and 8,850 in 2002. After slipping for the past few months, the median home price for this housing sector returned to the record $114,000 set in May 2004, compared to $103,500 a year ago.<separator></separator>The median square footage for a single-family home recorded sold in August was 1,700, slightly smaller than the 1,715 square feet reported a year ago. In the townhouse/condominium sector, the median square footage was 1,135, slightly smaller than 1,140 square feet reported a year ago.<separator></separator><ul><li>Compared to figures from August 2003, recorded sales in the city of Phoenix increased from 1,600 sales to 2,990, while the median price rose from $132,000 to $143,500. Since Phoenix is a geographically large city, the median prices can range significantly such as $99,900 in the Sky Harbor area to $225,000 in the Union Hills area. The townhouse/condominium sector improved from 270 to 540 sales, while the median price rose from $87,000 to $103,000. </li><li>The Scottsdale resale home market improved from 650 to 1,045 recorded sales. The median price continued its upward trend, from $334,000 to $376,000. The median resale home price is $437,500 in North Scottsdale and $189,900 in South Scottsdale. The townhouse/condominium sector in Scottsdale improved from 334 to 400 sales, while the median sales price increased from $142,000 to $171,640. </li><li>The Mesa resale housing market grew strongly from 775 to 1,415 sales, while the median price increased from $147,000 to $160,000. The townhouse/condominium sector improved from 170 to 330 sales, while the median home price increased from $92,250 to $96,500. </li><li>Glendale improved from 515 to 860 sales and the median sales price rose from $147,500 to $163,810.The townhouse/condominium sector strengthened from 45 to 75 sales, while the median sales price increased from $79,000 to $85,600. </li><li>In comparison to a year ago, the Sun City resale market increased from 110 to 175 sales, with the median sales price rising from $117,250 to $138,700. Resale activity in Sun City West improved from 70 to 80 recorded sales and the median sales price rose from $137,500 to $160,000. The townhouse/condominium market in Sun City grew from 70 to 105 recorded sales, while the median home price increased from $77,000 to $85,450. In Sun City West, sales improved from 20 to 30 sales and the median price rose from $92,500 to $122,500. </li><li>The resale market in Gilbert was better as activity moved from 430 to 765 sales, while the median </li><li>price rose from $180,000 to $210,000. The townhouse/condominium market improved from 20 to 25 sales as the median sales price increased from $111,000 to $137,000. </li><li>For the City of Chandler, the resale market expanded from 525 to 825 recorded sales, while the median sales price jumped from $163,500 to $190,000. The townhouse/condominium market remained at 75 sales, but the median sales price moved up from $110,000 to $112,250. </li><li>The resale market in Tempe improved from 205 to 280 sales, with the median sales price increasing from $169,450 to $185,000. The townhouse/condominium sector increased from 95 to 130 sales, while the median sales price rose from $109,500 to $121,000. </li><li>The highest median sales price again was in Paradise Valley at $850,000, with a median square footage of 3,300. </li><li>In the West Valley, the following communities represent 9 percent of the resale market, up from 6 percent a year ago: <ul><li>Avondale grew from 100 to 250 sales, with the median price increasing from $154,000 to $163,000.</li><li>El Mirage improved from 30 sales (median price $122,500) to 110 sales ($132,500).</li><li>Goodyear grew from 70 to 195 sales, while the median price increased from $162,000 to $191,500.</li><li>Surprise increased from 155 sales ($141,000) to 400 sales ($159,950).</li></ul></li></ul>