Greater Phoenix Resale Numbers

June 09, 2006

MESA, Ariz. - Historically, resale housing activity in May triggers a series of good levels through August. May 2006 had 6,870 recorded sales, which is slightly below the highest level for 2006 at 7,265 sales in March. While May 2006 produced a good level of activity, it was well below the 10,425 sales of a year ago and the lowest level since May 2003 (5,890 recorded sales). So far in 2006, there have been a total of 30,830 sales, while it stood at 46,485 sales in 2005 year to date. While it is very 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 (27,000 sales) and 2004 year to date (36,555 sales).

The primary news of the last year's housing market was the rapid rise in the median home price from $194,000 in January to $260,000 in December. However, since the $263,000 median price was set in September 2005, the aggressive growth rate has been disappearing with the median being up slightly to $265,000 in May, while it was $264,900 in April 2006 and $235,000 for a year ago.

As the housing market slows, the entry-level sector basically disappears, while the move-up market garners a larger share of the remaining activity. Thus, it is not unusual to see median prices stabilize or even increase as the move-up market works to be satisfied. For May 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 39 percent for homes priced over $300,000.

Along with a higher median home price, mortgage interest rates are higher than a year ago. Thus, affordability continues to be an issue. The average 30-year mortgage for May 2005 was 5.5 percent, while it was 6.2 percent for May 2006. Based on an 85 percent loan-to-value, the monthly mortgage payment for the median price home increased from $1,135 to $1,380. Since the greater Phoenix area is so large, the median price can range significantly from $700,000 ($663,750 in April) in North Scottsdale to $150,000 ($147,500 in April) in the Sky Harbor area of the city of Phoenix.

"When purchasing a home for investment or occupancy, the rapid growth in price that was so evident in much of 2005 is somewhat soothing to the uncertainty of the buying decision," said Jay Q. Butler, director of the Arizona Real Estate Center at ASU's Polytechnic campus. "If home prices continue to be stable or even decline in some areas, potential buyers may be increasingly reluctant to make the purchasing decision, because future appreciation is much more uncertain. Further, current owners, especially investors, may want to bring homes to a good market in order to lock any current appreciation."

With interest rates, especially short-term ones, continuing to increase and stable home appreciation, there is increasing concern about the ability of some homeowners to maintain their homes. 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 followed a pattern similar to the single family market, with an increase from 1,390 sales for April 2006 to 1,470 sales for May, which was below last year's 2,055 sales. So far in 2006, there have been 7,090 sales, while there were 8,800 sales a year ago. Further, the median home price has remained unchanged from April at $175,000, while it was $143,500 for a year ago.

The median square footage for a single-family home recorded sold in May 2006 was 1,625 square feet, which is smaller than the 1,655 square feet reported a year ago. In the townhouse/condominium sector, the median square footage was 1,100 square feet, which is smaller than 1,135 square feet reported a year ago.

In contrast to May 2005, recorded sales in the city of Phoenix decreased from 2,830 sales to 2,120 sales. The median sales price increased from $220,000 in April 2006 to $225,000, while it was $180,450 a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $150,000 in the Sky Harbor area to $330,000 in the Union Hills area. The townhouse/condominium sector decreased from 625 to 465 sales, while the median price increased from $116,000 to $153,700.
While the Scottsdale resale home market declined from 865 a year ago to 535 recorded sales, the median sales price continued its upward movement by increasing from $527,750 to $615,000, while it was $593,000 in April 2006. The median resale home price is $700,000 ($663,750 in April) in North Scottsdale and $329,250 ($320,000 in April) in South Scottsdale. The townhouse/condominium sector in Scottsdale also decreased from 445 to 305 sales, but the median sales price increased from $245,000 to $261,500.
The Mesa resale housing market declined from 1,205 to 790 sales, while the median price increased from $213,000 to $249,950 ($245,900 in April). The townhouse/condominium sector also fell from 290 to 225 sales, while the median home price increased from $115,000 to $157,000.
Glendale decreased from 800 to 575 sales, but the median sales price increased from $215,000 to $250,000 ($250,000 in April).The townhouse/condominium sector also declined from 95 to 80 sales, while the median sales price increased from $94,750 to $148,500.
For the city of Peoria, the resale market fell from 445 sales to 305 sales, while the median price moved from $238,000 to $284,950 ($275,500 in April). The townhouse/condominium sector slowed from 60 to 50 sales and the median price went from $134,900 to $175,000.
In comparison to a year ago, the Sun City resale market fell from 200 to 120 sales, the median sales price increased to $220,000 from $188,000. Resale activity in Sun City West also fell from 110 to 45 sales, but the median sales price increased from $222,000 to $259,000.The townhouse/condominium market in Sun City declined from 125 to 75 recorded sales, while the median home price increased from $120,000 to $149,000. In Sun City West, activity fell from 35 to 10 sales, but the median sales price increased from $165,000 to $172,950.
The resale market in Gilbert decreased from 605 to 340 sales, but the median sales price increased from $285,000 to $327,450 ($339,000 in April). The townhouse/condominium market fell from 20 to 15 sales as the median sales price increased from $160,000 to $205,000.
For the city of Chandler, the resale market slowed from 710 to 485 recorded sales, while the median sales price increased from $252,105 to $306,000 ($295,000 in April). The townhouse/condominium market declined from 80 to 50 sales and the median sales price increased from $135,250 to $186,500.
The resale market in Tempe decreased from 275 to 210 sales, with the median sales price increasing to $288,500 ($275,000 in April) from $236,950 a year ago. The townhouse/condominium sector slowed from 140 to 100 sales and the median sales price increased from $150,000 to $198,000.
The highest median sales price was in Paradise Valley at $2,058,500 with a median square foot house of 4,105 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 145 sales with the median price moving from $226,000 to $260,000 ($260,000 in April).
- El Mirage decreased from 165 to 95 sales, while the median home price went from $185,700 to $214,950 ($219,900 in April 2006).
- Goodyear declined from 210 to 125 sales, while the median price increased from $245,000 to $295,000 ($298,200 in April).
- Surprise decreased from 465 sales ($231,000) to 275 sales ($256,300), while it was $250,000 in April.