September 14, 2007
MESA, Ariz. — With 4,240 recorded sales in August 2007, the local resale housing market continues its uninspiring march. The activity of August followed July 2007 at 4,330 sales and was below last year’s 5,685 transactions. The month of August brought the year-to-date total to 37,750 sales, which is well below the 47,515 for 2006 year to date and 78,935 sales for 2005 year to date.
“Primarily the role of August is to act as a transition from the heady days of summer to the lower recorded sales of the last months of the year,” said Jay Butler, director of Realty Studies in the Morrison School of Management and Agribusiness at the Polytechnic campus.
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“However, there are increasing risks that the market could move lower than expected, driven by geopolitical risks and tighter mortgage underwriting guidelines. Both of these factors could make it increasingly difficult for people wanting to buy, but are not able to obtain needed financing. This point will be especially true in the move-up market,” Butler added.
The combination of large inventories and low interest rates have enabled people to purchase more expensive homes, which is one reason the county median price has remained fairly stable. But, recent troubles in the nonconforming mortgage market (mortgages above $417,000) have begun to adversely impact the move-up market. Last year, 39 percent of the resale homes sold for more than $300,000, while it was 37 percent for August 2007.
Foreclosures and new homes are providing a competitive alternative to the resale home in many areas of the market. New home builders continue to aggressively pursue buyers through incentives such as specially priced upgrades, free pools and gift cards. Thus, the 2007 resale housing market is showing signs of increasing weaknesses that could drive it below the current expectations of it being a good year.
Much like the ever-increasing sales activity of the last few years, the rapid improvement in price has disappeared. The median home price in August was $255,000 in comparison to $265,000 for July and last year’s $262,500. The most evident impact of lower prices is improved affordability. Although mortgage interest rates increased slightly from last year’s 6.1 percent to 6.2 percent, the lower median price allowed the monthly payment to decrease slightly from last year’s $1,350 to $1,330.
Changes in median prices can vary tremendously throughout the valley. For the western suburbs the median price has fallen from $240,000 in August 2006 to $217,450. On the other hand, homes in the North Mesa area have gone from last year’s $235,000 to $255,000. While some areas have declining prices, other areas are increasing or remaining fairly stable, especially the mature neighborhoods that are close to freeways, retail and schools. Since the greater Phoenix area is so large, the median price can range significantly from $680,000 ($697,500 in July) in North Scottsdale to $189,000 ($185,000 in July) in the Maryvale area of the city of Phoenix.
Although townhouse/condominium units have retained some popularity with seasonal visitors, investors and people seeking affordable housing, this housing sector has continually fallen from the 1,350 sales in March to 955 sales, while there were 1,100 sales for a year ago. Even with slower sales, the median home price increased slightly from $181,000 in July to $182,500 in August ($170,000 for August 2006).
The median square footage for a single-family home recorded sold in August 2007 was 1,740 square feet, which is larger than the 1,640 square feet for a year ago. The larger size further demonstrates the role of the move-up sector in the local housing market. In the townhouse/condominium sector, the median square footage was 1,115 square feet which is larger than the 1,090 square feet reported a year ago.
- In contrast to August 2006, recorded sales in the city of Phoenix decreased from 1,760 sales to 1,160 sales, while the median sales price decreased to $220,000 from $224,000 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $189,000 in the Maryvale area to $314,750 ($330,000 in July) in the Union Hills area. The townhouse/condominium sector decreased from 395 to 300 sales, while the median price increased from $153,295 to $173,000.
- While the Scottsdale resale home market declined from 390 from a year ago to 360 recorded sales, the median sales price decreased from last year’s $598,500 to $559,375. The median resale home price is $680,000 ($697,500 in July) in North Scottsdale and $305,000 ($315,000 in July) in South Scottsdale. The townhouse/condominium sector in Scottsdale increased slightly from 205 to 210 sales, while the median sales price decreased from $266,000 to $242,900.
- Compared to August 2006, the Mesa resale housing market declined from 645 to 460 sales, while the median price fell from $240,000 to $237,000 ($242,000 in July). The townhouse/condominium sector also fell from 165 to 120 sales, while the median home price decreased from $159,950 to $152,000.
- Glendale decreased from 445 to 300 sales and the median sales price decreased from $255,000 to $240,750 ($238,500 in July). The townhouse/condominium sector decreased from 65 to 45 sales, while the median sales price decreased from $143,000 to $140,500.
- For the city of Peoria, the resale market declined from 280 to 205 sales, while the median price dropped from $270,000 to $257,500 ($264,950 in July). The townhouse/condominium sector decreased from 25 to 20 sales and the median price went from $165,000 to $162,500.
- In comparison to a year ago, the Sun City resale market remained at 90 sales, while the median sales price decreased to $175,000 from $200,000. Resale activity in Sun City West declined from at 50 to 45 sales, the median sales price decreased from $240,650 to $220,000. The townhouse/condominium market in Sun City declined from 50 to 45 recorded sales, while the median home price decreased from $139,000 to $124,000. In Sun City West, activity fell from 15 to 10 sales and the median sales price decreased from $175,750 to $130,000.
- The resale market in Gilbert decreased from 355 to 290 sales and the median sales price decreased from $320,000 to $300,000 ($314,500 in July). The townhouse/condominium market remained at 10 sales as the median sales price decreased from $210,000 to $180,000.
- For the city of Chandler, the resale market fell from 410 to 300 recorded sales, while the median sales price went from $308,000 to $282,800 ($308,375 in July). The townhouse/condominium market stayed at 40 sales and the median sales price declined from $182,000 to $163,250.
- The resale market in Tempe decreased from 155 to 115 sales, with the median sales price decreasing from $299,950 to $270,000 ($283,810 in July). The townhouse/condominium sector was stable at 70 sales, but the median sales price increased from $179,250 to $194,950.
- The highest median sales price was in Paradise Valley at $1,950,000 with a median square foot house of 4,220 square feet.
- In the West Valley, the following communities represent 10 percent of the resale market.
- Avondale fell from 130 to 95 sales with the median price moving from $254,325 to $223,275 ($222,500 in July).
- El Mirage decreased from 80 to 60 sales, while the median home price went from $212,750 to $185,000 ($180,000 in July).
- Goodyear went from 95 to 80 sales, while the median price decreased from $280,000 to $272,000 ($248,750 in July).
- Surprise decreased from 225 sales to 200 sales, with the median price decreasing from $250,000 to $232,500 ($234,900 in July).