Greater Phoenix resale market numbers rise slightly in February

MESA — February is a short month, and it is traditionally not a strong month for home sales. With 3,710 recorded sales, the resale home market did improve over January (3,350 sales), but was behind last year’s 4,280 transactions. This year’s numbers are very comparable to the 3,885 of February 2001.

Even with some improvement, the traditional home-buying season has just begun, with hope for better results appearing in the March and April recorded transactions. So far in 2008, a total of 7,060 resale homes have been recorded sold, while it was 8,800 in 2007 year to date and 10,715 in 2006 year to date.

“For the last year, the resale market has been confronting issues derived from the hyper-market of previous years such as the subprime meltdown and overly ambitious investors,” said Jay Q. Butler, director of Realty Studies in the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus. “However, the over-all economy was still fairly good. Now, the housing market still has the market issues but the economy is weakening quickly.”

While there has been little attempt to help investors, there have been many programs started to help homeowners to save the occupancy of their home, Butler added.

“Most of the attempts have dealt with the reset of higher interest rates, with the basic premise being that the home occupant has the income but not enough to satisfy the new mortgage payment. In a weak economy where additional job and income losses may be experienced, many households will not have the needed income to save their homes, even with a new mortgage payment plan,” said Butler. “Thus, the potential economic downturn will define how much further the housing market will worsen and when recovery will begin.”

The median home price continues to decline from $265,000 in July 2007 to $220,000 in February 2008, while it was $260,000 for February 2007. This is the lowest monthly median home price since $213,000 in March 2005, but better than the $200,000 reported in February of 2005.

The declining median price is being driven by several forces including the large number of vacant homes, especially in certain areas. Further, capital is available for lower-priced housing, but lacking in the higher priced housing market. The recent rise in the FHA limit from $271,050 to $346,250 will help some move-up market activity. However, the non-conforming limit is expected to remain at $417,000, which will be of little assistance to the higher priced market.

Last year, 37 percent of the resale homes sold for more than $300,000, while it was 26 percent for February 2008. Homes selling for under $200,000 have increased from last year’s 19 percent to a current 40 percent of the local resale housing market. The most evident impact of lower prices is improved affordability.

In comparison to February 2007, the combination of low interest rates (5.8 percent) and lower prices have caused the monthly payment to decrease from last year’s $1,300 to $1,075. Improved affordability based on lower home prices greatly benefits buyers, but it adversely impacts many owners and potential sellers who are watching their limited equity erode as prices decline to and even below existing debt level.

“This factor and the overall confidence in the economy puts additional strain on the local housing market,” said Butler.

Changes in median prices can vary tremendously throughout the Valley. For the western suburbs the median price has fallen 16.9 percent from last year’s $230,000 to $191,075. On the other hand, homes in the Superstition Springs area have gone down 9.1 percent ($242,000 to $220,000) and South Tempe moved down 10.3 percent ($285,000 to $255,710). Since the greater Phoenix area is so large, the median price can range significantly from $573,570 ($625,000 in January) in North Scottsdale to $157,700 ($161,900 in January) in the Maryvale area of the city of Phoenix.

With 620 recorded sales, the townhouse -condominium market was comparable to the 640 sales of January, but well below last year’s 1,050 transactions. The median home price decreased from $174,500 in January 2007 to $165,000, while it was $175,000 a year ago. However, it is below the record $184,950 set in May 2007. The underlying reasons for the fairly stable price reasons can run the gamut for the return of the seasonal visitor, international investors, and new households satisfying their initial housing needs.

The median square footage for a single-family home recorded sold in February 2008 was 1,750 square feet, which is larger then the 1,670 square feet for a year ago. The larger size demonstrates that buyers are able to take advantage of lower prices to upgrade their housing. In the townhouse/condominium sector, the median square footage was 1,180 square feet, which is larger than the 1,085 square feet reported a year ago.

In contrast to February 2007, recorded sales in the city of Phoenix decreased from 1,215 sales to 910 sales, while the median sales price decreased to $185,000, from $228,470 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $157,700 ($161,900 in January) in the Maryvale area to $260,000 ($290,000 in January) in the Union Hills area. The townhouse/condominium sector decreased from 355 to 175 sales and the median price decreased from $150,000 to $147,500.

The Scottsdale resale home market declined from 355 to 250 recorded sales, and the median sales price decreased from last year’s $600,000 to $513,750. The median resale home price is $573,570 ($625,000 in January) in North Scottsdale and $254,000 ($240,000 in January) in South Scottsdale. The townhouse/condominium sector in Scottsdale decreased from 220 to 150 sales, while the median sales price increased from $254,950 to $269,000.

The Mesa resale housing market declined from 460 to 390 sales, while the median price fell from $238,500 to $208,750 ($209,880 in January). The townhouse/condominium sector also fell from 140 to 75 sales, while the median home price decreased from $161,400 to $140,000.

Glendale decreased from 300 to 250 sales, and the median sales price decreased from $242,850 to $202,000 ($210,000 in January). The townhouse/condominium sector decreased from 50 to 15 sales, with the median sales price decreasing from $139,000 to $116,065.

· For the city of Peoria, the resale market declined from 235 to 175 sales, while the median price moved from $270,000 to $225,300 ($261,450 in January). The townhouse/condominium sector decreased from 20 to 15 sales and the median price went from $184,000 to $189,000.

In comparison to a year ago, the Sun City resale market improved from 105 to 110 sales, however, the median sales price decreased to $179,750 from $204,500. Resale activity in Sun City West decreased from at 55 to 40 sales, and the median sales price decreased from $230,000 to $197,250. The townhouse/condominium market in Sun City remained at 50 recorded sales, while the median home price decreased from $129,000 to $124,000. In Sun City West, activity declined from 30 to 15 sales, and the median sales price decreased from $166,000 to $130,000.

The resale market in Gilbert increased from 230 to 265 sales, and the median sales price decreased from $307,500 to $254,700 ($283,775 in January). The townhouse/condominium market declined from 15 to10 sales, with the median sales price decreasing from $205,500 to $182,000.

For the city of Chandler, the resale market fell from 280 to 230 recorded sales, and the median sales price went from $307,500 to $244,000 ($256,750 in January). The townhouse/condominium market declined from 50 to 30 sales, and the median sales price declined from $170,830 to $150,000.

§ The resale market in Tempe decreased from 135 sales a year ago to 80 sales, with the median sales price decreasing from $280,000 to $240,000 ($253,545 in January). The townhouse/condominium sector fell from 50 to 40 sales, and the median sales price decreased from $182,500 to $159,000.

The highest median sales price was in Paradise Valley at $2,270,000, with a median square foot house of 3,770 square feet.

· In the West Valley, the following communities represent 14 percent of the resale market.

o Avondale grew from 70 to 115 sales, with the median price moving from $242,080 to $194,570 ($204,120 in January).

o El Mirage increased from 45 to 70 sales, while the median home price went from $206,000 to $149,500 ($164,225 in January).

o Goodyear went from 65 to 110 sales, while the median price decreased from $270,000 to $220,490 ($240,380 in January).

o Surprise improved 215 to 225 sales, but the median price moved from $245,000 to $213,740 ($210,500 in January).

Realty Studies is associated with the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus.