Greater Phoenix resale numbers up for April, median prices down

For the first time since July 2005, the Phoenix-area resale housing market has posted year-over-year improvement.

April had 5,585 recorded sales in contrast to 4,855 sales for a year ago and 4,335 sales in March 2008. Given the improvement, the basic question is whether this is the first sign of the much anticipated recovery or merely a blip in a continuing weak market, said Jay Butler, director of Realty Studies in the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus.

“Historically, April is not a strong month and is usually well behind March, which could have been impacted by the Easter holiday this year,” he said.

The total March and April 2007 activity was 10,245 sales, while 2008 was comparable at 9,920 sales. The 2008 year-to-date total is 16,975 sales, while it was 19,045 sales in 2007 year to date.

The median home price declined from $220,000 to $210,000, in contrast to last year’s $265,000. This is the lowest median price since February 2005 at $200,000.

“One of the driving forces in increased activity has been rapidly declining prices that have fueled renewed investor interest and potential owner-occupants, especially in the lower income ranges,” said Butler. “Investment interest is being driven by the anticipation that home prices will rise again in the next few years. The lower median price is being impacted by several factors, including the large number of vacant homes, especially in certain neighborhoods,” he said.

In addition, 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 remains at $417,000, which will be of little assistance to the higher priced market.

Last year, 41 percent of the resale homes sold for more than $300,000, while it was 24 percent for April 2008. Influenced by foreclosed properties, homes selling for under $200,000 have increased from last year’s 16 percent to a current 44 percent of the local resale housing market. The most evident impact of lower prices is improved affordability.

Even though mortgage interest rates increased from last year’s 5.8 to 5.9 percent, the much lower sales price allowed the monthly payment to decline from $1,320 to $1,060. While improving affordability based on lower home prices can greatly benefit buyers, it adversely impacts many owners and potential sellers whom are watching their limited equity erode, as prices decline to and even below existing debt level. The lower prices affect the ability and desire to continue owning the home and even overall confidence in the economy, which puts additional strain on the local housing market.

For the last year, the housing market has been confronting issues derived from the hyper-market of previous years such as the subprime meltdown and overly ambitious investors. Unfortunately, there is increasing data, such as job losses and layoffs that the economy is now weakening and will add further stress for the housing markets, according to Butler.

“In a weak economy, many households will not have the needed income to save their homes. Further, with increased energy and food costs, there is additional strain on the household budget,” he said. “Thus, the potential economic downturn and inflationary pressures will define how much further the housing market will worsen and when recovery will begin.”

Changes in median prices can vary tremendously throughout the Valley. For the western suburbs the median price has fallen 24.1 percent from last year’s $235,000 to $178,431, while East Mesa moved down 8.7 percent ($235,000 to $214,500). Since the Greater Phoenix area is so large, the median price can range significantly from $563,000 ($605,000 in March) in North Scottsdale to $146,455 ($148,800 in March) in the Maryvale area of the city of Phoenix.

With 835 recorded sales, the townhouse/condominium market improved from the 685 sales of March, but was well below last year’s 1,305 transactions. The median home price decreased from $174,500 in January 2008 to remain for the third straight month at $165,000, while it was $184,950 for a year ago. The underlying reasons for the fairly stable price can run the gamut from 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 April 2008 was 1,770 square feet, which is larger than the 1,700 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 1,190 square feet, which is larger than the 1,085 square feet reported a year ago.

In contrast to April 2007, recorded sales in the city of Phoenix increased from 1,280 sales to 1,435 sales, but the median sales price decreased to $178,000 from $225,000 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $146,455 ($148,800 in March) in the Maryvale area to $280,000 ($263,500 in March) in the Union Hills area. The townhouse/condominium sector decreased from 415 to 250 sales, and the median price decreased from $165,000 to $150,000.

The Scottsdale resale home market declined from 400 to 330 recorded sales, with the median sales price also decreasing from last year’s $557,500 to $506,500. The median resale home price is $563,000 ($605,000 in March) in North Scottsdale and $266,500 ($260,000 in February) in South Scottsdale. The townhouse/condominium sector in Scottsdale decreased from 300 to 205 sales, while the median sales price decreased from last year’s $264,450 to $262,500.

The Mesa resale housing market improved from 530 to 590 sales, while the median price fell from $234,510 to $196,250 ($200,000 in March). The townhouse/condominium sector also fell from 185 to 100 sales, while the median home price decreased from $158,000 to $140,000.

Glendale increased from 330 to 385 sales and the median sales price decreased from $245,000 to $189,000 ($209,750 in March). The townhouse/condominium sector decreased from 60 to 25 sales, while the median sales price decreased from $136,250 to $115,630.

· For the city of Peoria, the resale market declined from 250 to 235 sales, while the median price moved from $257,915 to $224,000 ($225,000 in March). The townhouse/condominium sector decreased from 30 to 15 sales, and the median price went from $200,000 to $140,500.

In comparison to a year ago, the Sun City resale market increased from 115 to 125 sales, while the median sales price decreased to $176,500 from $210,000. Resale activity in Sun City West increased from 50 to 40 sales and the median sales price decreased from $222,000 to $205,000. The townhouse/condominium market in Sun City decreased from 60 to 40 recorded sales, while the median home price decreased from $136,000 to $117,250. In Sun City West, activity stayed at 25 sales, with the median sales price decreasing from $164,700 to $138,750.

The resale market in Gilbert increased from 330 to 360 sales, and the median sales price decreased from $295,195 to $240,065 ($245,000 in March). The townhouse/condominium market stayed at 15 sales, with the median sales price decreasing from $207,500 to $166,930.

For the city of Chandler, the resale market declined from 375 to 340 recorded sales, while the median sales price went from $297,950 to $236,780 ($234,000 in March). The townhouse/condominium market declined from 60 to 40 sales, and the median sales price dropped from $179,975 to $155,000.

§ The resale market in Tempe decreased from 120 to 100 sales, with the median sales price decreasing from $285,000 to $248,500 ($237,000 in March). The townhouse/condominium sector fell from 75 to 40 sales, and the median sales price decreased from $184,200 to $172,475.

The highest median sales price was in Paradise Valley at $1,375,000, with a median square foot house of 3,540 square feet.

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

o Avondale increased from 90 to 190 sales, with the median price moving from $233,980 to $176,000 ($185,130 in March).

o El Mirage increased from 55 to 85 sales, while the median home price went from $199,000 to $140,170 ($146,900 in March).

o Goodyear went from 95 to 165 sales, while the median price decreased from $265,000 to $219,900 ($220,000 in March).

o Surprise improved 235 to 370 sales, but the median price moved from $246,060 to $200,250 ($205,000 in March).

Realty Studies is associated with the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus. Realty Studies collects and analyzes data concerning real estate in the greater Phoenix area.

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