The 2007 Greater Phoenix resale home market continued to slow in December 2007, with 3,290 sales recorded (3,280 sales in November), compared to 4,620 sales for a year ago. This is the lowest level of activity for December since 3,240 sales were recorded in 1999.
For 2007, a total of 50,975 sales were recorded, in contrast to 67,035 for 2006 and 110,835 sales for 2005. The market slowed greater than expected, especially in the latter months of 2007, ending as the lowest level of activity since 45,620 sales were recorded in 1997.
In Maricopa, buyers purchased 78 single family homes in December, 2007 ranging in price from $77,400 to $315,910, according to Multiple Listing Service numbers. (See homes sold list in related story, ‘MLS shows 78 single-family homes sold in Maricopa in December‘).
The least expensive house was a 1,095 square foot, two-bedroom, two bath house that took four days to sell. The most expensive one was a 4,100 square foot house with six bedrooms and 3.5 bathrooms. It was on the market for 366 days.
The average for Maricopa for December 2007 was a 2,188 square foot house with three bedrooms and 2.38 baths that listed for $188.523 and sold for $174,909, with 87 days on the market.
“Although there is a large inventory of available homes, buyers, for many reasons, appear reluctant to take advantage of the market,” said Jay Butler, director of Realty Studies in the Morrison School of Management and Agribusiness at Arizona State University. “The first issue is that most buyers have to be sellers, which is difficult in this market.”
While interest rates are low, higher underwriting guidelines for all loans and limited capital availability for non-conforming loans, above $417,000, have made it difficult for people to obtain the needed financing.
Finally, many of the vacant homes are in submarkets that current buyers do not want due to travel congestion, higher energy costs, lack of area amenities and uncertainty about the future appreciation in the area. Thus, throughout 2007, the resale housing market increasingly showed signs of weaknesses that will continue into 2008, especially in light of a weakening economy.
While sales activity declined 24 percent, the median home price decreased only 1.4 percent from $260,600 in 2006 to $257,000. Though this seems very stable, the median price has been declining during the year from $260,000 in January to $232,000 in December, which is the lowest median price since $221,000 was reported in April 2005.
For 2006, 16 percent of all recorded sales were for homes priced from $125,000 to $199,999, 43 percent for $200,000 to $299,999, and 38 percent for homes priced higher than $300,000.
In 2007, the distribution was 19 percent of all recorded sales were for homes priced from $125,000 to $199,999, 41 percent for $200,000 to $299,999, and 39 percent for homes priced over $300,000.
Because the greater Phoenix area is so large, the median price can range significantly from $675,000 ($684,600 in 2006) in North Scottsdale to $145,000 ($149,900 in 2006) in the Sky Harbor area of the city of Phoenix.
Changes in median prices can vary tremendously throughout the Valley. For the western suburbs the median price has fallen from $243,525 in 2006 to $223,000 ($205,000 in December 2007).
While in the South Tempe area, prices have gone from last year’s $292,000 to $285,000 ($281,000 in December 2007). 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.
“A fundamental component of the economic development of the area has been the relative affordability of housing, especially when compared to California and the national housing market,” Butler said. “As the local market is still well below most of the California market, it is now well above the national median sales price of $210,200.”
When home prices were soaring, low mortgage interest rates were very important in sustaining affordability. Today, interest rates continue to be low, and the declining home prices will provide additional support for affordability. Based on an 85 percent loan-to-value, the mortgage payment would have been $1,330 for 2006 (6 percent) and 1,310 for 2007 (6 percent).
While improved affordability is important for the continued economic development of the area and for homebuyers, declining homes price will continue to seriously impact many households, especially those who have used the increasing values to finance a desired lifestyle.
The rapid growth of sales activity and prices of the last few years has been largely due to the ever-increasing involvement of investors in the market. Thus the slowdown in the investor market can be a relevant reason for the overall market slowdown and the increase in trouble properties.
“Many investors have found it increasingly difficult to rent and are trying to sell their homes before they lose them to foreclosure or to sell them to lock in any appreciation,” Butler said. “Another source of trouble properties are those households, in anticipation of continued appreciation, bought more home than they could afford and probably used non-traditional financing to acquire it. Thus, confronting financial issues, these households are trying to sell in order to obtain some appreciation and/or to avoid foreclosure.”
The townhouse/condominium housing sector also slowed to 11,550 sales from 13,995 sales of 2006. For 2007, market activity declined from 1,350 sales in March to 635 sales for December 2007. In the townhouse/condominium sector, the annual median sales price increased 2.8 percent from $174,000 to $179,000, but ended in December 2007 at $167,000.
The median square footage for a single-family home sold in 2006 was 1,630 square feet, while it was reported as 1,715 square feet in 2007. In the townhouse/condominium sector, the median square footage remained at 1,100 square feet.
In contrast to 2006, recorded sales in the city of Phoenix fell from 20,600 to 13,710 sales for 2007, while the median sales price stayed at $220,000 ($200,610 in December). The median price ranged from $324,000 in the Union Hills Area ($324,900 in 2006) to $199,900 in the Metrocenter area ($204,000 in 2006) to $145,000 in the Sky Harbor area (149,900 in 2006). In the townhouse/condominium sector, sales activity declined from 4,605 to 3,705 sales, while the median sales price moved from $149,000 to $161,550.
Scottsdale slowed from 5,150 sales in 2006 to 4,120 sales for 2007. The median sales price, slowed from $595,000 to $579,000 ($523,350 in December 2007). The median sales price in North Scottsdale declined from $684,660 to $675,000 ($620,000 in December 2007), and it moved from $320,000 to $308,500 in South Scottsdale ($279,000 in December 2007). The townhouse/condominium sector in Scottsdale declined from 2,900 recorded sales to 2,595 sales; with the median sales price decreasing from last year’s $264,005 to $254,835.
The resale market in the city of Mesa also decreased from last year’s 7,600 sales to 5,605 sales. The median price decreased from $243,500 to $235,000 ($212,000 in December 2007). The townhouse/condominium sector also declined from 1,995 sales to 1,500, while the median home price declined slightly from $156,000 to $155,000.
Sales activity in the Glendale resale home market decreased from 5,310 sales to 3,560 sales, with the median sales price decreasing from $249,900 to $237,500 ($209,365 in December 2007). The townhouse/condominium sector also decreased from 760 sales to 485 sales and the median sales price decreased from $142,000 to $140,000.
For the city of Peoria, the resale market fell from 2,930 sales to 2,415 sales, with the median price moving from $270,000 to $257,830 ($232,000 in December 2007). The townhouse/condominium sector slowed from 380 to 265 sales, and the median price went from $166,000 to $168,000.
In comparison to 2006, the Sun City resale market decreased from 1,160 sales to 1,125 sales, while the median sales price decreased from $210,000 to $195,000. In Sun City West, sales activity improved from 545 sales to 555 sales while the median sales price decreased from $240,000 to $220,000. The townhouse/condominium market in Sun City slowed from 685 to 580 sales with the median sales price going from $140,000 to $128,875.
In Sun City West, sales activity moved from 175 sales to 190 sales, with the median sales price decreasing from $175,000 to $160,500.
The resale market in Gilbert moved from 3,730 to 3,205 sales. The median sales price slowed from $327,000 to $295,000 ($260,025 in December 2007). In the townhouse/condominium market, sales activity fell from 165 to 140, and the median price decreased from $211,000 to $200,000.
For the city of Chandler, the resale market decreased from 4,625 to 3,675 sales, with the median sales price decreasing from $297,900 to $290,000 ($260,000 in December 2007). The townhouse/condominium sector fell from 510 sales to 455 sales, while the median sales price moved down from $180,000 to $170,000.
The resale market in Tempe declined from 1,785 sales to 1,360, while the median sales price moved from $285,000 to $276,000 ($264,250 in December 2007). The townhouse/condominium sector also moved down from 885 sales to 690, with the median sales price going from $190,000 to $188,000
The highest median sales price was in Paradise Valley at $1,740,000, with a median square foot house of 3,835 square feet.
In the West Valley, the following communities represent 10 percent of the resale market.
Avondale fell from 1,555 to 1,070 sales, with the median price moving from $255,000 to $225,500 ($203,000 in December 2007).
El Mirage decreased from 955 to 605 sales, while the median home price went from $215,000 to $192,600 ($160,000 in December 2007).
Goodyear went from 1,075 to 950 sales, while the median price decreased from $282,000 to $255,500 ($235,530 in December 2007).
Surprise decreased from 2,515 sales to 2,435 sales, with the median price decreasing from $250,000 in 2006 to $237,000 in 2007 ($218,350 in December).
