Pinal County resale housing market experiences drop in median price, competition from new homes

Recorded sales for resale homes tend to be strongest in the second quarter, and this traditional trend continued in Pinal County with 970 resale homes recorded sold, which is better than the 840 recorded sold in the first quarter.

However, continued concerns have pushed the market lower from a high of 1,785 recorded sales in second quarter 2005 and 1,180 sales for a year ago. On a monthly basis, sales activity was very stable with 310 sales in April and 330 sales in both May and June. For comparison, in second quarter 2007, there were 14,990 sales recorded in Maricopa County.

Much like the sales activity, the median price has steadily eroded from $220,000 in fourth quarter 2005 to $204,600 in first quarter 2007 to $200,000 for the second quarter. It was $211,000 for a year ago.

In the first quarter of 2006, the median priced resale home in Maricopa was $250,000, and there were 95 sales. For the same period this year, the median price was $246,500, and there were 90 sales. In the second quarter of 2006, there were 95 sales in Maricopa at an median price of $256,500; those numbers for 2007 were 115 and $219,500.

The median home price in Pinal County was 76 percent of the median price in Maricopa County ($263,500), while it was 80 percent for a year ago. The combination of lower interest rates, from last year’s 6.2 percent to 5.9 percent, and home prices has driven the monthly mortgage payment for the median price, based on an 85 percent loan-to-value, down from $1,100 to $1,010. It would be $1,330 for the median priced home in Maricopa County. Thus, the phrase “drive ’till you can afford” has taken on greater meaning in the Pinal housing market.

“Although affordability has improved, higher gasoline prices and more congested highways continue to impact the housing market in Pinal County,” said Jay Butler, director for Realty Studies in the Morrison School of Management and Agribusiness. “While investors were drawn to the inexpensive housing in Pinal County in 2005, today’s higher prices have limited their role in the local housing market.”

In order to reduce inventories, new home builders have been aggressively pursuing buyers through incentives such as specially priced up-grades, free pools and gift cards. The new home has become a strong competitive and attractive alternative to the resale home in Pinal County. New home sales were 2,425 homes with a median price of $201,880. Thus, there are many reasons for the slowing market and issues that will have to be overcome for any future recovery.

The median square footage for a resale home in Pinal County was 1,610 square feet, while a new home was 2,200 square feet. In Maricopa County, the resale home was 1,700 square feet and 2,550 square feet for a new home (median price of $289,995).

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 metropolitan area.