Greater Phoenix 2008 resale numbers finish year up compared to 2007

In December 2008, there were 7,425 recorded home resales, with foreclosure activity representing 42 percent (3,110 transactions), and traditional market transactions at 4,315. Foreclosure transactions represent home owners losing their property to successful individual bidders or the lender of record.

December activity brought 2008 to 81,700 transactions, with foreclosure activity representing 43 percent of the transactions (34,955 sales). For 2007, there were 54,570 recorded sales, but foreclosure activity was only 16 percent (8,535 sales) of the market.

For 2008, foreclosure activity differed throughout the Valley such as 43 percent in Surprise, 22 percent in Tempe and 40 percent in Mesa.

“In the much hoped for response to various mortgage modification programs offered by lenders and government agencies to assist troubled homeowners, recorded foreclosure activity could slow over the next few months,” said Jay Butler, director of Realty Studies in the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus. “The fundamental issue is that most of the programs are based on the homeowners having the required income to support the modified mortgage.

“Unfortunately, the extremely weak economy is leading to mounting job losses that could severely affect the ability of a troubled household to have the needed income to qualify for one of the possible programs,” he said.

While many will be helped, other households will confront not only job loss but the loss of their home. Thus, the desire and ability to maintain ownership or to purchase a home is being severely tested, which will further delay any potential recovery. The local housing market will continue to be vexed well into 2010 by eroding consumer confidence, possibly additional job losses and tighter mortgage underwriting guidelines.

While lower prices can greatly improve affordability, they can adversely affect many owners and potential sellers who are watching their limited equity erode, as prices decline to and even below existing debt level. Rapidly declining value can be another issue in some of the mortgage modification programs which require a limited decline in value from the purchase and financing of the home.

For the traditional market, the median price in December was $146,000 ($200,500 for 2008), while the foreclosed properties had a median price of $148,340 ($169,915 for 2008). In December 2007, the traditional market median prices were $240,000 ($260,000 for the year), with foreclosures at $205,260 ($218,080 for 2007).

The declining prices have piqued interest for potential investors and owner-occupants, especially in the lower income ranges. Investment interest is being driven by the anticipation that home prices will rise again in the next few years. Slightly over 30 percent of the foreclosed homes were sold again, with a median price markdown of 13 percent. The markdown varied throughout the Valley ranging from 40 percent in Maryvale to 28 percent in Gilbert to 7 percent in Tempe.

Since the Greater Phoenix area is so large, the median price can range significantly. For December 2008 in North Scottsdale, the median price for a foreclosed property was $429,750 ($371,300 in November), while the traditional market was $518,850 ($500,000 in November). In South Scottsdale the splits were respectively $175,950 ($240,910 in November) and $215,000 ($229,000 in November).

In Maryvale, traditional transactions were $50,000 ($57,000 in November) and foreclosures were $108,180 ($112,020 in November), while in Union Hills it was $227,000 ($242,000 in November) and $218,300 ($204,090 in November), respectively.

For December 2008 in Paradise Valley, traditional transactions had a median price of $1,237,500, with a median square footage of 4,010 square feet.

Within the 725 total recorded sales for December 2008, the townhouse/condominium market had 280 foreclosed properties. This brought 2008 to an end with a total of 9,420 sales, including 2,815 foreclosed sales. For 2007, the split was 12,125 for traditional sales and 620 for foreclosed sales. In December 2008, the median price for foreclosed properties was $119,550, while the traditional market stood at $137,250. Last year, the splits were $150,150 and $170,000, respectively.

The median square footage for a single-family home recorded sold as foreclosed in December was 1,670, and it was 1,700 square feet for a market transaction home. For a year ago, both the traditional and the foreclosed markets were at 1,760 square feet. In the townhouse/condominium sector, the median square footage for a foreclosed unit was 1,115 square feet (1,080 square feet for year ago), while the traditional market unit was 1,190 square feet (1,090 square feet for a year ago).

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. Realty Studies is a comprehensive and objective source of real estate information for private, public and governmental agencies. Its director, Dr. Jay Q. Butler, may be reached at (480) 727-1300 or e-mail him at Jay.Butler@asu.edu. To subscribe to RSS feed for Realty Studies news, visit http://www.poly.asu.edu/realty/rss.html.

Jay Butler, Jay.Butler@asu.edu
(480) 727-1300

Chris Lambrakis, lambrakis@asu.edu
(480) 727-1173
Public Affairs at ASU Polytechnic campus