Phoenix resale numbers for November weaken further

In an environment of heightened economic uncertainty and continuous financial issues, the local resale housing market remained anemic at 3,280 sales, in comparison to 3,610 recorded sales in October 2007 and last year’s 5,040 sales. While resale activity remains below historical trends, the fourth quarter of the year is traditionally one of the slowest. The month of November brought the year-to-date total to 47,690 sales, which is well below the 62,415 for 2006 year to date and 104,360 sales for 2005 year to date.

“Although there is a large inventory of available homes, buyers appear reluctant to take advantage of the market,” said Jay Q. Butler, director of Realty Studies at Arizona State University’s Morrison School of Management and Agribusiness. “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.

“In addition, 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,” said Butler. “Thus, the 2007 resale housing market continues to show signs of increasing weaknesses that are well below the expectations of even a few months ago.”

Much like the ever-increasing sales activity of the last few years, the rapid improvement in prices has disappeared. The median home price in November was $240,000 in comparison to $242,000 for September and last year’s $259,000. This is the lowest monthly median home price since $235,000 in May 2005, Last year, 38 percent of the resale homes sold for over $300,000, while it was 33 percent for November 2007.

Because financing is more available in the conforming mortgage market, homes selling for under $200,000 have increased from last year’s 16 percent to a current 29 percent of the local resale housing market. The most evident impact of lower prices is improved affordability. Although mortgage interest rates remained stable at 5.9 percent, the lower median price allowed the monthly payment to decrease from last year’s $1,315 to $1,215.

Changes in median prices can vary tremendously throughout the valley. For the western suburbs the median price has fallen from $232,015 in November 2006 to $206,000. On the other hand, homes in the south Tempe area have gone from last year’s $267,700 to $275,000. 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. Since the greater Phoenix area is so large, the median price can range significantly from $675,000 ($644,500 in October) in North Scottsdale to $173,500 ($175,000 in October) in the Maryvale area of the city of Phoenix.

Much like the single-family market the townhouse–condominium market also showed weakness in November with 670 recorded sales. This is below the 710 sales of October and the 920 sales of a year ago. Townhouse-condominiums tend to be popular with seasonal visitors, investors and people seeking affordable housing.

Unlike the single-family market, the median home price increased from $170,000 to $180,200 and was above last year’s $172,000. Much of the price increase from October was evident in more traditional markets such as Tempe ($190,000 to $215,000), Mesa ($140,950 to $153,350) and Scottsdale ($225,900 to $275,00). The underlying 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 November 2007 was 1,750 square feet, which is larger then the 1,650 square feet for a year ago. The larger size demonstrates that buyers are interested in upgrading their housing. In the townhouse/condominium sector, the median square footage was 1,110 square feet, which is smaller than the 1,150 square feet reported a year ago.

• In contrast to November 2006, recorded sales in the city of Phoenix decreased from 1,575 sales to 870 sales, while the median sales price decreased to $208,425 from $226,160 for a year ago. Since Phoenix is a geographically large city, the median price can range significantly, such as $173,500 ($175,000 in October) in the Maryvale area to $300,000 ($307,450 in October) in the Union Hills area. The townhouse/condominium sector decreased from 315 to 215 sales while the median price increased from $149,900 to $164,450.

• While the Scottsdale resale home market declined from 400 to 240 recorded sales, the median sales price decreased from last year’s $630,000 to $544,645. The median resale home price is $675,000 ($644,500 in October) in North Scottsdale and $295,445 ($277,200 in October) in South Scottsdale. The townhouse/condominium sector in Scottsdale decreased from 215 to 190 sales, while the median sales price decreased from $275,000 to $255,000.

• The Mesa resale housing market declined from 600 to 360 sales, while the median price fell from $240,000 for a year ago to $223,500 ($232,000 in October). The townhouse/condominium sector also fell from 115 to 70 sales, while the median home price decreased slightly from $153,350 to $153,000.

• Glendale decreased from 350 to 235 sales, and the median sales price decreased from $247,000 to $215,000 ($222,500 in October). The townhouse/condominium sector decreased from 55 to 20 sales, while the median sales price decreased from $136,000 to $117,000.

• For the city of Peoria, the resale market declined from 225 to 165 sales, while the median price moved from $270,000 to $239,450 ($248,750 in October). The townhouse/condominium sector decreased from 30 to 20 sales and the median price went from $169,500 to $155,000.

• In comparison to a year ago, the Sun City resale market declined from 100 to 95 sales, while the median sales price decreased to $188,000 from $190,000. Resale activity in Sun City West decreased from at 50 to 35 sales and the median sales price decreased from $220,000 to $207,500. The townhouse/condominium market in Sun City decreased from 55 to 45 recorded sales, with the median home price decreasing from $148,500 to $125,000. In Sun City West, activity remained at 20 sales and the median sales price decreased from $160,000 to $154,500.

• The resale market in Gilbert decreased from 285 to 230 sales and the median sales price decreased from $308,000 to $276,000 ($275,000 in October). The townhouse/condominium market remained at 10 sales as the median sales price decreased from $218,000 to $205,000.

• For the city of Chandler, the resale market fell from 335 to 250 recorded sales, while the median sales price went from $295,000 to $269,900 ($279,000 in October). The townhouse/condominium market declined from 30 to 20 sales and the median sales price declined from $185,000 to $178,000.

• The resale market in Tempe decreased from 140 to 65 sales, with the median sales price decreasing from $270,000 to $261,250 ($261,200 in October). The townhouse/condominium sector decreased from 40 to 15 sales and the median sales price increased from $180,000 to $215,000.

• The highest median sales price was in Paradise Valley at $1.5 million with a median square foot house of 3,260 square feet.

• In the West Valley, the following communities represent 11 percent of the resale market.

• Avondale fell from 115 to 75 sales, with the median price moving from $245,000 to $213,955 ($214,700 in October).

• El Mirage decreased from 70 to 50 sales, while the median home price went from $200,000 to $170,000 ($180,245 in October).

• Goodyear went from 75 to 65 sales, while the median price decreased from $252,000 to $228,410 ($247,000 in October).

• Surprise decreased from 200 to 150 sales, while the median price decreased from $246,000 to $227,000 ($229,080 in October).