Yesterday the Arizona Real Estate Center released its report on the August resale market. The report was titled Greater Phoenix Real Estate Market Up Slightly in August. There were 5,685 sales in August, which was indeed up from July’s 5,545, for an increase of 2.4%. Let’s look at the graph of the sales numbers for the past few years to see if we can put these numbers in context:
|Data from AZ Real Estate Center, AZ MLS|
As you can see, sales numbers in Phoenix follow a general annual trend. Sales are typically at their lowest point in January, and are at their highest in the summer months. The 2.4% increase is not unexpected this time of year, and does not appear to represent any kind of recovery.
The bigger story is the continuing decline of the median house price. This is what the report said about median prices:
Although the record median price was $267,000 in June 2006, the rapid rise in home prices appeared to end in September 2005 with a median price of $263,000. For August, the median home price of $262,500 was a retreat from the $264,900 in July, and was not appreciably above $258,700 last August.
Here’s the updated median price appreciation graph (Year-over-year) :
|Data From AZ Real Estate Center|
The continuing decline in the median price in my mind is a much bigger story than the negligible sales increase. Year over year appreciation for August is 1.47% – and that’s not adjusted for inflation. This has serious implications for home owners with little to no equity who wish to sell.
Sales from September to January have declined 21% on average for the last three years, so a similar decline or greater would not be unreasonable this year. The Arizona MLS has not yet released official inventory numbers. Bubble Tracking however, has an unofficial number on August 31 of 53,253- which would be a new record high. Slowing demand and record inventory then is likely to result in median prices falling, at the very least through January, if not longer.