Jay Butler’s report on the Phoenix metro housing market came out yesterday. According to Butler:
The median home price has been very stable at $259,000, a slight improvement from October’s $257,000 and September’s $256,900. It is still below last year’s $263,000 and the record of $267,000 set in June 2006.
The year over year decline is 1.5% for single family homes. This rate is not adjusted for inflation. Median prices can be affected by seller incentives, and the mix of homes being purchased. It does not always adequately reflect same house appreciation or depreciation. This is the third month in a row that the Phoenix market has been in negative territory:
My own home town of Gilbert did not fare as well as the rest of the Valley. Gilbert’s median price dropped from $324,500 last year to $308,000 this year, for a 5.1% decline year-over-year. While real estate pundits in some areas claim that a growing population will insulate their housing market from a downturn, Gilbert’s drop is happening in spite of being touted as the fourth fastest growing city in the nation.
As for the sales numbers, Butler said:
The local single-family resale market has settled into a very stable pattern, from the hyper-activity of last year. There were 5,040 recorded sales for November 2006, slightly up from the 4,985 sales in October 2006, but below last years 7,195 sales. This is the lowest monthly level for November since 4,305 sales were reported in 2002.
Sales have in fact been slowly declining since August, and are down 30% over last year. Last November, sales had already begun to fall off, and were lower than 2004 levels.
This is a slow time of year for the housing market. Typically sales drop off in December and January, and start to pick up in February. Expect continued downward pressure on prices in the near future.
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Elk Grove, which is just south of Sacramento, was ranked #1 on that list. So how has being the fastest growing city in American insulated Elk Grove from the housing slump? Not very well. According to DataQuick, Elk Grove saw a 9.89% year-over-year price decline in October. So much for population growth being the cure-all.
Lander-
Sorry it took so long for your comment to post. Igor, our spam jailer, had mistaken you for a spam bot. [John- we need to feed him more or something!]
I suspect a lot of that “growth” was really speculation. If that’s the case, some of us at the top are in fact the most vulnerable to price drops.
(Igor, prior similar comment just “disappeared”, if this is duplicate please zap the first one.) Did you notice Az. Republic today, page D4, reporting that the volumn of mortgage applications from major US Banks last week was the highest since October 2005 and up 22.2% YOY? Aberration? Is this just a rush of year end conversions from ARMs to more responsible fixed products from “major” banks? Could it be that the market and old guys in suits like Toll are really break dancing now (“dancing on the bottom”)? Is this good news for those of us wanting a more stable market and bad news for those looking only for signs of disasterous collapse?
Old Mike-
Sorry about that- Igor had a record number of prisoners this morning. On review, all of them were spambots but you- I had to find you in the crowd!
Mortgage applications are up, but home sales remain down, which looks like a wave of refis more than recovery- but people have to take their sunshine where they can get it.
Twist, either way “the collapse” could look less like a hurricane and more like Mr. Zimmerman’s “idiot wind “if this is a trend of more than one week. Even if its ALL refi. of ARMS, thats less borrowers to get trapped, more who beleive they can pass current creditworthiness standards from the “majors” for a fixed, and therefore likily few defaults. If defaults are largely limited to sub-prime, well think feather rather than golden anvil. If we had 5 or 6 more weeks of this, rather than just a one week blip, it could be great news for almost everybody. And remember, mortgage apps. are a leader, sales data a notorious laggard. In my head I do believe its just a blip. In my darker moments I think its just more crazy people using the housing ATM to buy Christmas junk. But in my heart…
Old Mike & Twist -
Sorry about the delay. Finally seem to have finished a long S/W upgrade. Just rescued Comment #5. Am back in business, but the more urgent business right now is lunch!
Old Mike — I had many of the same thoughts about the increase in mortgage applications as you posted above. I feel it’s a blip, just one last head-fake toward supposed “stability” in the market before things get really bad in ’07.
According to the Newsday story, 52.6 percent of last week’s applications were refi’s. It would be nice to assume that most of them were re-sets rushing to lock in, but you have to figure this also might be the last gasp of the ATM crowd. Some homeowners might be thinking this is their last chance to take advantage of their “paper equity,” consequences be damned.
They probably figure, “Well, I can’t sell it, so I better hurry and re-fi before the comps and appraisals go totally in the tank. I might as well mortgage it to the max, put a big pile of cash in my pocket and live like a rich person.”
The fools.
1.5%
Wow!!