On Friday Jay Butler of ASU Realty Studies released his home sale report for August:
With 4,240 recorded sales in August 2007, the local resale housing market continues its uninspiring march. The activity of August followed July 2007 at 4,330 sales and was below last year’s 5,685 transactions. The month of August brought the year-to-date total to 37,750 sales, which is well below the 47,515 for 2006 year to date and 78,935 sales for 2005 year to date.
If you don’t have your calculator handy, that works out to a 2% decrease month-to-month and a 25% decrease year-over-year:
As for the median price:
The median home price in August was $255,000 in comparison to $265,000 for July and last year’s $262,500.
The 3% drop was the largest drop since the market started to cool off in late 2005. While the median price has ranged in the $250,000s to the $260,000s for the past year and a half, $255,000 was first hit in July 2005. The median reflects the mix of houses sold, and is not adjusted for inflation. Consequently, it often does not reflect same house appreciation. Additionally, incentives offered by sellers can also skew the median upward.
Even the generally optimistic Butler sounded a warning on the Phoenix market:
There are increasing risks that the market could move lower than expected, driven by geopolitical risks and tighter mortgage underwriting guidelines. Both of these factors could make it increasingly difficult for people wanting to buy, but are not able to obtain needed financing. This point will be especially true in the move-up market.
Recent troubles in the nonconforming mortgage market (mortgages above $417,000) have begun to adversely impact the move-up market. Last year, 39 percent of the resale homes sold for more than $300,000, while it was 37 percent for August 2007.
The median price in my own community of Gilbert did not fare as well as the Valley in general. Butler reported:
The resale market in Gilbert decreased from 355 to 290 sales and the median sales price decreased from $320,000 to $300,000 ($314,500 in July).
That would be a year-over-year drop in home sales of 18%, and a decrease in the median price of 6.3%
The Arizona Regional Multiple Listing Service also posted their report on Friday. They also indicate slowing sales. In their report however, in addition to sales, they also report the number of listings on the MLS. The listings to sales ratio continues to worsen- there is now a greater than 13 months supply of homes on the market:
Butler also stated:
Foreclosures and new homes are providing a competitive alternative to the resale home in many areas of the market. New home builders continue to aggressively pursue buyers through incentives such as specially priced upgrades, free pools and gift cards. Thus, the 2007 resale housing market is showing signs of increasing weaknesses that could drive it below the current expectations of it being a good year.
It was never my expectation that this would be a good year for the Phoenix market, and it seems rather late in the year to come to the conclusion that it might be a bad one. Still, better late than never.
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thanks for the info
They can’t go much lower here. Do a residential search for 1-50k and you’ll find 514 listings.
http://www.upmls.com/
Actually maybe they can
Excellent snowmobiling and ATV country. It’s the only jobs they get up in the U.P.
“There are increasing risks that the market could move lower than expected”
Speak for yourself, Jay. The realists out here will absolutely meet our expectations…assuming no massive undershoot past normal prices. We can visit that in 2010.
However it doesn’t appear that sellers have started lowering their prices. A quick search of ziprealty.com shows all these homes at ridiculously high prices. When will the price reset occur?
http://confessionsofamadprofessor.blogspot.com
April