ASU’s Greater Phoenix Resale Home Market report shows the median home price in October ($257,000) was essentially the same as in September ($256,900).
Last month the price decline was big news.
The median home price in September was down $5,600 or 2.1% from August ($262,500). The large September decline, however, didn’t carry any momentum into October suggesting the worst may be over.
If the median home price in November is not lower than October, that will strongly suggest a bottom has been reached because prices are usually weakest during the autumn.
Nevertheless, several cities still show a declining price trend. See graphs and chart below.
UPDATE: Here’s the Arizona Republic article on the report.
5 responses so far ↓
1 mrd // Nov 8, 2006 at 11:09 pm
Perhaps the housing market has started to flatten out. It seems to me a bit premature to say.
Interesting note: The stock market is now starting to post records once again. After the bubble burst of 2001, the stock market kind of meandered around for over 4 years (and might now be back on track).
The problems with markets is that it is difficult to know what the true value is. If there is a true value -aside from purely human psychological effects- it is an elusive thing that traders desperately want to know. I assume that the perceived value approximates the true actual value most of the time. It is when the perceived value gets too far out of line with the actual value that large corrections happen.
There are some parts of the housing markets where one can get a very good idea of what the true value is. On the outskirts of any town where there is housing being built, the builders know exactly what a house costs to build. If we knew what it cost to buy the land and build the house and knew what a historically reasonable amount of profit a builder should expect, then we would have a very good idea as to the true value of a house in that area. Of course, as one moves towards the interior of a town where there is higher chances of “land-lock”, more and more of the value of a home is driven by the desire of location. It seems reasonable to me that the behavior of the markets on the outskirts might give a good idea as to what the future might bring, as perceived values become more inline with any “true” value.
This says nothing as to what the value of location is far from the outskirts. If one knew how to calculate the “true” value of location, that person could make a whole bunch of money.
2 Cbass // Nov 9, 2006 at 5:30 am
I have a feeling that the scab will be picked of in the spring time and the “bleeding” begins again.
3 John L. Wake // Nov 9, 2006 at 7:44 am
mrd,
It may be premature but there is enough evidence to start talking about the possibility that prices are bottoming out.
“True value,” that’s pretty much the big question for the entire field of economics.
Clay,
If the scab comes off, it’s more likely to be next autumn than spring.
4 Ken // Nov 9, 2006 at 11:45 pm
John:
Is is normal to the see the Phx metro inventory shrink during the winter and expands again in the spring?
If so, doesn’t an inventory which hovers near 55 thousand all winter, mean gloomy news for sellers?
5 John L. Wake // Nov 10, 2006 at 12:07 am
Ken,
Inventory start shrinking in January-February and continues strong until May-July.
Selling isn’t going to be easy, but then again, that’s the normal situation.
If inventory hit 55,000 that would really increase the average days on market!
I expect the inventory to peak in December.
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