Price (green line)
The median home price in metro Phoenix continued to fall to $205,000 in May despite a relatively strong number of homes sold for the month.
The May 2008 median home price is exactly $50,000 less than in May 2007. That is, the median home price in metro Phoenix was 24% higher a year ago.
Sales (blue line)
Homes sales in metro Phoenix in May were very strong at 5,600 homes. We haven’t seen a number that high since before the mortgage meltdown in August of last year.
Home sales started out the season slow, we didn’t see big numbers in March this year like we usually do, but sales took off late in the season, April and especially May.
It will be interesting to see if the strong sales continue into June. Strong closings in June is a sign of a strong market. In most years, sales tend to fall off a lot from May to June.
Listings (red line)
The number of listings continued to fall in June, just the opposite of what happened last year.
The number of listings available for sale fell 2.9% from mid-May to mid-June. Last year, listings increased 1.7% over the same month.
That’s a totally different market dynamic. It’s funny how a huge price decrease can change things.
Conclusion
The market is starting to adjust… finally. But it has a long way to go to get inventory in line.
A year ago I didn’t think the median home price would go this low and certainly not this quickly. With the huge inventory of homes for sale still overhanging the market, prices could conceivably go crazy low in the same way they went crazy high earlier.
“MLS Listings” are measured at one point in time, usually the 15th day of the current month. “Median Price” of homes sold and the total number of home “MLS Sales” are for the entire preceding month.
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Aaron 06.16.08 at 3:01 pm
“That’s a totally different market dynamic. It’s funny how a huge price decrease can change things.”
I find it funny how several thousand Trustees Sales pump up the sales numbers. How many of the sales in May were Trustees Sales?
Philip 06.16.08 at 5:13 pm
John,
On Median Price (Green Line) above. I wish I remembered my math, but when I lay a straight edge against your numbers from Jan 00 to Jan 05 and continue that same Trend (Trend Line?), it finishes just about where we are today. So we had a big pop, and now the baloon is running out of air, but there is a bottom and it’s not far away. Keep up the good work!
Philip
John Wake - Real Estate 06.16.08 at 5:17 pm
None.
Those numbers are all from the MLS. No trustee sales.
http://www.armls.com/pdfs/HmSalesArmlsMay08.pdf
Now, if after a bank forecloses on a home they market it via the MLS, those sales will be included. But those are, after all, open market transactions.
Cbass 06.16.08 at 9:39 pm
Phillip I think your ruler must have a slight arc in it or something
I come up with about 185K.
John that “crazy low” stuff is sounding good. I am keeping my eyes wide open right now as I have been seeing a lot of homes down near the 100 dollar a square foot in my target neighborhoods. Have not been there in a few years so things are definitely looking better every day.
Philip 06.16.08 at 9:46 pm
Slight arc to be sure. I was trying to factor in the 04-05-06 phenomenon which I think can not be completed be discounted but I see and understand your point. Cheers, Philip
Peter Fork 06.17.08 at 7:35 am
Philip: to draw a trend you should use the numbers from the 1990s too, and compare all that with the median income in the region. The appreciation rate between 2000 and 2004 was above the historical average, even more if you account we were in a recession, because that should have lowered housing prices. House prices are (normally) closely related to what people can afford at a given time.
Given all that, I would not be surprised to see the median price go down to 150k$ in the Phoenix area. I think it’s good news for most people, because it means it will cost less for everybody to have a roof over their heads.
Alfan 06.18.08 at 5:54 am
Surprisingly, prices in Singapore went up in the last month.
http://www.sg-house.com/about179942-0-asc-1400.html
Does it somehow mean that Asian economy has decoupled from US?
Brian McMorris 06.19.08 at 8:52 am
John, for a real estate guy, you are really a straight shooter, which is why I keep coming to this site, and which is why you will be my real estate agent when I decide to buy in Phoenix. :o)
You don’t shy away from the truth of the market and you call it like it is. “Crazy Low” was also my prediction in mid 2007 when it really seemed that was a “crazy” thing to say. Now, we are on the verge of that 30% correction I had suggested based on long term trends and the idea of “reversion to the mean”. Maybe the bottom is in sight, though as you suggest, a lot of inventory needs to be cleared before we get there.
Unlike Philip, I don’t think 2003-06 can be factored into the long term trend. That was definitely an “above trend” period not just in AZ, but around the country and even around the globe. RE became “the thing” like never before since maybe the Florida swamp sales in the 1920s or the Mississippi Company Bubble of 1700’s French fame.
So we need to take that ruler and draw a straight line from the bottom of the last RE cycle in 1992 up through 2003 and project it on out to 2010 and beyond. I think CBass is closer to the truth at $185K, though I have been suggesting $160K since I expect a little overshoot (though would be happy to be wrong). But in either case, we are past the midway point of the correction, I believe.
I think I will be talking to you about buying sometime in late 2009 or early 2010.
John Wake - Real Estate 06.19.08 at 1:05 pm
Brian,
I look forward to your business!
I often make educated guesses about the future here, and the future often proves me wrong. Nevertheless, I feel the more educated the guess, the better. That’s why I spend so much time researching the market.