Price (green line)
The median single family home price in metro Phoenix fell to $145,000 in December, according to local MLS data.
In June 2006, the median single family home price peaked at $264,800. That means the median home price was 83% higher at the peak than it was last month, December 2008.
Sales (blue line)
Single family homes sales in metro Phoenix in December were very strong for a December, 4,982 homes. Home sales in December were more than November sales (4,050) which is another sign of a strong market.
The slowest month for closed sales is always January which reflects slow sales in the holiday month of December. It’s not unusual for closings to drop over 1,000 units between December and January. If it turns out that January’s closings are strong relative to December’s, that will give us a good idea of how strong the Arizona real estate market will be in 2009.
Listings (red line)
The number of homes listed for sale fell from mid-December to mid-January.
Listings usually rise significantly from January to February, except during the boom years of 2004 and 2005. How housing inventory changes between January and February will be another clue to the strength of the 2009 Arizona homes market.
Conclusion
The median single family home price of $145,000 in December was the lowest since April 2003 - that’s over 5 and one-half years ago. The median home price fell by 6% ($10,000) from November to December (to $145,000).
(”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.)
{ 9 comments… read them below or add one }
Brian 01.19.09 at 5:49 am
WoW! And the rate of change, or slope of the line is unchanged since the crash began. This implies further significant drops before bottoming out. Maybe $125K (1999 price) is the new target. I really never thought average price would get below $150K, a radical suggestion in early 2007. For people interested in technical indicators, the supply curve has formed a nice “head and shoulders” pattern, which implies further decline. This will help stop price declines.
Shift 01.19.09 at 11:30 am
OMG, this is getting crazy!
I have never wanted to invest in real estate -until now.
The problem is in timing this bad boy. OOK! Where is the bottom?
I am inexperienced in real estate investment. In the current financial climate, how much can I lever up? I’d like to lever up 10 to 1. Is that possible for investment properties? I went to an open house this weekend and the real estate agent said that you need 20% down for investment properties. Does this sound right? I could do 20% but don’t want to. Also, I’m betting the bottom might be late 2009 for Phoenix. I’m just trying to decide what I want to do and when I want to do it. This could be a once in a lifetime opportunity.
Where is the bottom. Where? Someone is going to make a heck of a lot of cash. I want to be that person.
Shift 01.20.09 at 12:39 pm
Looks like the futures market is pricing in a bottom for CA in 2009.
A plot from dr. hbubble of CA housing case-shiller futures data:
http://www.doctorhousingbubble.com/wp-content/uploads/2009/01/case-shiller-futures-data-california1.png
I wonder what the AZ plot would look like.
Brian McMorris 01.20.09 at 1:31 pm
Shift, the 2009 bottom is plausible, especially if the Feds end up owning the banking and mortgage industry (almost there) and they decide to make the bottoming a matter of public policy. There are non-market ways to stop the slide, though we really don’t know the “unintended consequences” of doing so (though I am on record that we should try).
In any case, even if the market bottoms, the “Dr. HBubble’s” speculations (future dates) are probably correct: a long period of sideways movement in housing prices. He has the flatline out till 2013 and no reason to believe that won’t be the case. Take a look at the much more mild downturn in CA from 1990-93 and see that downturn caused flat prices for the next 4 years (till ‘97).
I don’t think there will be any rush to buy once the market bottoms. The source of excess demand that runs up housing prices (speculators and new buyers) has been brutally crushed by this downturn and it will take even motivated buyers who lost their equity, years to rebuild enough for a down payment, even if they decide to wade back in the RE market. There just will not be enough demand from move-up buyers, or new first time buyers who did not lose their equity, to move the needle up very dramatically.
Flanigan Hill homes keller TX 01.20.09 at 3:44 pm
Very interesting post. 145 is not bad.
Tom 01.20.09 at 5:39 pm
Wow, I’ve been getting your weekly email for a long time, never saw more than one comment. Now 5? Is this your breakout week or what?
John Wake 01.20.09 at 9:54 pm
Tom, Scroll down and and you’ll see that several recent posts have a ton of comments. 19 comments on one post was the most in the last month.
http://www.arizonarealestatenotebook.com/2008/12/30/latest-phoenix-home-price-index/
The conversations have been excellent! I learn a lot from the comments.
Ken44 01.20.09 at 11:21 pm
Interested in the AZ housing market? Then this is the place to be.
Shift 01.21.09 at 9:44 am
Brain,
I think you are right. A good strategy might be to wait for the market to flat-line for a few months before buying any residential property.
I want to see what the Obama plan is with regards to the banking industry. If we do not nationalize the banks and just pump capital into the system it might be good to short the residential housing futures. Regardless of the Obama plan, reits are probably going to be a good short. Who knows? lots of risk.