Jay Butler of Realty Studies at ASU came out with his Phoenix area residential real estate sales and median price numbers for February 2009. Realty Studies is associated with the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus (although they are apparently going to become part of the W.P. Carey School of Business at ASU).
Greater Phoenix home sales usually start to rebound in February. January is typically the slowest month of the year for home sales (closings) reflecting reduced house hunting during the December holidays. Home sales in Phoenix usually take off in March (data available in mid-April). The strength of home sales in March is a pretty good barometer of how the rest of the year will play out.
Phoenix Median Home Price - Non-Foreclosures
February 2009: $133,000
February 2008: $230,000
From January to February the median home price fell $3,000. Last year the median home price fell $13,000 over the same period. The decline in the downward momentum in Phoenix home prices suggests the market as a whole may be approaching a bottom. But it’s only one month. March sales will be key.
Phoenix Number of Homes Sold - Non-Foreclosures
February 2009: 4,215
February 2008: 2,690
The number of homes sold in February in Greater Phoenix INCREASED 57% over February 2008.
When the higher number of sales eventually brings down the high inventory of homes for sale to “normal” levels, the fall in the median home price should stop. I expect prices in a few zip codes in Greater Phoenix to start leveling off. We will know a lot more about the strength of this rebound in Phoenix home sales by mid-April.
Actually, “rebound” is the wrong word. I don’t expect a bounce. I expect to see prices in some areas to stop falling. Once we see prices in a few areas approaching bottom, and that information becomes known by the general public, we will see a lot of money sitting on the sidelines come into residential real estate.
[By the way, I just got a phone call from an excitable Californian who before she flitted off wanted to make an immediate offer on a house she had never seen. Muy deja vu 2005. The buyer psychology is changing.]
{ 10 comments… read them below or add one }
ken44 03.13.09 at 7:44 pm
—The buyer psychology is changing.–
Good news for the Az housing market if true.
MPS 03.16.09 at 8:44 am
John,
Why do you say no bounce? There will be a bounce. Classic bubble graph says so and this is a classic bubble without doubt. There’s always some overshoot on the way down. However, we have to factor in foreclosure sales when talking about prices. Non-foreclosure pricing is only half the story right now. I still say this is a good time to be shopping. I’d be at the foreclosure auctions if I had two pennies to rub together. Out of state money is going to snap up all of the cheap real estate here as soon as a little confidence is restored to the banking system.
End of story is my generation got robbed blind and left holding the empty bag. And now we can sit and watch all those who will benefit more as they vulture the remaining scraps from our dead carcasses. Then of course they’ll leave us with the bailout tab as they stroll off into their luxurious retirements.
Garrett 03.16.09 at 9:54 am
$133,000 - Still too high for a house in the middle of the desert, in my humble opinion.
MPS 03.16.09 at 10:35 am
I agree, 133 is still a bit high, but you can find plenty under 100K now if you include bank owned in your search.
John Wake 03.16.09 at 12:02 pm
Well, half the homes sold were under $133,000.
MPS, I guess the lower prices go, the more likely there will be a bounce. And then what? After a bounce, are you thinking we go back to 3% to 5% appreciation a year? Or is it going to be more or less flat after the bounce?
MPS 03.16.09 at 1:00 pm
Who knows? With real estate prices lower than most major cities will people start moving here in droves again? I know why I moved here in 2003..cheap real estate and sunshine. Obviously the excess inventory must be absorbed before we have any regular pattern of appreciation.
I wonder what the real median home price is right now? (with bank owned sales included). That is the number that is relative to what you’ll really pay for a house if you’re a smart shopper. And that is the number that will represent an overshoot of the real bottom.
John Wake 03.16.09 at 6:27 pm
MPS, I didn’t word that post very well. The $133,000 does indeed include normal, short and bank owned sales. It does NOT include “sales” when the bank repossesses a property. That repossession “sale price” is pure fiction because no money changes hands. In a repossession (trustee sale), the County uses the open bid price as the “sale” price if the auction fails and the ownership goes back to the bank. Lately, about 95% of trustee sales end with the house going back to the lender. The lender can set the opening bid at whatever the lender wants but it is usually set at the outstanding loan balance.
azrob 03.16.09 at 9:31 pm
prices may very well level off for the next six months.
1. 8000 credit for first time buyers. This is a hell of a pump on an 80K home.
2. since 2 weeks ago, foreclosures suddenly dropped. Clearly, banks are delaying to see if they can modify loans rather than foreclose. Interestingly, we are on track to SMASH the record for NTR (notice of trustee sale) in one month when march finishes.
Past history has shown an over 50% re default rate within six months on modified loans, and obviously, not all the thousands of loans being delayed will qualify for modification.
3. continued and increasing job losses.
4. In up years, prices usually rise more march to July (2/3 of the year’s price increase), so logical to expect this pattern moderates declines in a down market.
So, my predictions? foreclosures will rocket back up in a few months, and unless something else replaces the stimulus 8K for first time buyers, set to expire December 1, we will see prices stabilize in many zips for several months, only to begin sliding again when the spring/summer buying season ends. 100 Case Schiller index by years end, 100k median price. And oh yeah, maybe the hardest hit fringes settle, but scottsdale gets creamed all year long, Scottsdale still has like 18 months inventory for sale.
John Wake 03.16.09 at 10:17 pm
The lenders eased up on foreclosures around December but caught up on some of those delayed foreclosures in January and February. Now that they are more or less caught up, the pace of foreclosures, I hear, is down again.
Nevertheless, combine lower foreclosures with seasonally high Phoenix area home sales March - May, and we could see some interesting changes in the Arizona real estate market in some areas.
azrob 03.17.09 at 2:05 am
if by interesting changes, you mean the prices don’t drop as much for a while, sure ok… next fall will change that. We have yet to see many foreclosures from job losses, as most of the job losses have been in the last five months. The mean time to failure for someone to actually lose a home after losing a job is probably over a year, and certainly over seven months in arizona, since it takes six months from first missed payment. (most homeowners won’t immediately miss the first payment after a layoff, and even if they did, its still over six months to foreclosure)
by fall, the suckers/spring summer rally is over, and what are we left with? 3000 to 5000 foreclosures a month and downward pressure on pricing.