Arizona Real Estate Notebook

ASU’s Jay Butler on Phoenix home prices.

The median price of a home in the Phoenix area used to be about 90 percent of the National Association of Realtors’ national median price, he said.

Prices began rising during a hot housing market in early 2005 and, during the past year and a half, have settled at about $260,000. The national median is $219,000.

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EXCLUSIVE - Table of ASU data created by your favorite Realtor, John L. Wake, Associate Broker, HomeSmart Real Estate.

For all of Greater Phoenix the median home price year-over-year was down 1.4% going from $267,000 in June 2006 to $263,145 in June 2007.

Sun City West and Sun City are the big winners in the falling prices contest, down 16% and 14% from a year ago. Last June was the peak for the median home price in Sun City West, however, so that comparison is a bit misleading. It’s not misleading to say the median price of single family homes in Sun City West and Sun City have fallen more in the last year than in any other city listed below.

Previous price charts
Archive of price charts

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EXCLUSIVE - Table of ASU data created by your favorite Realtor, John L. Wake, Associate Broker, HomeSmart Real Estate.

For all of Greater Phoenix the median home price year-over-year was down slightly going from $265,000 in May 2006 to $262,000 in May 2007.

11 of the 14 cities below had lower prices, 2 cities were flat, however the largest city by far, Phoenix, was up 2% which kept the median home price flat for Greater Phoenix overall. Phoenix was the only city with a year-over-year increase in median home price for May. Among these 14 cities, it looks like there is some real pain in Avondale and Goodyear.

Previous price charts
Archive of price charts

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Good!

Maybe the increased new-home impact fees in Chandler will help strengthen resale home prices in Chandler a tad bit.

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As an aficionado of graphic presentation of data, I love what the East Valley Tribune did with this chart.

You can see my comments on that study here and here but the better data, I believe, is here.

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It’s not only Phoenix where home prices are falling.

U.S. home prices fell 1.4 percent in the first quarter compared to a year ago, the first time since 1991 prices have shown a quarterly decline, according to a housing index released Tuesday by Standard & Poor’s.

Boston, Detroit, San Diego and Washington, D.C. showed the greatest year-over-year declines in prices. Meanwhile, Charlotte, N.C., Seattle and Portland, Ore. had strong price appreciation over last year. Compared to February, the gains in those cities were more modest.

This has got to be a concern for the Federal Reserve, however, the rest of the economy is so strong that they are reluctant to lower rates and possibly spur inflation.

Here’s Reuters article on it.

Detroit and San Diego posted the biggest annual declines of 8.4 percent and 6.0 percent, respectively.

Phoenix and Las Vegas have seen the largest price slides from their peaks. In September 2005, Phoenix showed a 49.3 percent growth rate and Las Vegas jumped 53.2 percent in September 2004. Those cities in March had respective price drops of 3 percent and 1.6 percent.

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Case-Shiller probably has the best data on Phoenix home price appreciation. They added Phoenix late last year which is very useful for us.

You can see the average home price index in metro Phoenix drifting lower. Home prices in some areas will no doubt do far better than average and others far worse.

This graph makes it look like sellers should sell sooner rather than later and that buyers should play hardball on price to get ahead of the curve. Again, different parts of the Valley need to be treated differently but overall the trend since last summer has been lower.

The data shown is through March 2007. Each data point is a 3 month rolling average so the data point for March is actually the value for the 1st quarter (January-March) of 2007

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Without a doubt, the best part of this article was the graphic. It was like one of those “Factoids” you see on the front page of USA Today, a graphic with a little blurb, but in this case it was a giant Factoid.

It’s great that the Republic seems to be realizing that graphics can communicate some data far better than words. They even put that giant graphic in the middle of the front page above the fold! [Maybe it was a slow news day!]

For the life of me, I can’t find that graphic online. Okay, I snagged it.

Enough about presentation.

The point is that asking prices are coming down. Notice that the sale price has actually increased slightly since last summer. But also notice that the gap between the list price and the sale price is still large and that list prices could fall a lot more and still have no effect on the median sale price.

I agree with the article’s idea that home sales will increase if list prices decline (… even if sale prices don’t decline).

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EXCLUSIVE - Table of ASU data created by your favorite Realtor, John L. Wake, Associate Broker, HomeSmart Real Estate.

For all of Greater Phoenix the median home price year-over-year was flat, going from $264,900 in April 2006 to $265,000 in April 2007.

10 of the 14 cities below had lower prices, however the largest city by far, Phoenix, was up 2% which kept the median home price flat for Greater Phoenix overall.

Previous price charts
Archive of price charts

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EXCLUSIVE - Table of ASU data created by John L. Wake, Realtor, HomeSmart Real Estate.

For all of Greater Phoenix the median home price was up 1%, from $263,000 in March 2006 to $265,470 last month.

Scottsdale up 7%. Phoenix up 4%. All other cities in the table are flat or down.

Previous price charts
Archive of price charts

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The average price of Phoenix area homes sold during the 4th quarter was $5,200 more than during the 3rd quarter, according to the local MLS.

The average days on market, however, increased from 58 to 70 days.

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For 2006, the median home price decreased from $257,000 in January to $255,900 in December or a 0.4 percent decrease.

Despite dire warnings from the Arizona Republic in a June article, “How low will it go?; Home prices may dip 10% as fear grips Valley market.” the median home price in Greater Phoenix in 2006 was… flat.

This is what Catherine Reagor of the Arizona Republic wrote in that June article.

If prices fall 10 percent this year, as analysts predict, the median price of an existing Valley home would dip to around $238,000.

Wow! The Arizona Republic or their “analysts” sure got it wrong.

2006 was definitely NOT a good year but it was a lot better year than what the Arizona Republic expected. They were too low by $17,900.

Nevertheless, the fact that the median home price in Greater Phoenix was flat will be little solace to homeowners in a few Greater Phoenix cities where the median home price did indeed fall by 10 percent or more.

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You saw in the graphs below that the inventory of homes for sale has probably peaked. The average days on market, however, is still increasing rapidly.

As the number of days on market increases, a seller is more likely to accept a lower price. So the increasing average days on market puts downward pressure on prices.

Once average days on market starts to decline the downward pressure on Arizona home prices will be relieved somewhat.

Once average days on market goes below 70 days, the odds of a significant decline in Arizona home prices should be very small indeed.

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ASU’s Greater Phoenix Resale Home Market report shows the median home price in November ($259,000) was up slightly from October ($257,000) but there’s still plenty of pain out there.

Last month I said;

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.

Well, the median home price for Greater Phoenix was indeed higher in November than October but it’s not a broadbased increase. A lot more cities had a lower median home price in November (9) than a higher median home price (5).

So I can’t say that strongly suggests the bottom has been reached.

The mixed signals suggest no clear direction which, now that I think about it, is consistent with approaching the bottom.

Here is an Arizona Republic article on the report. And another on Scottsdale.

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Catherine says, “New-home building probably has hit bottom in metropolitan Phoenix.”

The part about “half” is the top factor to lower the downside price risk for new and resale homes in the Phoenix market.

There were 2,341 single-family permits issued in October, according to RL Brown’s Phoenix Housing Market Report. That’s up slightly from September, but half the pace of October 2005. [emphasis added]

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