April 10, 2009

Greater Phoenix resale market experiences drop in foreclosures

Posted: April 10, 2009

There were 8,610 resale homes recorded sold in March 2009, while there were 8,510 recorded sales in February and 5,320 sales for a year ago. Foreclosure activity in March 2009 represented 31 percent (2,670 transactions), while there were 5,940 traditional market transactions.

Foreclosure activity, as a share of total activity, is down significantly from the 51 percent (4,295 recordings) in February 2009. The slowdown can primarily be attributed to the various hiatus programs that lenders instituted, while awaiting the new loan modification and refinancing programs from the federal government, according to Jay Butler, director of Realty Studies in the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus.

In March 2008, there were 2,055 sales in foreclosure or 39 percent on the month’s recordings. For March 2009, foreclosure activity differed throughout the Valley, such as 40 percent in El Mirage, 28 percent in Gilbert and 28 percent in Scottsdale.

Historically, March is the portal month for the resale home season that usually lasts until August, said Butler.

“During this time, sales and median prices tend to increase as the buyers move to lock in a purchase before the start of schools and the holiday times. So, some improvement in the local housing market would not be unexpected,” he said.

Although mortgage interest rates and prices are attractively low, tighter underwriting standards, a weak economy and poor job market, including job losses and lost income through reduced pay and furlough programs, could place sever obstacles before the potential of the market. The impact of foreclosures on the market has been the primary concern of the last year and will continue to be in the coming months, especially with the end of many hiatus programs and the weak job market. 
“The fundamental mitigating factor could be the various existing and potential loan modification programs that will allow households to save their homes,” said Butler. “Thus, there is increasing hope that the housing troubles are beginning to ebb and the bottom, along with recovery, is in sight. However, many problems continue to exist that could hinder the timing of any recovery.”

The declining prices have piqued interest for potential investors and owner-occupants, especially in the lower income ranges. For the traditional market, the median price in March was $127,000, down 45 percent from the $229,900 for a year ago. Foreclosed properties had a median price of $146,880 ($189,170 for March 2008).

Investment interest is being driven by the anticipation that home prices will rise again in the next few years. According to Butler, there are two fundamental reasons why the median price for foreclosed homes is higher than traditional transactions.

“The first reason is more expensive homes continue to be foreclosed, with 15 in March, three over $2 million, and 7 percent of the foreclosures were in the $300,000 range,” he said. “The other reason is that, for the last year, slightly more than 30 percent of the traditional sales were foreclosed homes that were sold again with a median price markdown of 15 percent. The markdown varied throughout the Valley ranging from 44 percent in Maryvale to 17 percent in Avondale to 10 percent in Tempe.”

Since the Greater Phoenix area is so large, the median price can range significantly. For March 2009 in North Scottsdale, the median price for a foreclosed property was $465,500 ($413,643 in February), while the traditional market was $430,000 ($511,765 in February). In South Scottsdale the splits were $190,900 ($200,000 in February) and $211,000 ($195,000 in February), respectively.

In Maryvale, traditional transactions were $39,900 ($40,000 in February) and foreclosures were $84,725 ($115,540 in February), while in Union Hills it was $199,900 ($205,000 in February) and $193,555 ($201,400 in February), respectively. For March 2009, Paradise Valley had a median square footage of 3,945 and a median price of $2,061,895.

While lower prices can greatly improve affordability, they can adversely impact many owners and potential sellers whom are watching their limited equity erode, as prices decline to and even below existing debt level. Rapidly declining value can be another issue in some of the mortgage modification programs which require a limited decline in value from the purchase and financing of the home.

Within the 900 total recorded sales for March 2009, the townhouse/condominium market had 295 foreclosed properties.  For a year ago, there were 700 total transactions with 130 being foreclosures. In March 2009, the median price for foreclosed properties was $105,075 while the traditional market stood at $115,000. Last year, the respective splits were $144,210 and $170,750

The median square footage for a single-family home recorded sold as foreclosed in March was 1,700 and 1,715 square feet for a market transaction home. For a year ago, the foreclosed market was at 1,705 square feet and the traditional market stood at 1,820 square feet. In the townhouse/condominium sector, the median square footage for a foreclosed unit was 1,010 square feet (1,110 square feet for year ago) while the traditional market units was 1,205 square feet (1,135 square feet for a year ago).

March 2008-- SINGLE-FAMILY RESALE HOMES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix 1,330 $178,000 665 $201,200 665 $161,220
Scottsdale 325 525,750 270 557,000 55 468,000
Chandler 360 234,950 255 240,100 105 215,500
Gilbert 365 245,000 240 245,000 125 244,980
Mesa 535 196,810 345 205,000 190 176,310
Tempe 105 232,500 90 236,500 15 205,935
Avondale 140 175,000 50 187,500 90 174,000
El Mirage 85 145,165 40 142,500 45 153,000
Glendale 335 193,000 180 216,750 155 184,000
Goodyear 155 220,000 85 231,800 70 204,075
Peoria 230 225,000 150 223,050 80 226,075
Sun City 85 170,000 75 140,000 10 220,500
Sun City West 80 220,000 80 220,000    
Surprise 345 201,510 220 200,000 125 202,745
             
County 5,320 $212,800 3,265 $229,900 2,055 $189,170

 

February 2009 -- SINGLE-FAMILY RESALE HOMES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix 2,835 $104,900 1,370 $ 65,000 1,465 $138,210
Scottsdale 325 395,000 195 434,000 130 369,225
Chandler 355 197,500 180 200,000 175 194,910
Gilbert 455 208,000 230 200,000 225 220,930
Mesa 780 144,500 385 135,000 395 157,260
Tempe 75 190,000 50 209,500 25 181,780
Avondale 340 120,540 155 112,000 185 143,485
El Mirage 195 90,000 90 71,900 105 117,500
Glendale 585 134,220 285 121,000 300 145,630
Goodyear 250 170,490 110 155,000 140 178,885
Peoria 380 179,905 190 169,900 190 190,000
Sun City 100 136,000 70 129,450 30 208,425
Sun City West 35 190,000 30 190,000 5 240,635
Surprise 495 154,260 255 140,000 240 175,000
             
County 8,510 $150,000 4,215 $133,000 4,295 $164,470

 

March 2009 -- SINGLE-FAMILY RESALE HOMES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix
2,720 $ 80,300 1,850 $ 64,000 870 $112,500
Scottsdale
345 375,000 250 385,000 95 341,250
Chandler
375 203,815 270 209,950 105 193,005
Gilbert
465 200,000 335 200,000 130 201,100
Mesa
805 132,000 545 126,000 260 147,445
Tempe
90 186,000 65 200,000 25 150,185
Avondale
330 109,900 210 106,900 120 120,000
El Mirage
205 75,000 125 71,000 80 94,085
Glendale
590 118,000 385 109,575 205 134,565
Goodyear
235 145,500 170 145,000 65 148,000
Peoria
375 173,000 260 170,000 115 195,950
Sun City
105 140,015 85 137,000 20 174,765
Sun City West
85 182,000 80 175,000 5 292,870
Surprise
535 139,900 375 135,000 160 147,325
             
County 8,610 $133,640 5,940 $127,000 2,670 $146,880

 

March 2008 -- TOWNHOUSE-CONDOMINUM RESALES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix 245 $143,780 180 $148,000 65 $132,825
Scottsdale 180 227,400 160 232,500 20 180,000
Chandler 20 144,605 15 145,000 5 136,400
Gilbert 5 192,660     5 192,660
Mesa 80 140,000 70 145,625 10 109,485
Tempe 40 163,750 35 167,450 5 115,400
Avondale            
El Mirage            
Glendale 20 150,000 15 156,000 5 133,700
Goodyear 5 115,785 5 115,785    
Peoria 20 179,560 20 179,560    
Sun City 65 118,450 65 118,450    
Sun City West 25 130,000 25 130,000    
Surprise 10 134,500 10 134,500    
             
County 770 $165,000 640 $170,750 130 $144,210

 

February 2009 -- TOWNHOUSE-CONDOMINUM RESALES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix 390 $115,000 140 $114,000 250 $119,500
Scottsdale 170 175,000 105 169,900 65 186,915
Chandler 25 133,000 10 133,000 15 138,640
Gilbert 20 140,915 10 139,500 10 168,725
Mesa 85 106,900 45 110,000 40 106,800
Tempe 35 131,765 20 117,000 15 134,100
Avondale            
El Mirage            
Glendale 55 85,000 20 58,860 35 92,900
Goodyear            
Peoria 15 82,600 10 126,500 5 82,290
Sun City 50 105,000 40 100,375 10 124,820
Sun City West 10 132,450 10 132,450    
Surprise 10 109,625 5 96,000 5 142,315
             
County 940 $125,000 455 $121,000 485 $128,395

 

March 2009 -- TOWNHOUSE-CONDOMINUM RESALES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix
345 $ 95,490 190 $102,500 155 $ 90,630
Scottsdale
160 186,450 120 183,250 40 195,250
Chandler
30 112,000 20 102,450 10 112,000
Gilbert
15 114,025 15 114,025    
Mesa
90 97,500 70 97,500 20 99,445
Tempe
30 127,000 15 134,000 15 124,565
Avondale
           
El Mirage
           
Glendale
40 67,685 15 36,825 25 90,405
Goodyear
           
Peoria
20 113,500 15 98,500 5 149,325
Sun City
50 84,500 50 84,500    
Sun City West
20 125,250 20 125,250    
Surprise
5 107,500 5 107,500    
             
County 900 $112,000 605 $115,000 295 $105,075

 


Realty Studies is associated with the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus. Realty Studies collects and analyzes data concerning real estate in the greater Phoenix metropolitan area. Realty Studies is a comprehensive and objective source of real estate information for private, public and governmental agencies. Its director, Dr. Jay Q. Butler, may be reached at (480) 727-1300 or e-mail him at Jay.Butler@asu.edu. To subscribe to RSS feed for Realty Studies news, visit http://www.poly.asu.edu/realty/rss.html.

Jay Butler, Jay.Butler@asu.edu
(480) 727-1300

Chris Lambrakis, lambrakis@asu.edu
(480) 727-1173
Public Affairs at ASU Polytechnic campus