August 27, 2009

Greater Phoenix resale numbers experience reduction in foreclosure activity for July

Posted: August 27, 2009

There were 11,500 resale homes recorded sold in July 2009, while there were 11,820 recorded sales in June and 8,165 sales for a year ago. Foreclosure activity in July 2009 represented 37 percent (4,200 transactions), while 7,300 traditional market transactions made up the bulk of activity. However, in the traditional market, approximately 46 percent of the recorded sales represent previously foreclosed property being sold.

Foreclosure activity, as a share of total activity, is down significantly from the 51 percent (4,295 recordings) of February 2009. Since recorded sales represent decisions made in prior months, this slowdown can primarily be attributed to the various hiatus programs that lenders instituted, while awaiting the results of the various loan modifications and re-financing programs from the federal government.  For July 2008, there were 3,470 sales in foreclosure or 42 percent on the month’s recordings. For July 2009, foreclosure activity differed throughout the Valley such as 42 percent in Goodyear, 36 percent in Mesa and 38 percent in Surprise.

Historically, July signals the ending of the resale home season that usually lasts through August.  During the resale season, sales and median prices tend to increase, so some improvement in the local housing market would not be unexpected. Although the level of activity has been at record levels, the market has been drive by foreclosure activity, including the sale of foreclosed homes, not the traditional owner-occupant segment.

“Except for the sense of failure -- foreclosures and bankruptcies -- the current market is not much different than the 2003-2006 hyper-market for it is driven by similar-minded investors looking for the deal, especially the potential of great appreciation,” said Jay Butler, director of Realty Studies in the Morrison School of Management and Agribusiness at Arizona State University Polytechnic campus.  

“So, a recovery cannot really be established until foreclosure activity drops to historical levels, such as 3-5 percent of monthly recordings, and owner-occupants are the primary driving force.”
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 reduce pay and furlough programs) could continue to place several 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,” said Butler. 

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 July was $135,500 or down 33 percent from the $200,750 of a year ago. Foreclosed properties had a median price of $148,045 ($159,200 for July 2008).

Investment interest is being driven by the anticipation that home prices will rise again in the next few years. 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.

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 32 being over $1 million in July -- including six over $2 million -- and 4 percent of the foreclosures were in the $400,000 to $1 million range. Since most loan modification programs are designed for homes under $400,000, the increase in foreclosure activity for the upper-end market was expected.

The other reason is that, for the last year, approximately 50 percent of the traditional sales were foreclosed homes that were sold again with a median price markdown of 20 percent. The markdown varied throughout the Valley ranging from 51 percent in Maryvale to 30 percent in El Mirage to 13 percent in Tempe.

Since the Greater Phoenix area is so large, the median price can range significantly. For July 2009 in North Scottsdale, the median price for a foreclosed property was $400,495 ($451,595 in June), while the traditional market was $500,000 ($460,000 in June). In South Scottsdale the splits were $219,650 ($180,000 in June) and $190,000 ($192,500 in June), respectively.

In Maryvale, traditional transactions were $51,400 ($48,000 in June) and foreclosures were $86,000 ($76,285 in June), while in Union Hills it was $215,500 ($210,500 in June) and $190,560 ($193,725 in June), respectively.  For July 2009, Paradise Valley had a median square footage of 3,730 and a median price of $1,412,500. 

Within the 1,475 total recorded sales for July 2009, the townhouse/condominium market had 555 foreclosed properties.  For a year ago, there were 870 total transactions with 280 being foreclosures. In July 2009, the median price for foreclosed properties was $109,545 while the traditional market stood at $106,500. Last year, the splits were $125,800 and $160,000, respectively.

The median square footage for a single-family home recorded sold as foreclosed in June was 1,685 square feet (1,600 for a year ago), while it was 1,760 square feet (1,825 for a year ago) for a traditional transaction home. In the townhouse/condominium sector, the median square footage for a foreclosed unit was 1,050 square feet (1,100 for a year ago), while the traditional market units was 1,160 square feet (1,160 for a year ago).

  

July 2008-- SINGLE-FAMILY RESALE HOMES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix 2,480 $147,475 1,145 $167,000 1,335 $134,670
Scottsdale 385 450,000 300 455,000 85 446,775
Chandler 440 229,500 320 239,750 120 198,405
Gilbert 515 239,620 345 240,000 170 231,000
Mesa 800 171,925 485 179,000 315 160,000
Tempe 115 240,000 100 248,500 15 213,560
Avondale 310 159,000 145 155,000 165 160,000
El Mirage 175 124,900 70 124,900 105 125,000
Glendale 570 170,000 315 182,700 255 155,235
Goodyear 225 182,900 135 189,000 90 180,435
Peoria 355 211,000 215 221,150 140 192,960
Sun City 85 155,000 75 155,500 10 153,940
Sun City West 45 205,000 45 205,000    
Surprise 475 173,620 280 175,000 195 165,750
             
County 8,165 $181,000 4,695 $200,750 3,470 $159,200
June 2009 -- SINGLE-FAMILY RESALE HOMES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix 3,615 $ 91,000 2,310 $ 79,000 1,305 $121,500
Scottsdale 590 376,000 430 380,000 160 357,500
Chandler 540 217,805 385 225,000 155 196,870
Gilbert 670 195,000 460 199,000 210 189,085
Mesa 1,100 130,850 705 125,000 395 151,615
Tempe 170 199,950 115 204,500 55 190,000
Avondale 440 106,000 280 99,500 160 129,000
El Mirage 230 76,750 150 70,000 80 135,735
Glendale 825 121,905 515 120,000 310 130,500
Goodyear 390 141,975 235 140,450 155 148,500
Peoria 505 165,500 330 160,000 175 172,120
Sun City 110 135,000 90 136,500 20 124,600
Sun City West 85 198,500 80 185,000 5 213,005
Surprise 665 140,000 415 133,840 250 164,365
             
County 11,820 $140,000 7,760 $134,000 4,060 $154,000
July 2009 -- SINGLE-FAMILY RESALE HOMES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix
3,755 $105,000 2,345 $ 94,000 1,410 $171,300
Scottsdale
535 370,000 400 389,900 135 320,500
Chandler
645 185,100 440 195,000 205 172,370
Gilbert
645 199,000 440 199,000 205 198,000
Mesa
1,135 130,000 730 127,000 405 136,000
Tempe
190 200,000 135 208,700 55 185,685
Avondale
410 109,600 245 110,000 165 106,950
El Mirage
210 75,000 125 70,000 85 94,205
Glendale
855 119,000 520 110,000 335 130,555
Goodyear
360 145,290 210 130,000 150 163,620
Peoria
515 165,000 330 161,750 185 171,300
Sun City
80 135,000 55 135,000 25 148,630
Sun City West
75 182,000 65 182,000 10 171,875
Surprise
680 139,800 415 138,010 260 144,500
             
County 11,500 $140,000 7,300 $135,500 4,200 $148,045

 

 

July 2008 -- TOWNHOUSE-CONDOMINUM RESALES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix 305 $138,600 175 $150,000 105 $120,700
Scottsdale 190 230,000 160 229,000 30 249,475
Chandler 45 142,950 30 155,000 15 125,000
Gilbert 15 158,250 10 164,750   128,290
Mesa 105 127,500 70 131,500 25 102,815
Tempe 55 153,000 45 155,000 10 122,240
Avondale            
El Mirage            
Glendale 35 108,550 15 114,900 20 101,000
Goodyear            
Peoria 15 112,500 5 114,070 5 112,500
Sun City 40 109,000 35 109,450   86,250
Sun City West 10 124,000 10 124,000    
Surprise            
             
County 870 $147,200 590 $160,000 230 $125,800

 

June 2009 -- TOWNHOUSE-CONDOMINUM RESALES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix 540 $ 99,060 300 $ 84,950 240 $110,010
Scottsdale 285 158,000 195 170,000 90 139,085
Chandler 50 83,950 30 81,500 20 119,995
Gilbert 30 122,700 20 117,700 10 142,870
Mesa 140 80,000 85 66,000 55 103,315
Tempe 55 110,500 35 110,000 20 121,505
Avondale            
El Mirage            
Glendale 80 55,850 45 43,000 35 84,920
Goodyear            
Peoria 25 97,000 20 120,500 5 58,045
Sun City 55 89,500 50 90,000 5 74,590
Sun City West 15 133,950 15 133,950    
Surprise 10 101,000 5 112,500 5 47,820
             
County 1,390 $110,000 880 $107,000 510 $112,100

 

July 2009 -- TOWNHOUSE-CONDOMINUM RESALES
Selected Cities Total Median Price Traditional Sales Median Price Foreclosed Sales Median Price
Phoenix
680 $ 95,000 400 $ 93,750 280 $104,935
Scottsdale
300 160,000 200 170,000 100 149,563
Chandler
55 103,000 35 101,000 20 131,200
Gilbert
25 135,000 15 125,000 10 141,700
Mesa
120 75,335 70 69,785 50 77,825
Tempe
70 121,400 55 119,930 15 135,000
Avondale
           
El Mirage
           
Glendale
70 56,140 40 43,505 30 67,610
Goodyear
           
Peoria
35 84,140 25 69,500 15 108,485
Sun City
45 83,000 35 81,250 10 94,950
Sun City West
10 102,670 10 102,670    
Surprise
10 114,900 5 101,750 5 165,530
             
County 1,475 $107,535 920 $106,500 555 $109,545

 


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. Visit http://realty.wpcarey.asu.edu for more information.

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

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