September 20, 2010

Median home prices dropping in Phoenix area

Posted: September 20, 2010
Associate Professor of Real Estate Jay Butler
W. P. Carey School of Business Associate Professor Jay Butler's new report shows median existing-home prices dropping in the Phoenix area for the third month in a row.

Two negative trends are clouding the Phoenix-area housing market right now, according to a new report from the W. P. Carey School of Business at ASU. August marked the third month in a row that the median existing-home price dropped in the Valley. Also, foreclosures made up their highest percentage of existing-home activity since back in January.

“Foreclosures accounted for 45 percent of the existing-home market activity in August,” said Jay Butler, associate professor of real estate, who authored the report. “When you add in resales of previously foreclosed-on homes, all of this foreclosure-related activity represents a full two-thirds of the market’s transactions in August.”

About 4,000 foreclosures were recorded in Maricopa County in August. That’s slightly up from about 3,900 foreclosures in July, but way up from last August’s total of about 3,100.

Sales activity overall is slowing down, now that summer is over. In August, 4,800 homes were resold. That’s down from almost 5,100 in July and almost 6,000 resales last August.

“It’s not unusual to see the resale home activity slow as the selling season comes to an end,” Butler said. “As the year comes to an end, median prices often decline in response to holiday and school activities that allow little time or desire to buy a home. Beyond the impact of foreclosure activity, the absence of a strong move-up market, will also limit any growth in home prices.”

The median home-resale price for August was $135,000. That’s down from $137,500 in July, $143,000 in June and $144,000 in May, demonstrating a sustained slide. Last August, the median was at $138,000.

“Although current interest rates and home prices are very attractive, homeowners don’t seem to be motivated to buy,” Butler said. “This lack of motivation can be attributed to anemic economic and job recovery, low consumer confidence and stricter underwriting guidelines, among other factors.”

The townhouse/condominium market saw 630 foreclosures in August. That’s up from 590 in July and way up from 380 last August. The median townhome/condo price continues to plunge. It was at $80,000 in August, all the way down from $105,000 last August.

Butler’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/realestate/Phoenix-Resale-Market-Reports.cfm. More analysis is also available from Knowledge@W. P. Carey, the business school’s online resource and biweekly newsletter, at http://knowledge.wpcarey.asu.edu.

Debbie Freeman, Debbie.Freeman@asu.edu
(480) 965-9271
Communications Manager, W. P. Carey School of Business