Phoenix Metro Area January Home Sales
Reflecting a trend seen across much of the West, Phoenix region January home sales fell harder than normal from December, but they were still the highest for a January since 2007. The share of homes bought by investors and cash-only buyers rose last month, as did the percentage of homes selling below $100,000 – factors that helped push the overall median sale price lower than the prior month for the second consecutive month, a real estate information service reported.
There were continued signs of price stability for resale houses. The median price paid for existing single-family detached houses didn’t decline from the year-ago level for the first time since July 2007, though it slipped a bit from December. The median price paid per square foot for those resale houses was the same as in both December and a year earlier, marking the first time that price measure didn’t fall on a year-over-year basis since October 2006, according to MDA DataQuick, a San Diego-based firm that tracks real estate trends nationally via public property records.
It appears competition between investors and first-time buyers has helped shore up prices for resale houses. But the economy’s fate and the magnitude and timing of future foreclosures will determine whether recent stability can endure. The market could also face a test soon if some government efforts to stoke housing demand with lower mortgage rates and a homebuyer tax credit expire as planned.
Last month foreclosure resales continued to claim just over half of all Phoenix resales, but they remained well below last year’s peak level and held steady for the third consecutive month.
In January, 52.1 percent of the houses and condos that resold had been foreclosed on in the prior 12 months, virtually the same as 52.2 percent in December and November but down from 65.9 percent in January 2009. Such foreclosure resales hit a high of 66.2 percent of all homes resold last March.
A total of 6,227 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in January, down 29.4 percent from the month before but up 14.8 percent from a year earlier.
A decline in sales between December and January is normal for the season, with that decline averaging 22 percent since 1994, when DataQuick’s statistics begin. The larger-than-usual drop in sales between the two months likely reflects lost momentum in the market relative to last fall, when some people rushed to buy to take advantage of super-low mortgage rates, lower prices and an expiring tax credit, which wound up being extended. However, historically sales trends in January and February have not proven to be very helpful for forecasting purposes.
January’s total sales were the highest for that month since January 2007, when 9,396 homes sold.
Sales of homes priced below $100,000 rose last month to 32.9 percent of all sales, compared with 30.8 percent in December and 29.7 percent a year earlier.
Total home sales have increased on a year-over-year basis for 13 consecutive months. However, the number of houses and condos that resold (excludes new homes) has risen on an annual basis for 19 consecutive months. In January, 5,675 homes resold, down 26.8 percent from December but up 22.8 percent from a year earlier. It was the highest level of resales for a January since 7,231 homes resold in January 2006.
The number of newly built homes sold in January dived 48.7 percent compared with December, and fell 31 percent from a year earlier. Builders, who have had a difficult time competing with low-cost foreclosures, sold the least number of homes for a January since 1997.
Last month’s new-home sales fell to 8.9 percent of total sales, down from 12.2 percent of all sales in December and a monthly average of nearly 25 percent of total sales since 1994.
January’s shift toward fewer sales of new homes, which tend to cost more than resale homes, helps explain the month-to-month decline in the overall median sale price.
The median price paid in January for all new and resale houses and condos combined was $131,540, down 3.6 percent from $136,500 in December and down 7.0 percent from $141,480 a year earlier. It was the smallest year-over-year decline in the median sale price for any month since September 2007, when the median fell 5.6 percent below the prior year to $237,900.
Beyond the falloff in new-home sales, the overall median was tugged lower by a higher concentration last month of sales to investors, who typically purchase lower cost homes. Last month’s sales figures reflect deals that were struck during the holidays, when investors remained some of the most serious buyers, and then closed escrow in January.
January’s median was the lowest since the median was $130,000 last June, and it was 50.2 percent below the peak $264,100 median reached in June 2006. The median has fallen on a year-over-year basis for 36 consecutive months. The low for the median in this cycle was $125,000 in April 2009.
The median paid last month for resale single-family detached houses was $130,000, down 2.1 percent from $132,750 in December but the same as in January 2009. It was 51.5 percent lower than the June 2006 peak of $268,000.
The median paid for resale condos in January was $95,000, virtually unchanged from $94,750 in December but down 24 percent from a year earlier and down 49.1 from an April 2007 peak of $186,500.
An alternative price gauge held steady in January: The median paid per square foot for resale single-family (detached) houses was $72, the same as in December and a year earlier. It’s been a long fall from the peak: The January figure stood 57.9 percent below its record level of $171 in June 2006.
Investors and first-time buyers continued to drive much of the resale activity last month. In January, 44.9 percent of all Phoenix-area home purchase loans were government-insured FHA mortgages, a popular choice among first-time buyers, according to an analysis of public property records. Absentee buyers purchased 39.2 percent of all homes sold in January, up from 38.5 percent in December, and paid a median of $115,000 last month. Absentee buyers are mainly investors, but include second-home buyers and others who indicate at the time of sale that the property tax bill will go to a different address.
Buyers who appear to have used cash to purchase their homes accounted for 40.6 percent of all January sales, up from 37 percent in December, based on an analysis of county property records. Last month’s cash buyers paid a median of $105,000. Specifically, these were transactions where there was no indication of a purchase loan recorded at the time of sale. Some of these “cash” buyers could have used alternative financing arrangements outside of a typical purchase mortgage, and in some cases these buyers might be taking out mortgages after their purchases. All-cash deals are popular in many Western markets where prices have dropped sharply and sellers favor the relative speed and certainty of cash transactions.
The “flipping” of homes has trended higher over the past year but dipped slightly last month, when 3.3 percent of all homes sold had previously been sold between three weeks to six months prior. The flipping rate was 3.9 percent in December and 2.1 percent in January 2009.
Foreclosure activity eased in January: The 4,942 single-family house and condo units foreclosed on in the Phoenix region represented an 18.6 percent decline from December’s peak level, but a 2.9 percent increase from a year earlier. The figures are based on the number of trustees deeds filed with the county recorder’s office. The document signals that a home was lost to foreclosure. The foreclosure totals can include units that the county assessor has designated condos, but are currently used as apartments (e.g. a 100-unit complex designated as condos but used as apartments could be foreclosed on and those units would be reflected in the foreclosure total for that month). For this reason and others, the number of foreclosure filings has seesawed month-to-month over the past year, and a single month’s increase or decline doesn’t necessarily indicate the beginning of a lasting trend.
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