Phoenix Metro Area July Home Sales

Phoenix region home sales dove to a 15-year low last month, falling more than 25 percent from both a year ago and from June, as the impact of home buyer tax credits faded and new-home sales plunged. The overall median sale price fell slightly on a year-over-year basis for the first time since January, a real estate information service reported.

Last month a total of 7,610 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area. That was down 26.7 percent from the month before and down 25.6 percent from a year earlier, according to MDA DataQuick of San Diego, which tracks real estate trends nationally via public property records.

Last month’s 26.7 percent drop in sales from June far exceeded the normal dip between June and July, which has averaged 6.7 percent since 1994, when DataQuick’s complete Phoenix-area statistics begin.

July’s sales total fell 24.8 percent below the average July tally of 10,124 sales since 1994.

Last month’s total resales – existing houses and condos combined – fell 23.4 percent from June and fell 24.2 percent from a year earlier, to the lowest level for a July in two years. However, while sales of existing detached houses declined 26.8 percent year-over-year, resale condos logged a mere 0.7 percent decline from a year earlier.

It was July’s new-home sales, which were the lowest for that month in 13 years, that drove the region’s overall sales count to the lowest level for a July in 15 years. The number of newly built houses and condos sold in July fell to 641, down 50.0 percent from June and down 37.7 percent from a year earlier.

Last month foreclosure resales – homes that had been foreclosed on in the prior 12 months – rose to 50.5 percent of the resale market, up from 47.4 percent in June but down from 57.8 percent a year earlier. The peak for foreclosure resales was 66.2 percent in March 2009

In July, buyers paid a median $132,000 for all new and resale houses and condos that closed escrow in the Phoenix metro area, down 5.6 percent from June and down 0.8 percent from $133,000 a year ago. It was the first time since January this year that the median fell on both a month-to-month and year-over-year basis. The July median stood 50.0 percent short of the peak $264,100 median reached in June 2006.

Contributing to last month’s drop in the overall median sale price from June was the sharp decline in sales of new homes, which typically sell for more than resale homes. The sudden decline in new-home sales puts downward pressure on the median, which is the point where half of the homes sold for more and half for less. The new-home sale plunge also helps explain the large shift last month toward a greater percentage of transactions occurring in the lowest price ranges: 57.8 percent of last month’s total sales were for less than $150,000, compared with 54.6 percent in June and 57.4 percent a year earlier.

The median paid last month for resale single-family detached houses was $132,800, down 2.0 percent from June but up 2.9 percent from a year earlier. It was the sixth consecutive month in which the resale house median rose year-over-year, though last month’s gain was the smallest in that series. Last month’s resale house median was 50.4 percent lower than its $268,000 peak in June 2006.

The median paid for resale condos in July was $80,000, down 9.1 percent from June and down 20.8 percent from a year earlier. The July resale condo median was 57.1 percent lower than its $186,500 peak in April 2007.

An alternative price gauge dipped month-to-month for the first time in seven months but remained positive year-over-year. In July the median paid per square foot for resale single-family (detached) houses was $72, down 4.0 percent from June but up 4.3 percent from a year earlier. The median paid per square foot remained 57.9 percent below its $171 peak in July 2006.

Given the lost boost from the expired federal home buyer tax credits, the future direction of the Phoenix-area housing market will depend largely on the strength of the local job market and consumer confidence. Also critical will be the magnitude and timing of future distress sales, as well as the number of willing and able investors and first-time buyers, who’ve been driving most of the region’s sales activity.

In July, 40.1 percent of all Phoenix-area home purchase loans were government-insured FHA mortgages, a popular choice for first-time buyers, according to an analysis of public property records. That was down from 48.3 percent in June and down from 47.5 percent a year earlier.

Absentee buyers purchased 41.9 percent of all homes sold in July, up from 37.3 percent in June but down from 42.5 percent a year earlier. Last month’s absentee buyers paid a median $112,000, down from $120,000 in June but up from $110,000 a year ago. Absentee buyers are mainly investors, but can 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 37.6 percent of all July sales, up from 33.6 percent in June and 35.3 percent a year earlier. Last month’s cash buyers paid a median of $100,000, down from $110,000 in June but up from $89,000 a year earlier. 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, recorded purchase mortgage, and in some cases these buyers might be taking out mortgages after their purchases. All-cash deals have become popular in many Western markets where prices have dropped sharply, luring investor buyers who don’t always qualify for traditional mortgages. Moreover, sellers favor the relative speed and certainty of all-cash transactions.

Last month about 3.5 percent of all homes sold had been “flipped,” meaning they had previously been sold on the open market within the prior six months. In June the flipping rate was 3.4 percent, while a year ago it was 2.6 percent. Phoenix-area flipping was higher during the housing boom, reaching a peak of 9.0 percent in July 2005.

Meanwhile, on the foreclosure front: Last month 5,725 house and condo units were foreclosed on in the Phoenix region, up 4.7 percent from June but down 1.6 percent from July 2009. During the first seven months of this year, 36,522 housing units were lost to foreclosure, up 7.9 percent from the same period last year.

The foreclosure figures are based on the number of Tustees Deeds filed with county recorder offices. The document signals that a home was lost to foreclosure. The foreclosure totals can include units that the county assessor has designated as 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 homes foreclosed on has seesawed, and a single month’s increase or decline doesn’t necessarily indicate the beginning of a lasting trend.

Phoenix MSA

Number of sales Jul-09 Jul-10 Yr/yr
%Chng
Resale houses 8,279 6,061 -26.80%
Resale condos 914 908 -0.70%
New homes 1029 641 -37.70%
All homes 10,222 7,610 -25.60%
       
Median sale price Jul-09 Jul-10 Yr/yr
%Chng
Resale houses $129,000 $132,800 2.90%
Resale condos $101,000 $80,000 -20.80%
New homes $175,000 $199,900 14.20%
All homes $133,000 $132,000 -0.80%

 

Media calls: Andrew LePage (916) 456-7157

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