Arizona’s residential real estate market is schizophrenic right now – a dichotomy of healthy sales in some segments versus years on the market in others. The good news is that lower sale prices overall have allowed buyers once priced out of the market to enter the fray. The bad news is that the buying process can be frustrating – especially in affordable price ranges in desirable areas.
New buyers have entered into the market because homes are now listed at much lower prices than what they were sold at just a few years ago. In the Phoenix area, the median resale home price was $115,500 in April 2009, down from a peak of nearly $265,000 three years ago. Consequently, first-time buyers accounted for somewhere around one-third of all transactions.
In addition, interest rates are once again near to historic lows (5.03% in the second quarter of 2009). When you add the impending expiration of the $8,000 tax credit (on November 30, 2009), it is easy to see why there is so much buyer activity now.
The lower prices mean that in some price segments there are fewer homes available than in the recent past. For July in Maricopa County, approximately 32,000 homes were on the market, down 30 percent from January. In particular there are less properties for sale in the popular $160,000 – $100,000 price range, and the time on the market of properties for sale between those limits have generally decreased. Between $100,000 and $120,000, the number of active listings decreased in metropolitan Phoenix from 1323 in June to 1290 in July. In addition, the number of sales pending (a contract has been signed but the closing hasn’t occurred) decreased in many price points. For example, from 846 to 778 closed sales from June to July in the $120,000 to $139,000 price range.
This doesn’t mean that there are not distressed sales – lender owned properties (REOs) and short sales, in the sought after price ranges. Continuous waves of foreclosures affect all of metropolitan Phoenix and Scottsdale. In fact, approximately 87% of all recent sales have been of distressed homes. The difference is that when a desirable area and an affordable price range coincide, demand can exceed supply.
Part 2 of this blog will detail the consequences to buyers of the multitude of distressed properties: short sales, pre-foreclosures (trustee sales initiated but not completed) and bank owned properties that are available. As you will see, “hurry up and wait, and wait some more,” is the new buyer reality. For more on this topic, and for answers to your real estate questions, keep visiting this blog and our website, simplysoldaz.com.