In May 2008, a total of 5,740 resale homes recorded sold. This sales activity includes 1,475 recorded foreclosed home transactions & 4,265 traditional market transactions, while a year ago it was 305 & 4,915 recorded sales, respectively. Foreclosed transactions represent home owners losing their property to successful individual bidders or the lender of record. In April 2008, the spilt was 1,825 foreclosed homes & 3,760 traditional transactions.
Historically, May is a strong month & the 4,265 recorded sales represent the best month of 2008 & the best since 4,570 homes were recorded sold in June 2007. The 2008 year-to-date total is 16,280 traditional sales & 6,435 foreclosures.
For the last year, the housing market has been confronting issues derived from the hyper-market of previous years such as the subprime meltdown & overly ambitious investors. Unfortunately, there is increasing data, such as job losses & layoffs that the economy is now weakening & will add further stress for the housing markets.
While there has been little attempt to help investors, there have been many programs started to help people save their homeownership. Most of the attempts have dealt with reset of higher interest rates, with the basic premise being that the home occupant has the income but not enough to satisfy the new mortgage payment.
“However, in a weak economy, many households now will not have the needed income to save their homes, even with a new mortgage payment plan,” said Jay Butler, director of Realty Studies in the Morrison School of Management & Agribusiness at Arizona State University’s Polytechnic campus. “With increased energy & food costs, there is even additional strain on the household budget, thus, the potential economic downturn & inflationary pressures will define how much further the housing market will worsen & when recovery will begin.”
The declining prices have fueled renewed investor interest & potential owner-occupants, especially in the lower income ranges. For the traditional market, the median price was $223,500, while the foreclosed properties had a median price of $179,465. For a year ago, the median prices were $265,000 and $217,225, respectively.
“Investment interest is being driven by the anticipation that home prices will rise again in the next few years,” said Butler. “The lower median price is being impacted by several forces, including the large number of vacant homes, especially in certain neighborhoods. Further, capital is available for lower-priced housing, but lacking in the higher priced housing market.”
Since the Greater Phoenix area is so large, the median price can range significantly. In North Scottsdale, the median price for a foreclosed property was $475,000, while the traditional market was $575,000. In South Scottsdale the splits were $253,515 and $260,000, respectively. In Maryvale, traditional transactions were $147,900 & foreclosures were $142,785, while in Union Hills it was $280,000 & $231,415, respectively.
Lower prices can greatly improve affordability, but they can adversely impact many owners & potential sellers who are watching their limited equity erode, as prices decline to & even below existing debt level. Thus, lower prices affect the ability & desire to continue owning the home & even overall confidence in the economy, which puts additional strain on the local housing market.
Within the 810 total recorded sales, the townhouse–condominium market had 130 foreclosed properties. A year ago the split was 1,225 for traditional sales & 20 for foreclosed sales. In May 2008, the median price for foreclosed properties was $136,000, while the traditional market stood at $169,900. For April 2008, the respective splits were $148,000 & $171,500.
The median square footage for a single-family home recorded sold as foreclosed was 1,695 & 1,840 square feet for a traditional market transaction home. In Paradise Valley, the median square foot home was 3,210 at a median price of $2,000,000. For a year ago, the foreclosed market was at 1,735 square feet & the traditional market stood at 1,695 square feet. In the townhouse/condominium sector, the median square footage for a foreclosed unit was 1,025 square feet (1,155 square feet for year ago), while the traditional market was 1,195 square feet (1,090 square feet for a year ago).