Greater Phoenix homes sales in July are a mix of emotions. On the one hand there is joy over the large number of sales but only until you look at the median price trends.
But there is much more going on. In July 2008 sales of single family homes in Greater Phoenix surpassed by 39% those of last year. That's quite an accomplishment and a lot of homes trading hands even if some of those hands belonged to lenders. Many of the homes selling are lender owned. These are foreclosed homes. It's actually a good thing to get rid of as many REO (real estate owned or lender owned) homes as possible mainly because the lower price of these homes is hurting the normal sellers who in many cases are even more motivated but less able to sell.
Sales have been on a very steep increase since January 2008 and after a large decline in the 3rd and 4th quarters of 2007. Despite the very promising looking unit sales chart the chart below looks more grim. It represents the median home price which continues its decline. The median price has been declining for about 15 month and will probably continue to go down because the sheer large supply of distressed properties out there. The median price, though, does not tell it all. There are several neighborhoods, 85018 is one of them, which have not only held steady but the median price has increased over 2007. Plus certain segments are very active so much so that buyers have to compete for properties. Surprise is one of them. The July 2008 median home price was $196,000, a very low number indeed.
Another good indicator of the market is total inventory, new inventory and pending sales. The green line in the chart below represents total inventory on the ARMLS. It's much lower then it wall and continues to decline and more importantly new listing to the market have been pretty steady.
More importantly the sold listings which is the blue line have been on the increase and that is why total supply of real estate has decreased to below 9 months. 9 months is till high, 6 is about right, but it much better then the almost 16 months we had at the turn of current year.
The hot real estate market: The starter home market in Greater Phoenix is hot. This is pretty much the strongest segment right now. We'll see how it gets affected by the new legislation which comes into effect on October 1st. This legislation eliminates down payment assistance for buyers and this is a very larger portion of the transactions now. The entire housing market depends on this starter segment. Homes up to $240,000 represent 58% of all sales and drive the rest of the market except for luxury. If sales drop for starter homes then less homes will sell in the move up segment. 84% of all homes sold are $390,000 or less and the market over a million is only 2.25% of the total market. This legislation is a big mistake. We'll see in the late 4th quarter and early 2009 what the results are.
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