Foreclosures are dramatically down in the Phoenix-area housing market. This means fewer cheap homes coming onto the market, home prices rising for the sixth month in a row as a result, and many buyers finally starting to turn their attention from bargain resale homes to new-home sales. A new report from the W. P. Carey School of Business at Arizona State University reveals some trends for Maricopa and Pinal counties, as of March:
> The number of foreclosures completed this March was down a huge 60 percent from March 2011.
> The median single-family-home price went up more than 20 percent from last March.
> New-home sales rose 35 percent in the same time period.
Mike Orr, the report’s author, says the home-buying season is in full swing and peak activity will last until June. The median single-family-home price in the Phoenix-area was $134,900 in March. That’s up 20.4 percent from a year ago when it was $112,000. Realtors will note the average price per square-foot went up 14.4 percent.
“Prices have begun to rise at a fast pace, and bargains are no longer plentiful,” says Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “Most homes that are priced well are attracting multiple offers within a couple of days, and many are exceeding the asking price.”
Orr emphasizes there’s been a dramatic change in the types of transactions happening in the market. Normal resales, new-home sales, investor flips and short sales are on the rise, while lender-owned home sales are down 61 percent from the year before.
Overall, the supply of single-family homes on the market (without an existing contract) went down 64 percent from March 2011 to March 2012. Orr estimates there is only a 23-day supply of homes priced under $250,000 available and that the market is very unbalanced, with far more buyers than sellers. The existing supply is heavily weighted toward the higher-priced end of the market.
“The very low number of inexpensive homes available for resale means more buyers are considering purchasing new homes as an option,” says Orr. “This signals the start of a distinct upward trend in new-home sales.”
When it comes to resales, Orr says all-cash buyers are still receiving preference over those with offers that require some form of financing. That’s because lenders need an appraisal, and appraisers are typically looking at months-old home sales for comparison. Those are priced well below the current market value.
“This puts ordinary home buyers at a severe disadvantage,” explains Orr. “More than 26 percent of Phoenix-area transactions are investor purchases.”
Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at wpcarey.asu.edu. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at knowwpcarey.com.