Low mortgage rates, fewer foreclosure sales and increased short sale transactions, were some of the factors attributed to the rise in Phoenix area home sales in October. The median sales price rose slightly from September, but remained nearly 20% below October 2008 levels. For more on this, see the following article from DQNews.
Phoenix-area October home sales rose above September and the year-ago level as the region posted its sixth month-to-month increase in the median sale price. October’s $138,000 median for all houses and condos sold was still 21 percent lower than a year ago, however, and was close to half of its peak level reached in June 2006, a real estate information service reported.
The median sale price has gotten a boost from lower concentrations of foreclosed homes selling in recent months.
In October, 53.7 percent of the houses and condos that resold had been foreclosed on in the prior 12 months, down from 56.5 percent in September and the lowest since such foreclosure resales were 49.8 percent in September 2008. Foreclosure resales hit a high of 66.2 percent of all resales this March, according to MDA DataQuick, a San Diego-based firm that tracks real estate trends nationally via public property records.
A total of 9,153 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in October, up 3.0 percent from September and up 20.1 percent from a year ago. Total home sales have increased on a year-over-year basis for 10 consecutive months, while total resales (no new homes) have risen on an annual basis for 16 consecutive months.
October’s total sales were the highest for that month since October 2006, when 11,584 homes sold.
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Relatively strong resale levels this fall likely stem from three factors: Short sales have become more popular this year and they take longer to close, meaning some summer deals that normally would have closed earlier instead closed in September or October. Sales were also driven higher by the allure of historically low mortgage rates and the chance to take advantage of a federal tax credit for first-time buyers, which was initially set to expire at the end of November but was extended and expanded.
The median price paid in October for all new and resale houses and condos combined was $138,000, up 0.7 percent from $137,000 in September but down 21.1 percent from $175,000 a year ago.
October’s $138,000 overall median was 47.7 percent below the Phoenix area’s peak $264,100 median reached in June 2006. The median has fallen on a year-over-year basis for 33 consecutive months.
The median sale price began to edge higher month-to-month this year after dropping to a decade low of $125,000 in April. The median’s gradual ascent began shortly after the percentage of resales involving foreclosures started to decline this spring. Foreclosures have often been the most aggressively priced and have been concentrated in the more affordable neighborhoods – areas where during the housing boom many buyers stretched to purchase homes with risky subprime loans. Even absent price appreciation, a decline in foreclosure resales puts upward pressure on the median sale price, just as the huge run-up in deeply discounted foreclosure resales over the past two years spurred dramatic declines in the median.
An alternative price gauge has risen month-to-month since June: The median paid per square foot for existing single-family (detached) houses rose to $74 in October, up from $71 in September but down 19.6 percent from a year earlier and down 56.7 percent from a peak $171 in June 2006.
First-time buyers and investors continue to dominate the market. In October, 47.9 percent of all Phoenix-area home purchase loans were government-insured FHA mortgages, a popular choice among first-time buyers, according to an analysis of public property records. Absentee buyers purchased 37.5 percent of all homes sold – a relatively high percentage in the West. Absentee buyers are mainly investors, but 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 32.0 percent of all October sales, based on an analysis of county property records. 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 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 and sellers favor the relative speed and certainty of cash transactions.
The number of Phoenix-area houses and condos foreclosed on in October increased sharply – 34.2 percent – from September. The 5,562 homes lost to foreclosure in October marked a 10.5 percent increase from a year earlier. The figures are based on the number of trustees deeds filed with the county Recorder’s office. The document signals that a home was lost to foreclosure. The foreclosure totals can include units that have been approved as condos (can be sold off individually), but are currently used as apartments.
This article has been republished from DQNews. You can also view this article at DQNews, a real estate research and news site.