Home sales in the Phoenix metro area fell in November, but were 62 percent above the same period in 2008 due to low mortgage rates and price declines — marking the 17th consecutive month of year-over-year growth in sales. More than half of the home resales were foreclosure homes, and the median sales price was $142,700, down significantly from the market peak of $264,100 in June 2006. For more on this, see the following article from DQNews.
Phoenix-area November home sales fell from October but jumped 62 percent above the unusually low levels of a year earlier, largely because of strong demand from first-time buyers and investors. The median price paid edged above the prior month for the seventh consecutive month as foreclosure resales continued to play a large but fading role in the market, a real estate information service reported.
In November, 52.2 percent of the houses and condos that resold had been foreclosed on in the prior 12 months, down from 53.7 percent in October and the lowest since such foreclosure resales were 49.8 percent of all resales in September 2008. Foreclosure resales hit a high of 66.2 percent of 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 8,544 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in November, down 6.7 percent from October but up 62.0 percent from a year ago. A decline in sales between October and November is normal for the season. On average, sales have dropped about 8 percent between the two months over the past 15 years.
Total home sales have increased on a year-over-year basis for 11 consecutive months, while total resales (no new homes) have risen on an annual basis for 17 consecutive months.
November’s total sales were the highest for that month since November 2006, when 10,482 homes sold.
This November’s sales rose sharply over November 2008 in part because last year November had only 17 full business days, compared with 19 this year. The November 2008 tally was the lowest for that month in DataQuick’s complete Phoenix region statistics, which go back to 1994. In addition, the 1,430 newly built homes that closed escrow in November marked a 19.9 percent gain from October and a 40.5 percent increase from a year earlier. It was the highest tally for any month since October 2008, when 1,759 new homes closed escrow.
This fall’s relatively strong home sales can be attributed to several factors, such as price declines and super-low mortgage rates that have boosted housing affordability. Also, before the federal tax credit for first-time home buyers was expanded and extended recently, it was set to expire at the end of November, causing some buyers to rush to buy in time to qualify for the credit.
The median price paid in November for all new and resale houses and condos combined was $142,700, up 3.4 percent from $138,000 in October but down 12.4 percent from $162,984 a year ago. It was the smallest year-over-year decline in the median sale price since January 2008, when the median fell 11.8 percent below the prior year to $225,000.
This November’s $142,700 overall median was the highest since it was $154,000 in December 2008. However, the median was still 46.0 percent below its peak of $264,100 reached in June 2006. The median has fallen on a year-over-year basis for 34 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 increased to $76 in November, up from $74 in October but down 9.5 percent from a year earlier and down 55.5 percent from a peak $171 in June 2006.
First-time buyers and investors continued to drive the market. In November, 50.4 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 35.3 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 31.5 percent of all November 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 are popular in many Western markets where prices have dropped sharply and sellers favor the relative speed and certainty of cash transactions.
Foreclosure activity tapered off in November: The 4,292 single-family house and condo units lost to foreclosure represented a 22.8 percent drop from October and a 27 percent decline from November 2008. 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 (meaning they can be sold off individually), but are currently used as apartments. Foreclosure filings have seesawed month-to-month this year, and a single month’s increase or decline doesn’t necessarily indicate the beginning of a lasting trend.
This article has been republished from DQNews. You can also view this article at DQNews, a real estate research and news site.