Phoenix Metro Area December Home Sales
Sales of existing homes in the Phoenix region rose to the highest level for a December in four years as home price measures trended lower and investor activity rose. The percentage of sales involving a foreclosure held steady after declining for eight consecutive months, a real estate information service reported.
In December, 52.2 percent of the houses and condos that resold had been foreclosed on in the prior 12 months, the same as in November but down from 61.9 percent in December 2008. Such foreclosure resales hit a high of 66.2 percent of all homes resold last March, according to MDA DataQuick, a San Diego-based firm that tracks real estate trends nationally via public property records.
A total of 8,826 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in December, up 3.3 percent from November and up 30.5 percent from a year ago. A rise in sales between November and December is normal for the season. On average, sales have risen about 10 percent between the two months over the past 15 years.
December’s total sales were the highest for that month since December 2006, when 11,341 homes sold.
Total home sales have increased on a year-over-year basis for 12 consecutive months. However, the number of houses and condos that resold (excludes new homes) has risen on an annual basis for 18 consecutive months. In December resales hit 7,750, up 8.9 percent from November and up 42 percent from a year earlier. It was the highest level of resales for the month of December since 9,386 homes resold in December 2005.
The number of newly built homes sold in December dropped nearly 25 percent compared with November, and fell 17.5 percent from a year earlier. Builders, who have had a difficult time competing with low-cost foreclosures, sold the least number of homes for a December since 1997.
New home sales in December fell to 12.2 percent of total sales, down from 16.7 percent of all sales in November and a monthly average of 25 percent of total sales since 1994, when DataQuick’s complete Phoenix stats begin. December’s shift toward fewer sales of new homes, which tend to cost more than resale homes, helps explain at least part of the month-to-month decline in the overall median sale price.
The median price paid in December for all new and resale houses and condos combined was $136,500, down 4.3 percent from $142,700 in November and down 11.4 percent from $154,000 a year earlier. It was the smallest year-over-year decline in the median sale price since December 2007, when the median fell 10.9 percent below the prior year to $230,000.
December’s median was 48.3 percent below its peak of $264,100 reached in June 2006. The median has fallen on a year-over-year basis for 35 consecutive months.
Last April the median sale price dropped to a decade low of $125,000. After that, the median edged higher each month until December, when it dipped below November’s level. The median’s gradual ascent last year began shortly after the percentage of resales involving foreclosures started to decline last 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. If foreclosure resales hold steady or begin to account for a larger share of sales again, the median sale price will likely reflect the shift.
It wasn’t just the overall median sale price that eroded in December relative to November. The median paid for resale single-family detached houses slipped from $135,000 in November to $132,750 in December. However, that median’s 5.2 percent decline from a year earlier was the smallest, and the first in the single digits, since December 2007, when it fell 8.1 percent to $235,000.
The median paid for resale condos in December fell to $94,750, down from $103,000 in November and down 28.7 percent from a year earlier.
An alternative price gauge had risen month-to-month since last June but then dipped in December: The median paid per square foot for resale single-family (detached) houses dropped to $72 in December, down from $76 in November and down 6.5 percent from a year earlier. It was the smallest year-over-year drop since July 2007. However, it’s been a long fall from the peak: The December median paid per square foot stood 57.9 percent below its record level of $171 in June 2006.
Investors and first-time buyers continue to fuel much of the home sales activity. In December, 45.3 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 38.5 percent of all homes sold – a relatively high percentage in the West. That was up from 35.3 percent absentee buyers in November and 36.2 percent a year earlier. 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 37.0 percent of all December 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 rose in December: The 6,072 single-family house and condo units foreclosed on represented a 41.5 percent increase from November and a 39.4 percent rise from December 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 the county assessor has designated condos (meaning they can be sold off individually), but are currently used as apartments (e.g. a 100-unit complex designated as condos but used as apartments could be foreclosed on and those units would be reflected in the foreclosure total for that month). For this reason and others, the number of foreclosure filings has seesawed month-to-month over the past year, and a single month’s increase or decline doesn’t necessarily indicate the beginning of a lasting trend.
In the second half of 2009, lenders foreclosed on 30,300 house and condo units in the Phoenix metro area, up nearly 10 percent from the first half of 2008.
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