Phoenix Region June Home Sales

by 27 Jul 2011
The strongest resale activity in six years lifted June home sales in the Phoenix area above the year-ago level, which had gotten a boost from last year's homebuyer tax credits. The region's overall median sale price, which had changed little over the prior six months, rose modestly in June from May but remained more than 12 percent lower than a year earlier, a real estate information service reported.    A total of 10,537 new and resale houses and condos closed escrow during June in the combined Maricopa-Pinal counties metro area. That was up 8.3 percent from May and up 1.5 percent from June 2010, according to San Diego-based DataQuick, which tracks real estate trends nationally via public property records.   On average, Phoenix-area sales have risen 1.8 percent between May and June since 1994, when DataQuick’s complete Phoenix region statistics begin.   Total June sales fell 3.6 percent short of the average number of homes sold in June since 1994, but that was only because new-home sales were so low -- the lowest for a June in 14 years. The resale market fared much better: Last month sales of existing (not new) single-family detached houses and condos combined rose 7.1 percent above a year ago and were 16.7 percent above average for a June. Last month's 9,741 resales were the highest for any June since June 2005, when a record 15,055 homes resold.    Last month's modest year-over-year increase in total sales and the larger increase for resales, specifically, are significant, given that a year earlier the housing market was still being fueled in part by outgoing federal homebuyer tax credits. By July 2010 sales had fallen off sharply in the absence of the tax credits. This means that, barring new downward forces on the housing market, over the next few months it will be easier for the Phoenix area and other markets to come closer to, or exceed, year-ago sales levels.   In June, buyers paid a median $122,900 for all new and resale houses and condos that closed escrow in the two-county Phoenix area. That was up 2.4 percent from the month before but was down 12.2 percent from a year earlier. June’s increase over the May median marked the first month-to-month gain since February. The median has fallen year-over-year for 12 consecutive months.   The June median stood 53.5 percent lower than the all-time peak of $264,100 in June 2006.   Over the six months leading up to this June the median had vacillated between $119,000 and $120,000 – the lowest levels since late 1998. This reflects several factors, including: recent home price erosion; the high numbers of investors, who target lower-cost homes, especially foreclosures; and an unusually low percentage of new-home sales coupled with an above-average share of existing (not new) condo resales.   In June 7.6 percent of sales were newly built homes, which on average are more expensive than other home types, compared with 12.4 percent a year ago and a 10-year monthly average of 25.8 percent of sales. Resale condos, which tend to be the most affordable home type, made up 11.5 percent of June transactions, compared with 10.5 percent a year ago and a 10-year monthly average of 9.9 percent.   The Phoenix area's median sale price hit a high for last year of $139,900 in June 2010, then fell sharply in July 2010 (to $132,000) and continued to gradually erode until early this year. Therefore, over the next few months, barring increased downward pressure on home prices, it will be easier for the region to post smaller year-over-year declines in its median sale price.    Another key price gauge analysts watch, the median price paid per square foot for existing single-family detached houses, rose again last month to $68, up from $67 the month before but still down 9.3 percent from a year ago. It was the third consecutive month in which this price measure rose month-to-month, but it marked the 10th consecutive month in which it fell year-over-year.  June’s figure was 60.2 percent below the $171 peak median price paid per square foot in May and June of 2006.    At the county level last month, the median price paid per square foot for resale single-family detached houses in Maricopa County was $70, the same as in May but down 10.4 percent from a year earlier. The Maricopa County median price per square foot has changed little during the first six months of this year, ranging from $68 to $70. The Pinal County median per square foot was $44 in June, down 3.2 percent from May and down 12.7 percent from a year earlier. The Pinal County figure has been fairly constant this year, too, ranging from $44 to $46.    The use of low-down-payment, FHA-insured mortgages – popular with first-time buyers – represented 34.9 percent of all purchase loans in June. That was down from 35.5 percent in May and from 46.2 percent a year earlier, and well below the peak for FHA loans -- 55.3 percent in September 2008.   Many buyers, especially investors, continue to pay cash for their Phoenix-area homes. Cash buyers represented 40.8 percent of all sales last month,  down from 42.0 percent in May and a record 48.0 percent in February, but up from 33.6 percent a year ago. Last month's cash buyers paid a median $88,700, down from $90,000 in May and $110,000 a year ago. 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, recorded purchase mortgage, and in some cases they might take out mortgages after their purchases.   Absentee buyers, who are mainly investors, bought 44.0 percent of all Phoenix-area homes sold last month, down from 45.3 percent in May and a record 47.1 percent in March, but up from 37.3 percent a year earlier. Absentee buyers, who paid a median $100,000 last month, can include second-home purchasers and others who indicate at the time of sale that the property tax bill will go to a different address.    Nearly 43 percent of all absentee buyers who purchased in the Phoenix area last month were based elsewhere in the United States. Buyers from California represented the largest out-of-state buyer group, accounting for 8.8 percent of all absentee buyers last month, followed by Washington (4.8 percent of absentee buyers) and Colorado (2.6 percent). Absentee buyers based in California represented 3.7 percent of total Phoenix region June home sales.    Foreign buyers purchased roughly 4.5 percent of the Phoenix-area homes sold in June, based on a review of public property records where foreign addresses were available. Of the foreign buyers that could be identified, about 89 percent had mailing addresses in Canada. Australia was the next-most-common country, representing about 5.5 percent of the buyers with a foreign address. Foreign buyers paid a median $116,500 for resale houses, $80,000 for condos and $226,263 for newly built homes.   Distressed homes remain a huge target for investors. Last month distressed property sales – the combination of sales of foreclosed homes and “short sales” – represented nearly 64 percent of the Phoenix-area resale market.   Foreclosure resales, defined as homes that had been foreclosed on in the prior 12 months, represented 49.6 percent of June resales. That was down from 50.8 percent in May but up from 47.4 percent a year earlier. The peak level for foreclosure resales was 66.2 percent in March 2009.   Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 14.1 percent of Phoenix-area resales last month. That was up from an estimated 13.7 percent in May but down from 17.6 percent a year earlier. Two years ago the estimate was 9.2 percent.   Foreclosures fell both month-to-month and year-over-year in June. Lenders foreclosed on 4,794 house and condo units in the two-county Phoenix area during June, down 1.5 percent from May and down 12.3 percent from a year earlier. During the first six months of this year, 31,820 homes were foreclosed on, up 3.3 percent from the same period last year. The foreclosure figures are based on the number of Trustees Deeds filed with county recorder offices. The document signals that a home was lost to foreclosure.   The foreclosure totals can include units that the county assessor has designated as condos, 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 homes foreclosed on has seesawed, and a single month’s increase or decline doesn’t necessarily indicate the beginning of a lasting trend.   (chart below)  
 Phoenix MSA        
Number of sales

Jun-10

May-11

Jun-11

YOY %Change

Resale houses

8,009

7,937

8,530

6.5%

Resale condos

1,086

1,118

1,211

11.5%

New homes

1,283

670

796

-38.0%

All homes

10,378

9,725

10,537

1.5%

         
Median sale price

Jun-10

May-11

Jun-11

YOY %Change

Resale houses

$135,538

$120,000

$124,000

-8.5%

Resale condos

$88,000

$80,000

$75,000

-14.8%

New homes

$184,987

$189,250

$198,608

7.4%

All homes

$139,900

$120,000

$122,900

-12.2%

         
Source: DataQuick, DQNews.com      
Media calls: Andrew LePage (916)456-7157 or alepage@dqnews.com    

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