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The declining prices have fueled renewed investor interest and potential owner-occupants, especially in the lower income ranges. For the traditional market the median price was $218,000, while the foreclosed properties had a median price of $169,890. For a year ago, the median prices were $265,000 and $225,900, respectively. Investment interest is being driven by the anticipation that home prices will rise again in the next few years. The lower median price is being impacted by several forces including the large number of vacant homes, especially in certain neighborhoods. Further, capital is available for lower-priced housing, but lacking in the higher priced housing market.
Since the greater Phoenix area is so large, the median price can range significantly. In North Scottsdale, the median price for a foreclosed property was $502,275, while the traditional market was $570,200. In South Scottsdale the splits were $219,360 and $252,000, respectively. In Maryvale, the median price for traditional transactions were $111,000 and foreclosures were $125,990, while in Union Hills it was $263,150 and $205,460.
While lower prices can greatly improve affordability, they can adversely impact many owners and potential sellers that are watching their limited equity erode, as prices decline to and even below existing debt level. Thus, lower prices affect the ability and desire to continue owning the home and even overall confidence in the economy, which puts additional strain on the local housing market.
For the last year, the housing market has been confronting issues derived from the hyper-market of previous years such as the subprime meltdown and overly ambitious investors. Unfortunately, there is increasing data, such as job losses and layoffs, that the economy is now weakening and will add further stress for the housing markets. Though there has been little attempt to help investors, many programs have been started to help people save their homeownership.
Most of the attempts have dealt with adjustable interest rate mortgage being reset to higher interest rates. The basic premise is that the home occupant has the income but not enough to satisfy the new mortgage payment. In a weak economy, many households now will not have the needed income to save their homes, even with a new mortgage payment plan. Further, with increased energy and food costs, there is even additional strain on the household budget. Thus, the potential economic downturn and inflationary pressures will define how much further the housing market will worsen and when recovery will begin.
Within the 855 total recorded sales, the townhouse–condominium market had 230 foreclosed properties. A year ago the split was 1,215 for traditional sales and 40 for foreclosed sales. In June 2008, the median price for foreclosed properties was $133,215, while the traditional market stood at $164,950. For May 2008, the splits were $135,600 and $169,900, respectively.
The median square footage for a single-family home recorded sold as foreclosed was 1,665 and 1,865 square feet for a market transaction home. In Paradise Valley, the median square footage was 3,210 square feet at a median price of $2,167,000. For a year ago, the foreclosed market was at 1,790 square feet and the traditional market stood at 1,725 square feet. In the townhouse/condominium sector, the median square footage for a foreclosed unit was 1,075 square feet (1,050 square feet for year ago), while the traditional market unit was 1,120 square feet (1,060 square feet for a year ago).
See the full charts of the Maricopa County Resale Numbers.
Realty Studies is associated with the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus. Realty Studies collects and analyzes data concerning real estate in the greater Phoenix metropolitan area. Realty Studies is a comprehensive and objective source of real estate information for private, public and governmental agencies. Its director, Dr. Jay Q. Butler, may be reached at (480) 727-1300 or e-mail him at mailto:Jay.Butler@asu.edu" title="blocked::Jay.Butler">mailto:Jay.Butler@asu.edu">Jay.Butler@asu.edu