First we thank you for stopping by to see what the downtown and greater Phoenix real estate market is doing. In a nutshell, things are definitely getting more peppy. If you’ve been trying to buy a home in the under $200,000 market you’ve likely been met with multiple offers and people offering over asking price. You might wonder why this is happening.
WHY IS THERE A HOME BUYING BOOM?
First is a supply issue. The number of homes and condos available to purchase had gone down dramatically. In the past year alone, inventory numbers have dropped 1/3 and much of that has been in the past three months. According to ARMLS stats, there were a bit over 30,000 properties on the market this time last year and today we have about 19,175 homes and condos. To give you even more perspective, in 2009 we had over 50,000 homes and condos to choose from.
Second is the flip side of supply… demand. We are seeing a lot of people decide to explore buying homes and condos. Many feel the market has reached bottom or near bottom and it is highly likely FHA loans will go from 3.5% down to 5% down in the Fall. This is especially true in the downtown up central Phoenix regions where prices have been seeing upward trends.
THOUGHTS FROM HOUSING MARKET GURU MIKE ORR:
The monthly average sales price per sq. ft. fell 2.2% between May and June but the median sales price rose 1.2%. These conflicting signals tell us that prices are not yet reacting to the improvement in market dynamics over the last 6 months. Supply of active listings has fallen 39% since November while 2,361 sales in June is the largest monthly total ever recorded, up 19% from May and 33% higher than June 2010. More short sales closed successfully than usual and they now make up 28% of sales and 46% of active listings, although more than half of those active listings already have a contract awaiting lender approval. Listing success rate made a new high of 77% and trustee sales declined 7% compared with May. New foreclosure notices rose 10%, but the total in June was 26% lower than June 2010. Contract ratios are very high, especially in 85037, 85041 and 85043 and months supply is now less than 2 months in 16 ZIP codes with 85004, 85054 and 85037 at 1.3 months or lower. Only 85003 and 85012 possess more than 4 months supply. (Click here to see Mike’s full report for the Phoenix market.)
DOWNTOWN PHOENIX REAL ESTATE
In the downtown Phoenix region we are seeing especially high interest… both in the condo/loft and single family home markets. 85004 and 85006 have less than 3 months of supply according to ARMLS. 85003 & 85007 have a little more inventory, just under a 6 month supply, probably due to higher home prices in Roosevelt, Willo and Encanto/Palmcroft.
We are especially pleased with the condo market rebound. One Lexington has but 8 units available. This is stunning news since the price point was generally in the $200,000 to $300,000 range, a target not hit by many in this market. 3rd Avenue Palms, also on our recommended buy list, has sold all but 5 of the 80 or so units they began with at the beginning of the year. Owners who bought early are already seeing significant gains. No other project I am aware of has had that kind of success.
We believe home and condo prices in the downtown region will continue to see gains. ASU’s student population is growing. CityScape will be fully leased by September bringing even more jobs to the area. In addition, UofA Med School will double their student population within 2 years, TGEN is adding 40,000 sq.ft and a few hundred jobs to their footprint and a new medical supercomputer will be going in at the Barrister Building on Central adding well over 100 higher paying jobs. If that isn’t enough, downtown is home to the largest supply of highly sought after historic homes in Maricopa Country. All of this and more give us high hopes for the downtown Phoenix real estate market.
OTHER REAL ESTATE NEWS FOR TEMPE, CHANDLER, SCOTTSDALE ETC.
We see the general Phoenix, Tempe, Scottsdale, Chandler and Gilbert markets gaining strength into the fall. We have some concerns about upcoming changes in FHA financing. The proposed change of down payment requirements from 3.5% TO 5% will affect some buyers, yet the biggest proposed change in in the amount FHA will loan. Today they will fund loans in the $350,000 and under range. In October they are posed to bring the loan limits down to about $270,000. This will have a significant effect on the $275K to 360K market and probably spin off effects in the surround price ranges.
On the good news side, most people are confident we have seen the bottom of the real estate market in most areas of Greater Phoenix. Confidence is a HUGE factor in moving forward and seeing price stability, almost as important as jobs.
We still advise thoughtfulness when buying or selling a home. Do your homework, take time to gain as much knowledge as possible, use a seasoned real estate agent and try to be practical verses emotional as you move forward.
Thanks for visiting our site and know we are here if you have questions or needs.
Gene Urban & Ron Urban
The Urban Team at Realty Executives
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