Phoenix Region March Home Sales/Prices/Foreclosure Resales/FHA & Absentee Purchases

March sales of existing homes in the Phoenix area rose to the highest level for any month since summer 2006, driven up by especially robust investment activity and by first-time home buyers taking advantage of deeply discounted foreclosures. With repossessed homes representing two-thirds of the resale market, the median sale price continued its decline – albeit at a slower month-to-month pace compared with the recent past, a real estate information service reported.

The Phoenix region’s median sale price for all new and resale houses and condos combined fell to $129,900 last month, down 3.8 percent from February and down a record 39.8 percent from a year ago, according to MDA DataQuick. The San Diego-based firm tracks real estate trends nationally via public property records.

Last month’s median stood 50.8 percent below the Phoenix area’s peak $264,100 median reached in June 2006, and marked the first time the all-home median has been below $130,000 since January 2000. The median has fallen on a year-over-year basis for 26 consecutive months.

As with many Western markets, Phoenix’s median sale price has eroded a bit more slowly, on a month-to-month basis, since late fall. The March median’s 3.8 percent dip from February compares with month-to-month declines of 4.6 percent in February, 8.1 percent in January, 5.5 percent in December and 6.9 percent in November. It is unclear whether the recent, milder declines in the median sale price foretell a price plateau in the months ahead. Depending on their severity, ongoing job losses and foreclosures could undermine any trend toward near-term price stability.

Recent home sales gains in Phoenix and across the boom-bust West have been fueled mainly by the allure of discounted foreclosures. The primary bargain hunters are first-time buyers and investors. Last month about 46 percent of all Phoenix-area buyers used government-insured FHA loans, a popular choice among first-time buyers. Absentee buyers made up about 37 percent of all purchases – a relatively high percentage in the West. Absentee buyers include investors and other buyers whom public records show will have their property tax bills go to an address other than the one for the home they just purchased.

A total of 8,300 new and resale homes closed escrow in the combined Maricopa-Pinal counties metropolitan area in March, up 37.4 percent from February and up 30.0 percent from a year ago. Resales of houses and condos combined have risen on a year-over-year basis for nine consecutive months, and the March resale total was the highest for any month since August 2006.

Last month’s 79.5 percent annual increase in sales of existing single-family detached houses offset year-over-year sales declines for resale condos and newly constructed homes, which posted annual decreases of 0.2 percent and 53.3 percent, respectively. New home sales in March 2009 were the lowest for that month in more than a decade.

In the resale market, an alternative price gauge analysts watch declined more sharply than the straight median price: The median paid per square foot for existing single-family (detached) houses fell to $65 in March, down 49.6 percent from a year ago and down 62.0 percent from a peak $171 in June 2006.

Across the West, year-over-year declines in the median sale price - the point where half of the homes sold for more and half for less – have sometimes overstated the extent to which the value of the typical home has fallen. It’s because the median is being tugged lower not just by price depreciation but by shifts in the types of homes selling. For example, more of today's sales involve foreclosures, which tend to sell at a discount and be concentrated in more affordable areas. Also, the August 2007 credit crunch made larger "jumbo" mortgages more expensive and harder to obtain, which has led to sluggish sales – in some cases the lowest in many years – in higher-priced neighborhoods. (A dropoff in high-end sales can pull down the median.)

Nearly 67 percent of the Phoenix-area houses and condos that resold in March had been foreclosed on in the prior 12 months, according to MDA DataQuick.

Phoenix MSA

Number of sales	Mar-08	Mar-09	%Chng
Resale houses	3,785	6,794	79.5%
Resale condos	550	549	-0.2%
New homes	2048	957	-53.3%
All homes	6,383	8,300	30.0%

Median sale price	Mar-08	Mar-09	%Chng
Resale houses	$222,000	$120,000	-45.9%
Resale condos	$170,000	$109,500	-35.6%
New homes	$215,944	$194,000	-10.2%
All homes	$215,875	$129,900	-39.8%