Big Drop in Phoenix-area Housing Market Activity

October 12, 2011

Big Drop in Phoenix-area Housing Market Activity

Partly Because Foreclosure Rate Is Down

TEMPE, Ariz. — The amount of activity in the Phoenix-area housing market dropped significantly last month. A new report from the W. P. Carey School of Business at Arizona State University reveals the decrease and explains that it’s largely due to a decline in foreclosures.

“When you look at the drop in the number of transactions from August to September, 43 percent of that decline is due to a decrease in foreclosure activity,” says W. P. Carey School of Business Professor Emeritus Jay Butler, who wrote the report. “At the same time, though, the overall housing market is not strong enough to make up the decline in activity with traditional sales.”

The existing-home market had 9,250 single-family home transactions in August. In September, the number plunged to fewer than 8,000. That’s even low when compared to the activity at the same time last year. Last September, the market had just over 9,000 transactions.

Foreclosures made up 29 percent of the total activity in September. This is way down from 43 percent in January and down from 31 percent in August. August was the only month this year that the foreclosure rate went up in the Phoenix area. The number of foreclosures dropped from almost 2,900 in August to about 2,300 in September.

Butler adds that investors have been the dominant buyers of area homes since the start of the housing decline in 2007, not homeowners who want to “move up” to a better home. He says this issue, combined with the ongoing stream of foreclosures, the rough economy, unemployment and uncertainty in policies surrounding the housing market are limiting growth in home prices.

Still, there was some improvement in the median price for single-family homes resold (not new foreclosures) in the Phoenix-area in September. The September median was $125,000, up from $120,000 in August. Prices are still way down from last September, when the median was $135,000.

In the townhouse/condominium market, 325 foreclosures happened in September. This is way down from 555 foreclosures last September. The median price for a townhome/condo resold in September (not new foreclosures) was $76,700, up from $75,000 last September.

Butler’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Press-Release-September-2011-resale-homes.doc. More analysis is also available from Knowledge@W. P. Carey, the business school’s online resource and newsletter, at http://knowledge.wpcarey.asu.edu.

W. P. CAREY SCHOOL OF BUSINESS
The W. P. Carey School of Business at Arizona State University is one of the top-ranked and largest business schools in the United States. The school is internationally regarded for its research productivity and its distinguished faculty members, including a Nobel Prize winner. Students come from 99 countries and include 60 National Merit Scholars. For more information, please visit wpcarey.asu.edu and http://knowledge.wpcarey.asu.edu.