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Sales of luxury homes over $2 million dropped 33 percent and the total dollars spent collapsed 52 percent from August to September according to the latest housing market report released from the W. P. Carey School of Business at Arizona State University.
“The decline we’re seeing at the top end of the market correlates with the economic uncertainty and shaken investor confidence we saw reflected in the stock market in the end of August and September,” said Michael Orr, director of the Center for Real Estate Theory and Practice and author of the report. “While at first glance the greater Phoenix housing market looks pretty strong, weaknesses in a few areas like these suggest the fourth quarter may not be as encouraging at the first nine months of 2015.”
Demand looks healthier with homes below $2 million, largely due to lenders’ appetite for jumbo loans to people with strong credit. However the supply of homes in this price range is up from last year and more than adequate down to $500,000, so there is little expectation of a general rise in prices.
A balanced, healthy market exists in homes priced between $300,000 and $500,000 with good supply and enough demand to keep it in check. Gradual small price increases are expected in this price range.
“The biggest problem we face is a huge mismatch between supply and demand below $300,000. This is likely to keep prices rising strongly and fastest for areas where the vast majority of homes are under the median sales price of $225,000,” says Orr.
Additional highlights from the September 2015 report:
Additional information on demand, supply, pricing, foreclosure starts and completions, home sales, permits, purchasers and the rental market can be found on the complete report at wpcarey.asu.edu/realtyreports. The premium site includes statistics, charts, graphs and the ability to focus in on specific aspects of the market. For more about Orr’s work, see http://research.wpcarey.asu.edu.