The Phoenix Real Estate Market: What is Really Happening
In 2006 the media headlines had many things to say regarding the local real estate market, including: “Real Estate Market Shaky” (6/06), “High End Condos Low Opening Bids Signal Glut,” (6/06). “How Low Will it Go?” (6/06). “Bursting Bubble Talk,” (5/06). “Home Sales are Plunging in Metro Phoenix,” (5/06). “Housing Resales Slow,” (4/06). “All Buyers, Not Just Investors Will Pull Back,” (4/06).
Every Listing agent I talk to is getting ridiculous lowball offers.
Susan Kraemer, Team Leader of Keller Williams Realty Professional Partners in Goodyear was not experiencing the doom and gloom portrayed by the media. She researched the headlines and took a look at the actual numbers according to the Arizona Regional Multiple Listing Service and compared them to the headlines and quotes in the media in 2006.
To begin, Kraemer looked at what the media was saying about the real estate market before we experienced the wild sellers market, and huge appreciation rates of 2005. Here is what they said:
- “Real Estate Market Past it’s Prime” May, 1999
- “Is the Valley’s Real Estate Market Headed for a fall?” January, 2001
- “Valley of the Yawn: Real Estate Experts find Phoenix in the Cul-de-sac.” December, 2001
The market definitely proved those headlines to be false. The Arizona Regional Multiple Listing Services statistics prove the 2006 headlines and quotes to be false as well. Kraemer looked at the market from June 2003 through May 2006, based on four market indicators: The number of real estate transactions, the average days a home is on the market, the average sales price of a home and the average list to sales price ratio.
The numbers of real estate transactions according to ARMLS have been increasing since January of 2006. In January there were 5,266 transactions and increased to 7,573 sales in May. Home sales are increasing not decreasing.
Average days it takes for a home to sell from January 2006 through May 2006 were less than they were in the same months of 2004, which was considered a good real estate market. Homes sold faster in this market than June 2003 through May of 2004 every month except May when homes took only three days longer on average to sell.
Buyers tell me everyday that according to what they read and hear from the mainstream media that home prices are going down, and that they are going to wait to buy. According to ARMLS, the average sales price has increased from $348,682 in January 2006 to $362,492 in May, 2006. There was a slight drop in February and March, but prices are on the increase–they are not dropping. Prices have increased considerably every month since 2003 with the exception of October 2004, when sales price dropped from $238,667 to $226,540 and increased again in October 2005 to $$324,840. Every other month sales prices increased each year of the study.
Sellers are not giving their homes away either. The average list to sales price ratios are holding favorable. Since January of 2006 they have been between 97.3 percent and 98 percent. This means sellers are receiving 97.3 percent to 98 percent of their asking price for their homes.
The numbers don’t lie. The truth is the average sales price has increased 189 percent since June of 2003. There has been an increase in the sales price of over 25 percent since this time last year. The average sales price has even increased 3.9 percent since January 2006.
The pattern of homes selling each month has remained relatively constant over the past 36 months. The list to sales price ratio has remained very consistent. The average days on the market are still comparable to this time two years ago and well under the 180 days of a “buyer’s market.” The average sales price of properties that have sold continues to increase.
So much for the “bad news.” Buyers waiting for prices to drop may not see it happen, however, interest rates may increase. Sellers need to price and position their houses to sell and stand out from the rest of the inventory. The market has changed however look at the big picture, and the numbers, historically it is still a great time to buy a home.