Housing Bubble

Arizona home resales hit record

January 11, 2003

The Greater Phoenix resale home market managed to set a new record with 62,625 sales in 2002, despite a struggling economy and declining consumer confidence, according to data released today by the Arizona Real Estate Center.

The figure exceeded last year's recorded sales total (61,155) by 2.4 percent. In comparison, there were 55,370 sales recorded in 2000 and 56,365 in 1999.

The townhouse/condominium housing sector also set a new record with 13,300 recorded sales, compared to the previous record of 12,670 sales in 2001.

There are four basic motivations that drive homebuyers, according to Jay Butler, director of the center at ASU. "There is the need for housing, especially for new residents; the desire to own, not rent; the dream to improve current housing; and/or to invest in housing as rentals or second homes. The low interest rates have facilitated the ability of people to satisfy these motivations."

The key to the performance of the 2003 market will hinge on three critical factors, according to Butler:

Job growth: Will the economic recovery continue to strengthen, especially in creating new jobs that will draw people to the area?
Mortgage rates: How high or how low? Although low mortgage rates have been very important in sustaining the market, they need not remain at current levels because affordability can be maintained with interest rates at 8 percent.
World events: What will be the impact of future world events on the U.S. economy and the consumer psyche?

Among the highlights of the Greater Phoenix resale market in 2002:

While sales activity increased 2.4 percent over the previous record, the median home price rose 6.5 percent, from $136,000 in 2001 to $144,900. In the townhouse/condominium sector, the median sales price increased to a record $95,500 from last year's $90,500.
The median square footage was 1,640 for a single-family home sold in 2002, an increase over the previous year's 1,620 square feet. In the townhouse/condominium sector, the median square footage increased from 1,150 in 2001 to 1,160 square feet in 2002.
In comparison with 2001, recorded sales in the city of Phoenix slowed slightly from 18,850 to 18,520, but the median sales price increased from $112,000 to $119,500. In the townhouse/condominium sector, activity improved from 3,480 to 3,705 sales, and the median price rose from $80,100 to $85,000.
Scottsdale's market improved from 5,710 to 6,315 sales. The median sales price also continued its strong upward movement from $262,500 to $287,500. The townhouse/condominium sector in Scottsdale grew from 2,470 to 2,805 sales, with the median price increasing from $135,000 in 2001 to $142,500.
The resale market in the city of Mesa also slowed from 7,760 sales in 2001 to 7,740 sales. The median price increased from $126,500 to $132,500. The townhouse/condominium sector dropped from 1,900 sales to 1,855, while the median price increased from $84,000 to $87,945.
Sales activity in Glendale declined slightly from 5,685 to 5,665 sales, while the median price increased from $126,500 to $135,000. The townhouse/condominium sector improved from 605 to 620 sales and the median price increased from $72,000 to $75,000.
In comparison with 2001, the Sun City West resale market improved from 1,060 to 1,155 sales and the median price also increased from $135,000 to $139,000. In Sun City, sales activity improved from 1,440 to 1,490 sales while the median price increased from $99,900 to $101,575. The townhouse/condominium market in Sun City expanded from 960 to 1,060 sales, and the median sales price increased from $72,000 to $74,000. In Sun City West, activity improved from 320 to 335 sales, with the median sales price increasing from $87,500 to $91,000.
The resale market in Gilbert was stable at 3,435 sales. The median price improved from $154,000 to $164,000. In the townhouse/condominium market, there were 210 recorded sales ($112,000), in contrast to last year's 230 ($105,000).
For the city of Chandler, the resale market was stable at 5,010 sales, while the median sales price increased from $144,900 to $152,900. The townhouse/condominium sector decreased from 640 sales to 625 sales while the median sales price rose from $94,000 to $99,900.
The resale market in Tempe improved slightly from 1,950 to 2,005 sales, while the median price moved from $148,000 to $157,000. In contrast, the townhouse/condominium sector fell from 920 to 895 sales with the median sales price rising from $95,000 to $102,000.
The highest median resale home price was in Paradise Valley at $775,000, with a median square footage of 3,470.
Although primarily known for their new home markets, the resale housing market was especially evident in the West Valley communities of Avondale (680 to 805 sales; $132,900 to $139,000), El Mirage (120 to 290 sales; $98,145 to $107,990), Goodyear (510 to 625 sales; $145,000 to $156,950), and Surprise (850 to 1,200; $125,000 to $130,000).

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