June was cold month for resales
Glen Creno
The Arizona Republic
Jul. 13, 2006 12:00 AM
The Valley's resale housing market took a hard fall in June, its worst performance for the month since 2000 and clear evidence that buyers sat out the start of the crucial summer selling season.
Housing has been soft this year as prices and mortgage rates have climbed, and the market looks especially weak compared with last year's buying frenzy.
The number of homes for sale and the time it takes to sell them keeps increasing, outpacing even more "normal" years of 2003 and 2004, and the monthly selling reports look dismal. advertisement
There were 5,460 existing Valley homes sold in June, down more than 20 percent from May and a nearly 25 percent drop since this year's market peak in March, according to the Arizona Real Estate Center at Arizona State University Polytechnic.
"It was a lot weaker than I thought it would be," said Jay Butler, head of the Real Estate Center. "I see a lot of for-sale signs staying up. I'm seeing homes that are on their third agent. Homes are getting initial drive-by activity from buyers, then nothing."
For the year, sales are down 38 percent from 2005's record levels. They also are 25 percent below 2004 sales levels.
Results were mixed in Valley cities from May to June. Prices fell in Chandler, Peoria and Mesa, stayed flat in Phoenix and jumped the most in Scottsdale. Sales were down in most big Valley municipalities with the exception of Gilbert, where sales were essentially flat.
One piece of good news in Butler's latest report would appear to be the median sales price, up incrementally from May to a new a record of $267,000. Yet that is misleading because sales are down and high-dollar closings are skewing the total: Nearly 40 percent of the houses that sold last month cost more than $300,000. Only 17 percent of June sales fell in the $125,000-to-$199,999 range, and that makes it harder for first-timers to find a house they can afford. In the first three months of 2005, 38 percent of homes sold were in the $125,000-to-$199,999 range; 25 percent were above $300,000.
Affordability is the dark side of the Valley's housing boom. Prices have jumped beyond the reach of first-time buyers, the rank-and-file consumers who constitute the backbone of city services and their businesses: teachers, firefighters, resort workers.
Tim Sullivan, a national housing analyst with San Diego-based Sullivan Group, says about 40 percent of Valley households can afford the typical resale house, compared with the national average of 50 percent. He said that the figure isn't alarming but that Phoenix-area housing traditionally has mirrored national trends.
"The closer we are to reflecting the national numbers, the more diverse and elastic we are in the housing market," he said.
Agents and others close to the market say that prices have been falling and that buyers hold the leverage in negotiations, with some sellers offering incentives to make their properties stand out in the crowd of listings.
John Foltz, president of Realty Executives, thinks resale prices will fall 10 to 12 percent this year but said that prices rose 40 percent last year.
"This is a very healthy adjustment," he said.
Single-family homes took an average of about 60 days to sell in May, the latest figures from the Arizona Regional Multiple Listing Service. There were 41,797 homes on the market in the statewide database that reflects mainly Phoenix-area housing. Last year, there were 9,451 single-family listings in May and houses sold in an average of about 25 days.
Home builders have been blaming the local resale market for some of their troubles, saying that their buyers are canceling deals because they can't get what they want for their existing homes. Now, resale experts are saying that builders are messing up their market by dumping so many built-but-not-sold homes on the market with outsize buying incentives.
"There are (resale) homes out there selling for more than the brand-new home is selling for, and it's in nicer shape and they're offering the pool," said Margie O'Campo de Castillo of Arizona Dream Realty in Phoenix. "Who could say no to that? . . . It's going to be this way until the builders take these incentives back."
Bill Ryan of Re/Max Achievers in Chandler said resale prices are down 15 to 20 percent in some areas compared with last year as the market has made "dramatic adjustments" in the past 60 to 90 days. He thinks the market is fairly valued as long as interest rates don't jump too high.
"I'm not saying we are out of the woods yet," he said. "There is so much property on the market that it is a very strong buyers market. It has done a 180 turn to what it was a year ago."
). Put the house up initially for 690,000 and it finally sold for 580,000. If he would have started it at 620,000 they would have bid it up to an acceptable price, took him nearly 9 months to sell, every month the prices dropped by 2 to 4%... 
