The rebound of the Phoenix-area housing market continued losing steam in November, which saw the weakest sales numbers in several years and the once-explosive price increases slow to a trickle.
There were 5,846 single-family home sales in November in the Phoenix area — a 27 percent plunge from a year ago, according to the latest Arizona State University housing report released today. The luxury market, or homes priced above $500,000, was the only price range that saw sales increase (by 14 percent), while sales of those priced below the $150,000 took a 52 percent nosedive.
Overall, the November sales figure was down 17 percent from October.
“Demand is drastically lower in a slide that started in July,” said Michael Orr, the report’s author and housing expert at ASU’s W.P. Carey School of Business. “By the beginning of January, demand had weakened enough to drop even below the limited supply here, despite the fact that we have 15 to 20 percent fewer active listings than normal.”
Derek Jarr, managing partner of Green Street Realty in Phoenix, noted the fourth quarter is typically a slow time of year for residential real estate. He also pointed to the fact that foreclosures and short sales are almost a non-issue today.
“The sales reduction is a result of the fact that you don’t have as much distressed inventory in the market anymore,” Jarr said. “There aren’t as many people that have to sell ... now it’s people who want to sell.”
Orr has attributed the decline in demand mostly to poor consumer confidence, which Jarr said the housing market is extremely sensitive to.
“At the end of the day, residential real estate is driven by emotion ... and we overreact a lot,” Jarr said.
As demand wanes, the dramatic price increases the Valley was seeing in the first half of 2013 have slowed substantially.
The Valley’s median price reached the $200,000 mark in October, but didn’t budge at all in November. It was still, however, up 23 percent from a year ago.
Orr said home builders were also pretty disappointed with the end of 2013, noting that new-home permits in the Valley, according to the U.S. Census Bureau, took a sharp 35 percent drop from October to 667 in November.
“Despite all of this, time has shown us the Greater Phoenix housing market is very volatile,” Orr said. “Conditions could quickly change during the first quarter of 2014, and we could see some surprises.”
Kristena Hansen - Phoenix Business Journal