Phoenix Housing Market Showing Strong Divisions with Greater Risk for Additional Price Declines
Author: David Lorti
Category: Real Estate
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According to David Lorti, a Realtor with RE/MAX in Tempe, the Phoenix housing market is divided with greater risk for further price declines for homes above $400,000.
August 19, 2008 The Phoenix area housing market is literally dividing in two with buyer demand and home sales for properties priced under $400,000 showing significantly stronger performance than homes priced above $400,000. This disparity will mean continued pricing pressures for homeowners wishing to sell their homes above $400,000.
In terms of buyer demand for homes, "absorption," as measured by the percentage of available homes currently under contract, averages 17.4% for properties priced under $400,000. For homes priced above $400,000, the number of homes under contract drops substantially to 7.3% of available properties.
This figure drops further in the upper end of the market. Custom luxury homes priced at $1,000,000 and above are trending at a low 4.5% of homes being under contract. Homes priced above $3,000,000 are experiencing a 3.5% absorption rate.
In terms of sales, the number of transactions for homes priced above $400,000 is shrinking as a percentage of total sales and suggests that a shift is underway. Figures for prior years are below:
- 2002 - 5.3% (Normal Market)
- 2003 - 6.7% (Normal Market)
- 2004 - 9.1% (Accelerating Price Appreciation)
- 2005 - 16.6% (Rapid Price Appreciation)
- 2006 - 20.3% (Transitional/Declining Market)
- 2007 - 21.0% (Declining Market - 19.8% for the second half)
- 2008 - 15.1% (Declining Market)
"There is a good chance that we are going to see this percentage decline to 10-12% over the coming period as a result of additional buyer activity at the low end of the market and further price declines in the upper end of the market," says David Lorti.
That decline would be more in keeping with figures consistent with the normal market period of 2002-20004 and could be interpreted as a positive long-term sign that the market is working itself through the downturn.
From the standpoint of homes currently on the market for sale, it is interesting to note that though homes priced above $400,000 make up 27% of total available homes, they make up only 12% of homes currently under contract for sale.
"Sellers, working with an excellent Realtor, will have to evaluate where their home fits into this equation and adjust selling strategies and tactics appropriately to fit with the realities of this market. This is where the Realtor really provides value in a challenging market," says David Lorti.
About David Lorti:
David Lorti is a professional Realtor for RE/MAX Elite in the Phoenix area and helps clients buy and sell homes. He holds a Master of International Management and Bachelor of Arts degrees and his insights have been quoted in several news outlets. He also holds a Certified Negotiation Expert (CNE) designation - one of only 1,600 realtors nationwide. His website, www.LortiHomesArizona.com, and monthly newsletter, Dave's Real Estate News You Can Use, offers market updates and other information pertinent to home buyers, home sellers, and investors.
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View Count: 55
Date Submitted: 8/19/2008
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