Greater Phoenix resale market posts best November on record
The Arizona Real Estate Center at ASU again raises concerns about
the declining affordability of homes.
(Excerpt from press release December 9, 2004.)
MESA, Ariz. - The Greater Phoenix resale market continued its upward
trajectory, tracking 9,525 sales in November compared to 7,780 sales
in September and 8,755 sales in October. This is the best November
on record, well ahead of last year's 5,540 sales. The torrid pace
for 2004 has brought the year-to-date total to 94,075 sales, well
beyond the previous record of 73,785 homes sold in for the entire
year of 2003.
In the midst of the continuing record activity, concern is mounting
about the affordability of housing. Between January and November
of this year, the median home price rose from $156,000 to $184,900.
This compares to $158,000 in November 2003. Based on an 85 percent
loan-to-value and an interest rate of 5.5 percent, which is unchanged
from a year ago, the monthly payment last year would have been $760,
while it is now $895.
In remembering the late 1970s and 1980s, real estate analysts question
whether the market can be sustained, especially the ever-higher
home prices. The increasing number of rental properties has resulted
in extreme competition based on lower rents, and even concessions.
Rental difficulties could lead to fewer future buyers and more homes
on the market. For owner-occupants, higher interest rates combined
with stable income and higher home prices will adversely impact
the affordability of housing, leading to a potential slowdown of
activity. Further, people with low-interest mortgages have little
incentive to move, thus effectively slowing the market even further.
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The Arizona Real Estate Center is associated with East College
at Arizona State University's east campus. The center collects and
analyzes data concerning real estate in the Greater Phoenix metropolitan
area. The center is a comprehensive and objective source of real
estate information for private, public and governmental agencies.
