The Arizona Republic - January 2007
Metropolitan Phoenix's resale housing market finished 2006 with a whimper, capping a tumultuous year in which the region struggled to regain its footing after a buying frenzy driven by speculators.
Last year, 67,035 resale homes were sold, down from the boom years of 2004 and 2005, and taking the market back to the 60,000 range seen earlier in the decade, according to the Realty Studies group at Arizona State University. A report the group released Wednesday shows sales on existing homes in December were the worst for the entire year.
Experts blame investors, many of whom fled the Valley, leaving a glut of housing behind. Single-family resale inventory stands at more than 42,000, nearly double that of 2005.
"They were the driving force," said Jay Butler, who heads Realty Studies. "They were the ones who would pay any price for a home."
The Valley is still dealing with the aftershocks. Among them are high listings. Home prices were pushed ahead more quickly than they would have been in a more typical market. In just two years, the median annual sales price jumped nearly 50 percent, from $174,815 in 2004 to $260,600 in 2006.
Ben Sage of the consulting group Metrostudy said the big theme of last year was the changing expectations. "It was a major turnaround from the previous year, and the major disconnect now is between buyers and sellers over listing prices and what homes are selling for," he said.
Many people are looking to this year with hopes of better times. Some agents say they are seeing buyers who stayed on the sidelines early in 2006 moving into the market. Agents say houses in good locations and at realistic prices will sell, and they're seeing a different type of buyer, the person who wants to stay put rather than the quick-money investor.
The Valley's median home price is a record at $260,600, but Butler noted that the median fell from $267,000 in June to $255,900 in December. The national median is expected to be $222,100 for last year.
Ken Udenze initially listed his south Chandler home for $910,000 in April and has cut the price to around $830,000. He said he has learned to discount some of the optimism he heard about getting top prices and made realistic decisions to cut.
"You have to move ahead of the market," he said. "It can be hard to do that but it's what you have to do. Why is a house different from a stock when it comes time to sell it, when you know what the market is going to pay for it? You have to detach yourself from it and be a little bit objective."
But there's still a lot of excess supply that must be sold before the market can recover.
