Housing in the summer doldrums: What will fall bring?

Historically, the heat of summer wilts the Phoenix housing market, a phenomenon reflected in the June housing report from the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. Mike Orr, director of the center, says that prices tend to stay put or even drift downward during the summer doldrums. This year prices may be sliding sideward, and Wall Street is focused on the rise in interest rates. But pay no attention, Orr says. The long term trend will hinge on the major factors, which are population growth versus housing supply.

Historically, the heat of summer wilts the Phoenix housing market, a phenomenon reflected in the June housing report from the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. Mike Orr, director of the center, says that prices tend to stay put or even drift downward during the summer doldrums. This year, however, prices may be sliding sideward, but pay little attention, he advises. The rise in interest rates that has so captured the attention of Wall Street will also be a blip on the graph, he said. The long term trend will hinge on the major factors, which are population growth versus housing supply. Orr begins by talking about supply. [podcast]

Headlines:

As forecast, single family home prices were little changed between May and June, but we still measured dramatically higher pricing levels compared with June 2012: o The median sales price is up 26.7% from $150,000 to $190,000

• Average price per square foot is up 21.1% from $98.11 to $118.84

Townhouse/condo prices continued to rise and show substantial gains over the past 12 months: o The median sales price is up 38.9% from $90,000 to $125,000

• Average price per square foot is up 28.5% from $98.66 to $126.80

Active listing supply (excluding homes already under contract) rose 1% over the last month but it was rising at a faster rate of 4% per month at this time last year. As of July 1, 2013 we had 24% more active listings than at the start of July 2012. In contrast, distressed supply was down 32% from 12 months ago.

Foreclosure starts on single family and condo homes dropped 8% between May and June and were down 64% from June 2012.

Recorded trustee deeds (completed foreclosures) on single family and condo homes were down 27% between May and June and were down 61% from June 2012.

Sales of single family homes were 7% lower than in June 2012 while sales of townhouse/condos were down 6%. This is of no statistical significance since June 2012 had 21 working days and June 2013 only 20.

The percentage of residential properties purchased by investors fell from 27.3% in May to 26.5% in June, resuming the downward trend. It was 34.7% in June 2012.

Single family home sales increased year on year only for the largest sector: o Normal re-sales (up 51%)

Single family home sales fell year on year for all other sectors: o New homes (down 5%)

• Investor flips (down 25%)
• Short sales and pre-foreclosures (down 61%)
• Bank owned homes (down 59%)
• GSE (Fannie Mae, Freddie Mac, etc.) owned homes (down 42%)
• HUD sales (down 26%)
• Third party purchases at trustee sale (down 63%)

Unless otherwise stated all the statistics shown are for Maricopa and Pinal Counties combined.

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