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Phoenix real estate: January one of slowest in years

January — usually the slowest month of the year for home sales — turned out to be the second quietest in 14 years. According to Michael Orr, director of the Center for Real Estate Theory and Practice, the number of homes sold in the Phoenix area real estate market in January was 18 percent lower than December and 22 percent lower than January a year ago. Prices also declined, with the median sales price for a single family home slipping 4 percent between December and January.

2014-03-12

January is usually the slowest month of the year for home sales, but this year it turned out to be the second quietest in 14 years. According to Michael Orr, director of the Center for Real Estate Theory and Practice, the number of homes sold in the Phoenix area real estate market in January was 18 percent lower than December and 22 percent lower than January a year ago. Prices also declined, with the median sales price for a single family home slipping 4 percent between December and January. Orr said the market has now completed its rebound from the artificially low prices of 2009 to 2011. See full report   But don't read too much into the price decline, he said. Listen: [podcast] Read: Michael Orr: The median in December was a little higher than we might have expected and January was a little bit lower. It’s statistical noise, really. It suggests, however, that prices have stopped going up as fast as they have over the last two years. And I’m not expecting a significant movement either up or down for the next few months. KnowWPCarey: In other words, don’t look for fireworks, because the market is much different than it was a year ago. Orr: It’s not so surprising when prices have gone up as much. A lot more people are choosing to rent. WPCarey: That’s because household formation — when people marry or move out to get a place of their own — is at a low level across the nation right now. But curiously, despite the low, the numbers in January produced what appeared to be an encouraging indicator. Pricing is now back to the level that it would have attained if it had increased from the year 2000 in line with the Consumer Price Index. Orr remarked however, that the housing market does not always track with other commonly followed economic indicators. Orr: Housing prices have their own sort of ups and downs and don’t really tag along with everything else. But it is interesting that the difference between house prices measured on a per-square-foot basis in 2000 and now, really come back to the same sort of increase that the CPI index has. WPCarey: More significant to housing price is supply and demand, which can vary widely from year to year, he said, depending on the supply of money. Orr: Everything depends on the availability of mortgages. If mortgages are hard to get, then supply is suppressed. We had a period during 2003 to 2007 when mortgages were very easy to get and that created an unusually high demand that pushed prices way up. And we’ve gone back to a demand that is relatively quiet. WPCarey: The missing factor is the first time homebuyer, which today would be members of what is called the millennial generation. This group is slow to pursue home ownership, Orr said. Orr: Most people who are older than 35 have found it’s been a good deal. You have to be very patient though, it’s not necessarily a good deal over a short term, it’s over a longer period like 25 to 50 years. It will create a significant amount of equity as home prices do tend in the long-term to go up rather than down. It’s like the stock market. WPCarey: The Greater Phoenix Housing Market Report comes out monthly, with data and analysis concerning the residential market in Maricopa and Pinal Counties. To see the data, go to wpcarey.asu.edu/realtyreports.  

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