Hot in Phoenix: July housing sales up

Most years, the desert heat holds back buyers in the Phoenix real estate market, but not this year. Sales of single family homes were up 20 percent over July of last year, and townhouses rose even more.

Most years, the desert heat holds back buyers in the Phoenix real estate market, but not this year. Sales of single-family homes were up 20 percent over July of last year, and townhouses rose even more: 32 percent year-over-year. Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School, noted in his monthly report that this July sales were higher than March, April or May — very unusual.

Research and Ideas: Most years, the desert heat holds back buyers in the Phoenix real estate market, but not this year. Sales of single-family homes were up 20 percent over July of last year, and townhouses rose even more: 32 percent year-over-year. Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business, noted in his monthly report that this July sales were higher than March, April or May — very unusual. More closings did not correspond to higher prices, however. Typical for third quarter, on a month-over-month comparison prices slowed down.

Michael Orr: It’s not that all prices drop, it’s really the luxury areas that tend to sort of slow down a lot at the top end. So the average price in Scottsdale takes a significant decline in July and August because there aren’t so many big, expensive houses in the mix.

Research: Meantime, prices in the mid-market held steady. That’s true of new homes as well as resales, and has been for the past year. The longer view shows how much the market has improved, however. Compared to July 2014, the median sales price for a home in the Phoenix area is up 5.7 percent, and the average price per square foot climbed 4.3 percent.

Orr: The overall number is still looking pretty healthy, like five percent, six percent. People tend to yawn when I say that because they’re so used to big fluctuations. But when we’ve got virtually no inflation elsewhere, five percent is a big difference.

Research: The upward price pressure in the Phoenix market is coming from the lower end — homes under $250,000 — because supply in this range continues to be so constrained.

Orr: People are having to bid the asking price or even a bit more to get their offer to be taken seriously. That’s definitely pushing up prices.

Research: If you take a look at the neighborhoods, you will find that certain choice areas in the city are appreciating in value.

Orr: Arcadia is really in at the moment. Paradise Valley has been doing well and the southern and central parts of Scottsdale. So these are all pretty convenient for the airport and shopping, these sort of things. That seems to be more important to luxury home buyers than it used to be.

Research: Elsewhere in the metro area, interest in the communities on the outer edges has ebbed, in part because fewer buyers are coming from out of state and out of country.

Orr: Canadians tend to think homes out on the fringes are more attractive, because they’re close to the golf courses and the beautiful mountain views. And they still have the great weather. So, they don’t need to be commuting and worrying how close they are to shops. As Canadians have really dropped their interest over the last year that has not been good for the more distant markets.

Research: The strength of the American dollar has made Arizona less attractive to new Canadian buyers who are looking for a second home. In fact, Orr now sees only about 50 sales per month to Canadians each month, where it had been 4 to 500. In short, Orr painted a positive picture of the real estate market in July.

Orr: I would say overall the market is looking pretty healthy — nothing to get too disturbed about. It’s quieting down a little bit but then that’s what it should do this time of year in a normal situation.