Phoenix has seen some volatile changes in the local real estate market over the last 10 years. There are plenty of national media reports floating around about the real estate market continuing it’s decline with no relief in sight. Real estate can be a complex arena with big differences from state to state or neighborhood to neighborhood. Despite what national reports are saying, the median resale home value for Phoenix has been stable at a range of $110,000-$115,000 since December 2010. Inventory, or the supply of homes on the market available to purchase, has seen about a 50% drop from this time last year. Meanwhile, demand, the number of sales this year, is on track to be the second busiest year for home purchases in the last decade.
Looking at the numbers in a specific community built at the peak of the real estate boom, and what’s happened there over the last few years, is helpful to illustrate how much activity has picked up this year.
Optima Camelview in Old Town Scottsdale was built in 2007, with many people paying double for their homes than what they are worth today. I helped a client of mine purchase a really great 2 bedroom 2 bath condo there last year, with 1,272 square feet inside and a massive 2,000+ square feet exterior terrace/patio space, for $340,000. It was originally purchased brand new in 2007 for $682,596.
Take a look at the numbers at Optima Camelview showing how things have progressed over the years with the balance between supply and demand
Number of Sales recorded vs. Year vs. New listings on MLS
131 – 2007 – 99
136 – 2008 – 148
96 – 2009 – 131
102 – 2010 – 163
125 year to date (on track for 144 pace for year) – 2011 – 77 year to date (on track for 90 pace for year)
With sales activity picking outpacing the supply of new listings coming on the market, it’s easy to see how overall inventory drops. This is the story for much of the valley
When I was looking last summer for 2 bedrooms for this particular client, there were 30 on the market under $600,000.
Today there are only 15 2 bedroom condos for sale, of which 10 are at $600,000 or less. That same client would be looking at a 66% reduction in selection had he been looking today rather than last year. What about his price he paid? There are plenty of recent sales to support meeting his purchase price if he sold today, and likely even see a 5-10% appreciation for his particular unit.
An even more extreme case is evident in zip code 85033 as pointed out by The Cromford Report.
On January 1, 2009, at the peak of the foreclosure wave, there were 461 lender-owned single family homes for sale through ARMLS in ZIP code 85033 (West Phoenix). On October 1, 2011 there were 11 – that’s a 97.6% reduction.
Bottom line. It’s all about hyper-localism in real estate.