Here’s the Republic‘s read on yesterday’s housing numbers, a much more dire interpretation:
Valley home prices dipped again in August, even falling below last year’s levels in some areas.
It is the first time since the Valley’s housing market turned red-hot in late 2004 that the monthly median price of existing homes in some areas is lower than it was the same month the year before, according to the Arizona Real Estate Center at Arizona State University Polytechnic. And if the August median price of $262,500 holds steady or declines this month, the region’s median price will be below the September 2005 price of $263,000.
Jim Rounds, a senior economist with the Scottsdale-based consulting firm Elliott D. Pollack & Cos., said price declines in many parts of metropolitan Phoenix are just beginning and could continue until early 2007.
Also, he said, “new-home price reductions are right around the corner” for the Valley as the housing market’s oversupply issue is corrected.
This much is interesting:
For the first eight months of 2006, there were 47,515 used-home sales Valley-wide, which isn’t close to the 78,935 recorded in 2005.
Last year isn’t a perfect comparison because of the investor-buyer frenzy that has left the housing market with a hangover this year, but home sales this year have also fallen below 2004’s more normal level of 68,020. They are closer to 2003’s pace, when 47,255 used homes changed hands.
The boom in Phoenix real estate started in March 2004 if not earlier, so 2003 is the last normal year for comparison purposes. In other words, the Phoenix market is essentially normal on the buyer’s side.
We have a surfeit of inventory on the seller’s side, but we don’t have is the kind of fire-sale pricing you would expect if most of those sellers were actually motivated to sell — as opposed to being interested in selling if the price is right.
The interesting — and possibly dispositive — question is whether new-home builders actually will cut prices. They’re discounting heavily against list prices for inventory homes right now, but that’s a matter of clearing a finite amount of standing inventory. If pre-built homes are selling at the rates they want, they’re not going to give up anything downstream.
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