Ofir Levy's Blog

Home prices jumped in September

Reporter- Phoenix Business Journal

Home prices continued on a strong upward pace in September, jumping by one-third from a year ago to a median price of $199,000, according to Arizona State University’s latest housing report.

But don’t let the price jump fool you.

Michael Orr says the local housing market overall has actually “cooled dramatically” since July, and the Valley should expect a much slower rate of price appreciation moving forward.

The cool-down, he said, is largely due to economic uncertainty, which was exacerbated by the recent government shutdown.

“The main change is a steep fall in demand, which we can see in the 12 percent drop in single-family home sales activity just between August and September alone ... The sudden weakness in owner-occupier demand since July is unusual and unexpected,” said Orr, the report’s author and real estate expert at ASU’s W.P. Carey School of Business.

On a positive note, the chronic supply shortage of homes for sale that had caused a throbbing headache for buyers for more than a year has finally been easing.

There were 15,150 single-family listings not under contract on the Arizona Regional Multiple Listing Service on Oct. 1 — up 13 percent from a month prior and by nearly one-third year-over-year, Orr said. Supply is still, however, restrained for homes priced below $150,000.

“If the current trend continues, supply will exceed demand by the end of the year,” Orr said. “We now expect a balanced market to prevail during November. This is great news for buyers since they will experience less competition and be in a strong position to negotiate.”

Foreclosure activity also continued on a dramatic decline in September, and Orr predicts that downward trend will continue thanks to lenders’ tight underwriting standards.

Foreclosure starts — when a homeowner receives notice that their lender may foreclose in 90 days — were down 17 percent from August and a whopping 61 percent year-over-year. Complete foreclosures also were down 5 percent from August and 63 percent year-over-year.

The combination of dramatic price increases and fewer bargain deals has been causing investor activity also to wane.

Investor purchases made up 22.7 percent of all sales in September — down from 23.7 percent in August and the peak of nearly 40 percent in July 2012.


There have been no comments made on this article. Why not be the first and add your own comment using the form below.

Leave a comment

Commenting is restricted to registered users only. Please register or login now to submit a comment.