When the number of homes on the market falls dramatically and the demand for housing increases substantially you can usually expect prices to rise. That’s what has been happening in our local housing market, as reported in our Phoenix housing tracker.
Prices in the “Overall,” “Normal,” and “Foreclosure” segments have all been on a 3-month increase (as indicated in orange) after steadily dropping for years. This trend has been fueled by the lowest housing inventory in the last 5 years (Phoenix Scottsdale AZ real estate listings: June 2011) and the greatest 3-month demand / sales in our history (Phoenix Housing Tracker: May 2011 sales). We’ll need to wait for the June 2011 sales statistics to see if this trend will continue.
Slight rebound in housing prices: May 2011 Phoenix housing tracker
The decrease in inventory is partly caused by banks who have foreclosed on homes but have not released them for sale. It is also being fueled by the record number of home sales in our local housing market because of record low interest rates and exceptionally low home prices.
The recent increase in prices will most likely be relatively short lived because several larger banks are expected to begin releasing inventory and home sales generally slow down after the summer months.
It’s interesting to note the large difference in price between normal and foreclosure type home sales, which has ranged between $29-$47 per sqaure foot over the last 18-months. That range accounts for a hefty diference in price tags — an average of $89,000 over the same time period. However, this price comparison doesn’t signify the true difference in value between normal and foreclosure homes sales because the two types of sales are not evenly spread across all cities and kinds of neigborhoods. In other words, there are far less foreclosure sales in Scottsdale, Paradise Valley, and Fountain Hills than in El Mirage, Tolleson, and the Town of Maricopa.
The foreclosure segment has been the driving factor behind our price declines. For the last 4 years normal sellers, or those not short selling their homes or banks who own foreclosure, have been forced to compete with foreclosure sales that have been at a significantly lower price level. If they did not want to compete they usually could not sell their homes unless their homes were worth the higher price tag because of a superior location, remarkable upgrades, or some other built in value.
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