The Year in Review
As we begin a new year, I thought it appropriate to put this past year in real estate into perspective. The media coverage has been extraordinary, and for the most part negative. I am not going to tell you that everything is rosy, but the negative media spin tends to lead to a self fulfilling prophecy. The more negative press, the more people become scared, and the less likely that they will forge ahead with plans.
The market will continue to suffer through 2008 due to excessive inventory. This causes many sellers to sell in desperation further lowering prices. Many buyers are waiting to see how low prices will go, so it becomes a vicious cycle. There are areas around the valley that are suffering more than others. Our area although lower than last year, has remained more stable than most. One way to look at the market and the decision to purchase property is whether you want to ride the coming wave or wait for the next smaller one. I see some positive signs on the horizon, including that long term investors are getting into the market. The sustaining thought is that even if we aren't at the low point, it is close, and for the long term now is a good time to buy.
Here is some statistical data to compare 2007 with the years prior. The comparison uses average price per foot. Many indicators use the median price, which means that half the sales are higher and half lower. There is no perfect method to use, as all can be used for the analyst's advantage. I chose this method, as it is the most commonly used in the real estate industry. Keep in mind that it and most other methods aside from an appraisal will not factor in the features of each specific home, which do have an effect on the price paid.
There were 159 active listings in Desert Ridge as of 12/31, with 9 pending or contingent listings.
Yr. #sales Ave.Sold $/ft. Ave Sq.Ft. Sold price% of List Price Ave Days on Mkt
2007 183 $224.37 2702 96% 117
2006 186 $250.09 2409 96% 83
2005 212 $228.39 2305 99% 27
2004 214 $167.61 2231 99% 38
2003 202 $142.04 2266 98% 48
These figures reflect on MLS data as of 12/31, and do not include builder sales in the area.
Despite the unit sales in Wildcat Ridge dropping by 2/3 from peak, Desert Ridge has remained strong with only about a 15% drop in unit sales. Prices dropped 10% from 2006-2007. Both communities saw the sold price as a percentage of list price stay strong, which indicates more sellers realizing that value is determined by the buyer. Prices are still 59% higher than 2003 levels.
MLS Area 402
Boundaries are 16th St, Scottsdale Rd, Jomax, and the Hayden Rhodes Aqueduct. Desert Ridge is in this area.
2007 491 $200.63 2262 96% 102
2006 467 227.85 2080 97 76
2005 620 208.47 2085 99 28
2004 581 146.41 2084 99 36
2003 286 125.60 2097 98 47
As of 12/31/07 there were 44686 single family listings active on the ARMLS (which covers all of the Phoenix metro area including parts of Pinal County). A "normal" market will see less than half that number as a typical number of listings. Despite the slowdown, once the market does level, we can expect to see a reasonable rate of sales due to the pent up demand that ultimate results during any slowdown. The people who are waiting will join the people who have to move to dispense with the extra inventory.
Many people are concerned that this negative market will last. Keep this aspect in mind as well - If we did not have the crazy run up in 2004-2005, and had maintained the more normal 7-8% appreciation per year that we were seeing, then our prices would be lower than they are now. Take a step back and look at this in perspective. I realize that is hard to do for someone who bought at the peak, but the market always comes back.