The median home sales price of existing single-family homes in the Phoenix HMA (the most geographically comparative data available) declined 44 percent from $262,000 during the first quarter of 2007 to $145,600 during the first quarter of 2010. Although home sales prices have declined significantly from the peak, the median home sales price of existing single-family homes is up 4 percent from $140,000 during the first quarter of 2009. Foreclosure sales currently account for 37 percent of the total number of single-family home sales in the Greater Mesa-Scottsdale submarket, up from 4 percent in 2007.
Although the number of existing home sales is increasing, the number of new home sales continues to decline. New single-family home sales declined from approximately 2,425 homes sold in the first quarter of 2009 to 2,325 homes sold in the first quarter of 2010, according to ASU Realty Studies. New single-family home sales peaked in the first quarter of 2006, at approximately 11,300 homes sold.
Although new home sales continued to decline in the 12 months ending March 2010, single-family home construction is up from the previous year. According to preliminary data, during the 12 months ending March 2010, the number of building permits issued or single-family homes increased by 810, or 11 percent, to 8,450 homes permitted compared with the number of homes permitted during the previous 12 months. The number of single family homes permitted peaked at 48,550 in 2005 and has declined each year since that time (see Figure 11).
During the forecast period, current and anticipated sales housing market conditions will support an estimated demand for 52,700 new sales units. A portion of this demand will be met by the 3,800 homes currently under construction that are expected to be completed during the first year of the forecast period (see Table 1). As a result of the 20,000 vacant available sales units, no new homes are needed during the first year of the forecast period. Approximately 20,900 new homes should be supplied in the second year of the forecast period and 28,000 new homes should be supplied in the third year of the forecast period. Some of the demand could be met by a portion of the estimated 111,500 other vacant units becoming available for sale during the forecast period. Demand for homes is expected to be strongest in the $175,000-to-$224,999 price range (see Table 5).
Rental Market – Scottsdale-Mesa Submarket
The rental market in the Greater Mesa-Scottsdale submarket is currently soft. Single-family homes and condominiums for rent have not affected the Greater Mesa-Scottsdale submarket as much as they have in the Phoenix submarket; however, they have still contributed to soft conditions in this submarket. The current rental vacancy rate is estimated at 12.5 percent, up from the 9.9-percent rate recorded in the 2000 Census (see Figure 12).
As of the first quarter of 2010, apartment vacancy rates in the Greater Mesa-Scottsdale submarket ranged greatly from 5.4 percent in North Scottsdale/Fountain Hills to 20.4 percent in Peoria/Sun City, according to Real Data, Inc. North Scottsdale/Fountain Hills has a low apartment vacancy rate, mostly due to lower construction levels. During the first quarter of 2010, the lowest average monthly rent was $659 in Glendale, up from $608 during the previous year. The highest average rent was $941 a month in South Gilbert/Queen Creek, up from $913 the previous year.
Multifamily construction, as measured by the number of units permitted, has declined substantially during the 12 months ending March 2010. According to preliminary data, the number of multifamily units permitted declined from approximately 3,125 during the 12 months ending March 2009, to 100 units permitted during the 12 months ending March 2010. Multifamily permit activity was relatively stable from 2003 to 2008, when an average 4,850 units were permitted a year. See Figure 13 for multifamily building permit trends in the Greater Mesa-Scottsdale submarket from 1990 to the current date.
Absorption of the current excess rental supply is estimated to take several years. To prevent prolonging the current soft market conditions, during the 3-year forecast period, no additional rental units should be produced. If some of the estimated 111,500 other vacant units become available for rent during the forecast period, a recovery in the rental market could be prolonged.
Download the full Housing Market Research Phoenix Mesa Scottsdale Arizona report as a PDF. The Housing Market Research Phoenix Mesa Scottsdale Arizona was published September 30, 2010 by FHA.