Phoenix Housing Market Suddenly Divides

Housing markets in Phoenix have recently divided creating a dangerous situation. The housing market now runs the risk of facing even more price declines as buyers lose interest in higher priced homes.

In July 2008 the housing market in and around the Phoenix area became divided when buyers began showing more interest in homes and properties more reasonably priced homes. Houses priced at the higher end of the housing market suddenly received less interest. This means homeowners who are attempting to sell their properties for more than $400,000.00 will be pressured by this sudden change.

Currently 17.4% of the homes available on the market which are now under contract are at the lower end of the housing market.. When the residential properties valued for more make up little more than 7% of the houses under contract. This is an extremely small amount especially when compared to the lower priced houses.

This disparity becomes even more pronounced on the upper end of the housing market. Customized homes that are listed at prices of $1,000,000.00 and more are an even smaller percentage of the available homes that are under contract.

The number of actual completed sales transactions gives further evidence of the change in the Phoenix housing market especially when compared to past sales figures. The percentage of homes valued at over $400,000.00 in recent years were:

2008 Declining Market: 15.1%
2007 Declining Market: 21.0%
2006 Transitional or Declining Market: 20.3%
2005 Rapid Price Increase: 16.6%
2004 Accelerated Price Appreciation: 9.1%
2003 Normal market: 6.1%
2002 Normal Market: 5.3%

If the trend continues it is likely that the percentage will continue to decline to between 10% and 12% in the coming periods. This decline will be caused by the activity of buyers in the lower end of the housing market and the decline in housing prices at the upper end of the Phoenix housing market.

This possible decline will bring the market to percentages found in the 2002 through 2004 Phoenix housing market. This decline could actually be considered positive in the sense that it is a sign that the housing market is stabilizing itself during the downturn.

One thing that must be considered is the fact that the homes valued and listed at $400,000.00 and make up a quarter of the Phoenix real estate market, only half of the homes on the market are actually under contract. With this shift in the market homeowners will have to consider changing their home selling strategy and even consider reducing the listing price of their home to fit the reality of their new situation.