Hot Demand for Single Family Resale Properties Continues
November 2011 Results and Trends
- Single Family Homes in Demand to Own and Rent
- Median Sales Price Goes Up
- 2011 Will be Record Year for Single Family Rentals
- Single Family Rental Rates Flat in Many Cities
By
Fletcher Wilcox
V.P. Business Development
Real Estate Analyst
Grand Canyon Title Agency, Inc.
FWilcox@GCTA.com 602-648-1230
December 13, 2011: Released is a report on the single family residential resale market.
Median single family resale sales price up for Greater Valley Market
Single family homes are in demand both to purchase and to rent. Investors are purchasing, fixing and renting. Owner occupants are buying at the lower end of the sales price range.
This demand for single family homes drove up the overall median single family sales price for the Greater Valley Market.
In November, the overall median sales price hit its highest value this year at $124,850. This is an increase of four percent over the previous high of $120,000 this year. See page four for trend chart.
Owner occupants often find it difficult to buy properties because of the competition for properties at this price range.
The November 2011 median sales price was close to where it was in November 2010. It was one percent or $650 less than November 2010 when it was $125,500.
Twelve cities in November 2011 had a higher single family median sales price than November 2010. See page five for table.
Single family sales in 2011 are on pace to be second highest year ever for sales in the Greater Valley Market. Only in 2005, the year of the great real estate boom were there more single family sales.
Single family rentals
Demand for single family rentals continues hot.
The number of signed single family leases in 2011 will be more than 2010. Last year set the record for the highest number of single family leases.
Single family leases in 2011 are sixteen percent over what they were at this time last year.
In 2011 from January 1 through November 30 there were 23,565 signed leases.
In 2010 from January 1 through November 30 there were 20,364 signed leases.
Only two cities in this report had less single family leases this November than last November. The table on page six lists the number of leases and the median rental rate for twenty-two Greater Valley cities.
Fourteen cities had a median rental rate that was flat or less than last year, while it went up in eight cities.
(Note: This data comes from ARMLS. There are many single family properties not leased through ARMLS, but are leased through websites such as Craig’s List).
Own or rent ratio: a relationship between rental rates and sales price
The Own or Rent Index in this report is a relationship of sales prices to monthly rental rates. The Index shows affordability by using a ratio of sales price to rent indicating when it may be better to own and not rent, and when it may be better to rent and not own.
For example, when the sales price goes up, homes become less affordable. When rental rates go up it may make more sense to own and not rent. The lower the index the better time to buy. Page four has for twenty-four months of the overall Own or Rent Index for the Greater Valley Market. Page seven has the Own or Rent Index for twenty-two Greater Valley Cities.
Conclusion
The demand to own or rent a single family home is driven by a combination of investors, renters (people who have lost a single family home because of a short sale or foreclosure and want to continue living in a single family home), and owner occupants purchasing at the lower end of the price range.
There are many different single family markets within the Greater Valley Market. These markets differ widely in median home sale prices and median monthly rental rates. For example, in November the median monthly rental rate was $875 in San Tan Valley, $1,295 in Chandler, $1,150 in Peoria and $795 in El Mirage. In November the median home sales price was $92,000 in Maricopa, $125,000 in Surprise, $101,000 in Glendale and $360,900 in Scottsdale.
The Own or Rent Index suggests that owning may be better than renting.
Arizona Regional Multiple Listing Service, Inc. (ARMLS) data shows eighty-five percent of residential sales this year are single family properties and seventy-seven percent of leases are single family properties (this number excludes apartment rentals).
This report analyzes only single family properties since they make up the majority of the residential market. The majority of single family properties in this report are resale properties.
