Chandler Two-Year History Of Real Estate Prices and Statistics As Of July 2008

The Chandler real estate market is not unlike most in the Phoenix valley.  It’s gone through some tough times with homes lingering on the market and prices dropping at a concerning rate for homeowners.

The question on everybody’s mind is “have we hit bottom yet?”

Taking a look at the past two years of pricing trends, inventory levels and days on market can give real estate buyers and sellers a good idea of where we stand.

First, let’s look at the two-year trend for homes listed and sold in the Arizona Regional Multiple Listing Service:

You can view the raw data for this article here.

In the graph above:

• the blue line indicates the average price of single-family homes currently listed in Chandler.
• the green line indicates the list price for single-family homes before being sold.  In other words, this is the average price for all listings that went under contract before the final sales price was agreed upon by the buyer and seller through contract negotiations.
• the yellow line indicates what the average sales price was for single-family homes in Chandler.

As in yesterday’s Tempe Market Snapshot, it should come to no surprise to anyone who’s not been living under a rock for the past two years that prices have dropped pretty dramatically.  With the exception of May 2007, which saw some pricey homes sell in Chandler that pushed up the average selling price, prices were highest two years ago with an average selling price of $388,049 in August 2006.  As of July 2008, the average selling price of homes in Chandler had fallen to $287,474, or a nearly 35% drop in prices:

Is there any silver lining in all of this?  To homeowners, a 35% drop has created a bad situation for many who purchased during the middle or end of the real estate boom.  For example, take the average price of $388,049 in August 2006 as a purchase price for a family who put 20% down, or $77,610.  Keep in mind, most home buyers during August of 2006 were not putting down 20%, 15%, 10% or even 5% for a home.  But, for the sake of our ideal situation, we’ll use a traditional conventional mortgage of 20% down.

That same family, who took out a 30-year mortgage for $310,439 in August of 2006 for a $388,049 home now may have a home that is only valued at $287,474 - they have a negative equity of nearly $23,000!

Now, imagine those who purchased a home with a “Zero-Down Mortgage” or only put 3% - 10% down.  It’s no wonder that even those home buyers who had a decent down payment and good credit are considering walking away from their home and going into foreclosure.

Back to the question - is there a silver lining in all of this?  Maybe.  There’s no doubt that foreclosures will continue to bring down prices in Chandler and in much of the Phoenix real estate scene.  But, looking at the graph shows that prices are stabilizing in Chandler, similar to Tempe.  Like much of the Phoenix valley, prices dropped dramatically through the latter part of 2007 and the first part of 2008.  But, prices have stabilized to right around $290,000 in Chandler since May 2008.

Another indicator of the market is the Average Days on Market (ADOM).  This shows how long homes sit on the market before they are sold, on average.

It should be noted that this shows how long a listing that has sold has been on the market and not the average for all homes currently on the market.  What’s the difference? Take this current statistic from July 2008:

• The average days on market for sold listings was 72 days.
• The average days on market for all active listings was 153 days (this data is not graphed above).

Yikes.  That’s two and a half months versus a just over five months.  So why is the sold listing statistic so much better?  For one, it includes foreclosures.  Foreclosures sell much more quickly because they are usually priced below market value.  On the other hand, many traditional home sellers are still living in 2005 and 2006 and expecting to get that 35% higher price for their property - which is just not going to happen.  These sellers are creating a much higher ADOM for active listings.

What should be noted is that the ADOM for Chandler single-family homes is stabilizing just like the prices.  In fact, since March 2008 the ADOM has hovered around 100 days.  Prices and ADOM have stabilized which shows there is some sort of balance returning to the Chandler real estate market.

Want more stabilization indicators?  Check out the inventory levels in Chandler:

As a reminder:

• Less than six months of inventory indicates a “seller’s market.” In a seller’s market there are more buyers than there are homes to purchase.  As a result, real estate prices may increase during a seller’s market because there is less inventory than there are buyers.  This is what happened during the 2004 - 2006 real estate boom in Phoenix.
• More than six months of inventory indicates a “buyer’s market.” In a buyer’s market, real estate will often sell below the listing price because there are more buyers than inventory.  Much of the country has experienced an extreme buyer’s market over the past year or two.
• Six months of inventory indicates a “balanced market.” This is the most desirable market for buyers and sellers alike.  Homes will typically sell near listing price because there is a balanced amount of inventory when compared to buyers.  Sellers who market their property correctly and at the current market price will often receive an offer near that list price.  Buyers are more confident in purchasing because prices are stable or appreciating.

Currently, Chandler stands at 6.71 months of inventory.  This means that if no more listings were put on the market and the same number of homes sold for each of the 6.71 months, we’d then run out of single-family homes to sell in Chandler.

Based on this information, Chandler has just over the magic 6-month number.  We are in a buyer’s market but not as dramatic as it was just six months ago.  This means that if sellers continue to price their homes correctly and buyers don’t drop off the face of the earth, the worst of the worst may be over for Chandler.

There are still outside factors that can’t be controlled for all of the Phoenix Valley’s real estate market.  Those include foreclosures and the credit-crisis.  Many news reports have indicated that foreclosures have peaked in Phoenix - which is a good thing.  As the foreclosures on the market are bought up prices can continue to stabilize.  The credit-crisis continues to be a big factor in the real estate market as buyers are finding they can’t get approved for mortgages even with decent credit.

And with the recent changes in FHA Mortgage Loans that take effect on October 1, more buyers may be pushed out of the market.  Currently, a buyer needs 3% down for an FHA mortgage.  On October 1, that requirement increases to 3.5%.  The larger concern, however, is that FHA will no longer allow sellers or home builders to gift the down payment - which has been a key selling point for builders over the past few years with “zero down” offerings as well as for motivated sellers to get their home sold.

Overall, the single-family real estate market in Chandler, Arizona appears to be stabilizing.  Average prices have stabilized to around $290,000 since the second quarter of 2008 while inventory levels have stabilized to just under 7 months over the past three months.

If you’re interested in purchasing a home in Chandler, you can search our site casually or set up a fusionpower search - giving you a powerful personal and secure webpage with homes that meet your search criteria!

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