Market analysis & trends of waterfront homes
Now that we’ve finished up with the 1st quarter of 2009, it is a good opportunity to review what transpired during the first 90 days of 2009 for waterfront homes for the southeast valley, including Chandler, Gilbert, Tempe, Sun Lakes, and the Ahwatukee Foothills. The data is from the Arizona Regional MLS for waterfront property. I used waterfront information for the 1st quater 2008 , 4th quarter 2008, and 1st quarter 2009. I only used sales of single family homes.
Waterfront property trends by price range
For a more thorough analysis, I thought it would more helpful to analyze the data in two groups; waterfront homes with a sales price up to $350K, and those above $350K. I thought this would be a good dividing line because the FHA loan limits have recently adjusted, although it was later in the quarter and will have more of an impact during the 2nd quarter going forward.
S.E. Valley Waterfront Homes sales – Up to $350K sales price
Qtr./Yr……………… 1st Qtr. 2008 ……………..4th Qtr. 2008………….1st Qtr. 2009
#Sales 19 16 26
Price$/sq.ft. $147 $128 $125
Days on Market 103 70 90
#Distressed sales 1 7 11
S.E. Valley Waterfront Homes sales – Over $350K sales price
Qtr./Yr……………… 1st Qtr. 2008 ……………..4th Qtr. 2008………….1st Qtr. 2009
#Sales 28 15 18
Price$/sq.ft. $198 $181 $161
Days on Market 126 56 109
#Distressed sales 2 2 6
Separating the sales by price sold; up to and above $350K reveals two markets with different trends. The number sales of waterfront homes above$350K declined when comparing the first quarter of 2009 vs. 2008, while those under $350K have increased in the first quarter of 2009 vs. 2008. The sales price/square foot in the under $350k shows a smaller decline and leveling off compared to the higher priced waterfront homes. It wil be interesting to see if the 2nd quarter 2009 results for the under $350K group confirms this leveling off.
First Quarter waterfront home sales by loan type
Looking at the total sales by loan type for both groups combined revealed that the majority were conventional loans at almost 60%. 30% were cash transactions, and 10% FHA. Of the cash transactions, 70% of them were homes under $350K. I was expecting to see more FHA loans being used in the under $350K price range but the real impact of the revised loan limits will show up in the 2nd quarter of 2009.
The above table confirms what many are seeing in the market. Buyers are concerned about affordability and 70% (excluding the 30% cash buyers) are constained by loan availability. As prices drop, investors and cash buyers gain interest, and the new FHA loan limits allow buyers to extend into the high $350K range all of which contribute to establishing a bottom for the up-to-$350K waterfront properties group. Understandably, higher priced homes are at higher risk for further decline. Jumbo loans, over $417K are more difficult to secure.
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