Chandler Real Estate Market May Be Recovering
The City of Chandler in Arizona has fared better than most other Phoenix area housing markets and could be showing signs of recovery from the market malaise that has plagued the Phoenix area for over three years.
The City of Chandler is located southeast of Phoenix bordering Tempe to the north and west, Mesa to the north, and Gilbert to the east. Like many of the more central Valley cities, Chandler has long established roots in the area as an agricultural town. However, Chandler has blossomed into a nexus of smart growth and economic development with a strong professional employment base.
Like the rest of the Phoenix housing market, Chandler has seen its share of challenges with the downturn in the market. Most recently, this has culminated in a hiring freeze announced this week across city government with the possibility of future layoffs. The local government has seen a substantial drop in sales tax revenue as consumers pull back in spending. The slowdown in the housing sector has meant that construction-related activity has all but dried up with much fewer new homes are selling (the city gets substantial revenue from these projects).
But Chandler real estate is a brighter spot in the Phoenix housing market and looks like it is weathering the downturn better than other local housing sub-markets. Indeed, there are indicators that suggest that Chandler may have seen the bottom in activity levels and that 2009 could be a stronger year for Chandler in terms of residential real estate.
Taking a look at current market statistics provides more evidence of possible developing trends in the local Chandler real estate market.
The Inventory Picture is Changing
In terms of “Active” or properties currently available for sale, the inventory picture appears to be improving:
- Available inventory hit a low of 1,765 properties in October, the lowest point since April 2006. Though this figure currently runs higher consistent with the slower holiday season, even this level is significantly lower than the high of 2,200 available homes for 2008.
- In terms of the number of months supply, inventory has been in an overall decline. Since May 2008, inventory has consistently trended lower than 2007 supply trends. In fact, Chandler’s inventory supply dropped to as low as 5.6 months supply in July. This year’s data has tracked very closely with 2006 trends.
Both of these figures show a market for the latter half of 2008 that has seemingly broken away from 2007 trends.
Buyer Activity is Stronger
In terms of “Pending” or properties under contract for purchase, Chandler has experienced stronger overall results since the midpoint of 2008. Again, the trend curve looks to actually break away positively from the 2007 trend line at this point.
- In October, Chandler had 291 properties under contract for purchase vs. 233 the same period a year ago, a 25% year over year improvement.
Indeed, since mid-2008, Chandler's pending properties closely parallel activity seen in 2006 and consistently outperform 2007. Based on this, the Chandler real estate market looks to be positioning for a stronger 2009 if buyer activity (as defined by the number of properties under contract) follows traditional patterns.
Foreclosures are Impacting the Local Market
In terms of the percentage of foreclosed homes and their impact on the Chandler housing market, we see that foreclosures are driving a significant part of the market.
Chandler has seen a rapid acceleration of foreclosed (Real Estate Owned or “REO” or "Lender owned" properties) in 2008 so comparison to earlier years doesn’t make sense. Chandler saw REO properties grow from approximately 7.7% of sales in January to approximately 25% of sales in October.
Though this curve is distressing given the implications of so many foreclosures, a new trend may be developing.
When looking at available properties, cursory data suggests that the number of foreclosures coming added into the market in Chandler may have peaked in October. Though still early, if this trend continues, a steady decline in new foreclosures could mean that Chandler is working through its tough market climate and on the path to recovery.
Sales Steady in 2008
Final closed sales give us the most accurate historical picture of the strength of a real estate market. In this case, Chandler held steady. Estimates show that Chandler home sales figures for 2008 are roughly equivalent to 2007 figures.
- Chandler 2008 sales are estimated at 3,400 properties vs. 3,494 properties for 2007.
Chandler Better Positioned for 2009
Overall, Chandler real estate appears to be better positioned moving into 2009.
We will be watching for buyer activity to begin climbing after the start of the year. A strong buyer demand curve in the early months of the year could point to a stronger 2009 and signal that the bottom has passed. The national economic outlook could impact developments in the Phoenix real estate market and specifically Chandler but only time will tell to what extent. Foreclosures are expected to continue for some time.
It is likely that the real estate market will lead the nation out of its current recession. If this is the case, then Chandler may be one real estate sub-market showing signs of evolving to do just that. As such, the City of Chandler is clearly a place to watch in the Phoenix real estate market to see if a bottom there has already formed.
About David Lorti
David Lorti is a professional Realtor for RE/MAX Elite in the Phoenix area and helps clients buy and sell homes. He holds a Thunderbird Master of International Management degree and Bachelor of Arts degree and his insights have been quoted in several news outlets. He also holds a Certified Negotiation Expert (CNE) designation - one of only 1,600 Realtors nationwide. His website, http://www.lortihomesarizona.com, and blog, http://www.lortihomesblog.com, offer market updates and other information pertinent to home buyers, home sellers, and investors.
Date: Thursday, December, 11th 2008 @ 10:24:15 AMViews: 405
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