Rates slow significantly; townhouses depreciate. (metro Phoenix home appreciation)

Metro Phoenix Home Appreciation

Rates Slow Significantly; Townhouses Depreciate

Single-family homes in the Phoenix metropolitan area continued to appreciate during 1988, though not as much as in 1987. More townhouses depreciated during the year than gained value.

The median rate of appreciation for single-family homes declined to approximately 1.8 percent in 1988, down from 2.4 percent in 1987, and was lower than in any year since the appreciation rate study began in 1981. Most townhouses and condominiums (hereafter referred to as townhouses or townhomes) did not appreciate; the median townhouse sold during 1988 depreciated 0.8 percent. Appreciation rates of both single-family homes and townhomes were significantly lower than the 1988 Metropolitan Phoenix inflation rate of 4.1 percent.

The decline in the appreciation rate has further extended the length of time the typical seller utilizing the services of a realtor must own their home in order to bread even. During 1988, the annual rate of 1.8 percent means that homeowners selling through a realtor, as a majority of all sellers do, had to hold their home at least 3-1/2 years to break even. Realtors' fees, although often necessary to sell the home at all, simply compounded the depreciation of townhouses.

Of all homes sold more than once between 1981 and 1988, 38,257 constitute the single-family data base after removing sales that did not meet the selection criteria. Another 3,369 homes make up the townhouse data base. Throughout this article, less detail is provided on townhomes because of…