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Phoenix Home Sales at 3-Year High

Existing (not new) condo sales saw the biggest annual gain last month, rising 117.3% from a year ago. In March, condos were 12.4% of total sales, compared with 6.6% a year ago.

The number of newly built homes sold in March rose 40.7% compared with February but fell 5.0% from a year ago to the lowest level for a March in more than a decade. Builders continue to struggle to compete with low-cost foreclosures and other distressed sales.

Much of the housing demand still comes from investors and first-time buyers.

In March, 45.6% of all Phoenix-area home purchase loans were government-insured FHA mortgages, a popular choice for first-time buyers, according to an analysis of public property records. Absentee buyers purchased 39.8% of all homes sold in March, down from 41.2% in February, and paid a median $118,000 last month. Absentee buyers are mainly investors, but include second-home buyers and others who indicate at the time of sale that the property tax bill will go to a different address.

Buyers who appear to have used cash to purchase their homes accounted for 39.7% of all March sales, down from 43.6% in February. Last month's cash buyers paid a median of $109,000. Specifically, these were transactions where there was no indication of a purchase loan recorded at the time of sale. Some of these "cash" buyers could have used alternative financing arrangements outside of a typical, recorded purchase mortgage, and in some cases these buyers might be taking out mortgages after their purchases. All-cash deals have become popular in many Western markets where prices have dropped sharply, luring investor buyers who don't always qualify for traditional mortgages. Moreover, sellers favor the relative speed and certainty of all-cash transactions.

Last month about 3.5% of all homes sold had been "flipped," meaning they had previously been sold on the open market between three weeks to six months prior. A year ago it was 1.4%.

Foreclosure activity rose in March: The 5,962 single-family house and condo units foreclosed on in the region represented a 28.6% increase from February and a 52.1% gain from a year earlier. For the first quarter (January through March) of this year, the number of housing units lost to foreclosure fell 2.4% from fourth quarter 2009 but rose 7.8% from first quarter 2009.

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