Sunday, July 23, 2006

Valley's Skyrocketing Median Home Price a Bit Deceptive

Jul. 16, 2006 12:00 AM

The median home price in metropolitan Phoenix is holding steady and even inching up, thanks to pricey home sales.

Last month, the median or middle price of all used-home sales in the Valley peaked at $267,000. It was $265,000 in May.

In the wake of home sales plummeting, the uptick in the median home price may look like the housing market's bright spot. Some homeowners may be cheered, thinking that their values are climbing. But the figure is deceptive.

The median Valley home price is climbing because the number of pricey Valley houses that are selling has jumped in the past year as the number of more-affordable homes has fallen.

In June, almost 40 percent of all existing homes to change hands sold for $300,000 or more, according to the Arizona Real Estate Center at Arizona State University Polytechnic. Early last year, only 25 percent of all resales cost that much.

Only 14 percent of the houses to sell last month cost less than $199,000. At the beginning of 2005, before Valley home prices started their rapid ascent, 38 percent of all resales were priced below $200,000.

The drop in affordable-home sales means more first-time buyers are getting shut out, mainly because they can't find homes in that price range. Move-up buyers who can sell and pay the Valley's now-higher home prices are controlling the market.

Phoenix's relatively affordable housing for the West has enticed businesses and people to move here for the past 50 years. After last year's 50 percent run up in home prices, economists are concerned that if people can't move here, make the typical wage and afford the typical home, growth will slow.

The average Valley income climbed less than 3 percent during the past year.

The Arizona Department of Housing and Arizona Housing Commission recently released a report with recommendations to help provide more affordable housing. One is to expand its Employer Assisted Housing program and give more companies tax benefits for helping their workers buy homes.


More office space

Several big tenants are circling the Valley's office market looking for space.

As many as 10 firms are searching for 100,000 square feet of space or more. Five years ago, there was maybe one firm ready to sign a lease for that much office space.

Tom Adelson, an office broker with CB Richard Ellis, said that five year ago the smaller "mom and pop" firms drove office deals. Now, he said, the Valley's growth is attracting many more big firms.

Deals for 25,000 square feet used to be a big deal. In 2000, there were maybe a handful of firms looking for that much office space in metro Phoenix. Now there are as many as 30.

eBay's PayPal division was one of the companies looking for 100,000 square feet or more. It decided on a big block of office space in Scottsdale last week. The online-payment firm is bringing as many as 400 new jobs.


Catherine Reagor is senior real estate reporter. Contact her at catherine.reagor@arizonarepublic.com or (602) 444-8040.

For a free consultation on how to negotiate a home or investment purchase to take advantage of a buyer's market, call Laura Boyajian (Laura B.) today at 602.400.0008 and visit her website at:

http://www.historiccentralphoenix.com

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