Home prices in Phoenix area up 20 percent in past 12 months

by Catherine Reagor - Apr. 26, 2012 11:36 PM
The Republic

Home prices are surging in metro Phoenix, climbing 8 percent in March alone and 20 percent in the past 12 months.

The median price of a house in the region climbed to $134,900, according to a new report from the W. P. Carey School of Business at Arizona State University.

The trend is projected to continue throughout the year, although at a slower pace.

Mike Orr, director of the Center for Real Estate Theory at ASU, doesn't expect home prices to continue to climb as fast as they did in March over the next few months. But he projects metro Phoenix's housing appreciation for 2012 to reach 25 percent by September.

Orr credits the turnaround to steep drops in foreclosures and in the number of homes for sale, coupled with an increase in sales.

Fewer foreclosures means fewer inexpensive homes for buyers. The number of homes taken back by lenders in metro Phoenix is down 60 percent from March 2011.

Housing inventory has dropped steadily during the past year because of a record number of investors snapping up properties out of foreclosure.

Home sales are up 35 percent from a year ago as more regular buyers have joined investors in the mix.
"Prices have begun to rise at a fast pace, and bargains are no longer plentiful," Orr said. "Most homes that are priced well are attracting multiple offers within a couple of days, and many are exceeding the asking price."

March's price increase was the sixth in a row for Phoenix's housing market. Most real-estate analysts say the streak of rising home prices, along with slower foreclosures, is proof a housing recovery is under way.
A growing number of national real-estate analysts say metro Phoenix is leading the U.S.' housing market's recovery.

Metro Phoenix's median home price is still at least $130,000 lower than it was during the boom but almost $30,000 higher than it was in August 2011.

Foreclosures are down, and so are the sales of lender-owned homes. Since March 2012, the number of foreclosures resold by lenders has plummeted 61 percent. At the same time, regular sales, new-home sales, investor purchases and short sales have climbed. All those types of transactions have higher median prices.
The number of houses on the market across the Phoenix area is down 64 percent from March 2011.
Frustrated real-estate agents have buyers ready to sign contracts but can't find houses for them.
Don Paulsen of Peoria-based West USA Realty said the number of homes on the market is even lower when the number of homes that already have contracts written on them is subtracted.

An example would be a short sale in which the owner accepted an offer and the agent is showing the status as AWC -- active with contingencies -- until they get lender approval, he said.
"The reality is most agents will not show those homes because they know there is already an accepted contract on them," Paulsen said.

Orr also expects foreclosures to continue to fall, which means even fewer inexpensive homes will be for sale.
"The very low number of inexpensive homes available for resale means more buyers are considering purchasing new homes as an option," Orr said. "This signals the start of a distinct upward trend in new-home sales."

Pinal County home prices are up 21.3 percent in price per square foot from March 2011 to March 2012, with Maricopa County prices per square foot up 12.9 percent.

The areas showing the greatest increases are those that suffered the most price damage from the foreclosure wave from 2007 to 2011, Orr said. Examples include El Mirage, up 20 percent in average price per square foot; Maricopa, up 20 percent; San Tan Valley, up 31 percent; Tolleson, up 20 percent; Glendale, up 16 percent; Phoenix, up 17 percent; and Anthem, up 17 percent.

In contrast, some areas least affected by foreclosures are still showing price decreases. Examples are Paradise Valley, down 2 percent; Tempe and Fountain Hills, down 3 percent; Sun City West, down 12 percent; and Wickenburg, down 18 percent.

Owner-occupied home sales, which have been eclipsed by foreclosures and short sales in recent years, also increased 47 percent from March 2011 to March 2012.

Prices are still below March 2011, but Orr said the trend has reversed recently, with the price per square foot rising 8.1 percent from February to March. The median normal resale price is now $166,650, still 4.8 percent below the $175,000 in March 2011.

New-home sales are concentrated in the southeast Valley, with Gilbert and Chandler recording the most sales in March, Orr reported.

Phoenix-area home prices headed upward

Phoenix-area home prices headed upward
With fewer houses for sale, buyer competition mounts

by Catherine Reagor - Mar. 31, 2012 11:32 PM
The Republic | azcentral.com

Home prices are climbing in metro Phoenix faster than they have since the housing boom.

Some parts of the region experienced home-value increases of 5 to 10 percent a month this year because of a shortage of homes for sale that is sparking bidding wars between investors and regular buyers armed with pre-approvals for mortgages.

This emerging recovery of home prices in the Phoenix area started late last year and has been building each month.

Home values still have a long way to go to recover to pre-boom levels. MetroPhoenix's median existing-home price is currently $124,500, about $20,000 below the area's median in 2002 and well below the $267,000 from the height of the boom in summer 2006.

But many housing-market analysts see this as the beginning of a long-awaited recovery for the area's battered housing market. The uptick in prices is enticing more buyers who have been waiting for the market's bottom to purchase a home and now have likely missed it.

"Phoenix-area home prices are climbing so quickly in some areas now, due to such low inventory, it's hard to keep up," said Tom Ruff, real-estate analyst with online foreclosure service AZ Bidder and a founder of the Information Market, which supplies data for The Republic's Valley Home Values report.

He said the prices on sales closing now, which were started 90 days ago, are outdated. So to find comparable sales, buyers and real-estate agents need to look at sales negotiated last week.

Investors have driven the market, usually paying cash for low-priced homes and beating out other bidders. About 60 percent of homes sold in metro Phoenix this year have gone to cash buyers.

Now, both investors and regular buyers trying to purchase before prices climb higher are giving Phoenix's housing recovery momentum.

However, not all parts of the region are showing the same positive signs. Areas with lower-priced homes are drawing the most buyers, while the Valley's high-end housing market is still in a slump.

Communities in metro Phoenix with better schools, shopping and freeway access are also beating out other neighborhoods -- not far away -- for home-price increases.

"Metro Phoenix has always been a pocket market for home sales," said Jim Sexton of Realty One Group. "Chandler home prices may be steadily rising now, while a neighborhood in Mesa right next to its border are seeing declines."

Micro-markets
Many of the metro Phoenix neighborhoods and communities seeing the most rapid increases in prices now experienced the biggest drop in values.

Some communities on the edge of the region, including Goodyear in the west and Queen Creek in the southeast, drew more speculators and homebuilding during the boom. Many of the buyers had subprime loans that resulted in the Valley's first wave of foreclosures.

Home prices in these new communities plummeted much lower than the region's median but are now rising the fastest.

For example, in Goodyear, the median home price has climbed 14 percent in the past year.

But while the increases are large, the prices are low: The growth translates to a median home price of $92,000 in the area, compared with $81,000 in 2010.

Some neighborhoods with bigger homes in the southeast Valley cities of Chandler and Gilbert are posting significant price increases, even though the areas didn't see huge previous declines. Chandler's median home price has climbed to $186,000 from $170,000 last year.

Bidding wars
Martin Dace has been shopping for a house in the southeast Valley for nine months. He has been outbid by both investors and regular buyers on foreclosures and short sales.

Now he's considering buying a new home in Gilbert, near his job. Though the new home will cost $25,000 more than a short-sale house of the same size, he won't have to worry about being outbid.

"I am ready to buy and move in," he said. "I am tired of losing out on bidding wars. And new homes' prices are bound to go up, too, at some point."

Housing analysts say higher-paying jobs and better schools in the East Valley draw buyers willing to pay more to live there.

Homes priced below $400,000 in established neighborhoods are selling the fastest, real-estate agents say. A home listed for $165,000 in the upscale Encanto neighborhood in central Phoenix drew 26 offers and sold for almost $225,000.

There are similar bidding-war stories across the Valley in neighborhoods where homes are priced below $400,000, even in high-end communities.

A Carefree home priced at $300,000 through a short sale received three offers on the first day.
"The lender actually accepted the offer right away, but I had agents calling me for weeks with clients who wanted to put in backup offers," she said. "So many buyers are losing out on bidding wars, they are getting desperate."

Struggles remain
The high-end housing market was the last to crash and is now the slowest to recover. Homes priced above $1 million in Paradise Valley and parts of northScottsdale are generally slow to sell.

Mike Orr, a real-estate analyst with Arizona State University's W.P. Carey School of Business, said supply is a problem for the million-dollar-plus market.

He said so many homes are for sale with price tags and mortgages above $1 million, that this portion of the market could take a few years to post increases.

The median price of a home in exclusive Paradise Valley has fallen to $870,000 from $1 million a year ago.
Though, last week, a Paradise Valley home did sell for $10.5 million in cash, the highest price paid for a metro Phoenix home since the boom.

Joan Levinson of Realty One Group said that there are buyers looking for great deals in the Valley's high-end housing market but that some sellers are still reluctant to accept offers in the hope prices will climb.

Looking ahead
If the current trends continue, with fewer foreclosure homes for sale, home prices will also continue to rise, real-estate analysts say.

Foreclosures did climb slightly in February, but not enough to alarm housing-market watchers.

The number of metro Phoenix homes taken back by lenders during February is still less than half the number of foreclosures recorded during almost every month in 2009.

Also, the number of homeowners behind on their mortgages in Arizona continues to fall. So, many market watchers don't expect another big jump in foreclosures.

Post-foreclosure sales are another matter; banks decide when to put those homes back on the market. If they were to flood the market with a large supply of vacant homes, they could drive prices down again, as a similar move did in 2008-09.

Longer term, experts are gauging a housing recovery not by bank-owned homes but by homes for sale by owner-occupants.

Orr said the recovery will feel much more real when homeowners who bought before the boom feel optimistic enough to put their homes on the market.

"Many homeowners and buyers are still several months behind the reality of what's going on in metro Phoenix's housing market," said Orr, who also publishes the Cromford Report, an online daily real-estate analysis. "The housing market started recovering last year and hasn't stopped."

Now Apartment Rents are About to Soar (and what to do about it)

Now Apartment Rents are About to Soar (and what to do about it)

Ben Bernanke's money printing is starting to hit the apartment rental markets. This is real consumer level price inflation. Not a good sign. This means that the price inflation is already  moving beyond the capital goods sectors.

The apartment vacancy rate is expected to fall below 5% this year, crossing a benchmark into what it is commonly considered a “landlord’s market,” said Brad Doremus, senior analyst for Reis, a commercial real-estate research company. That means securing an apartment will become more difficult and rents are likely to be higher by the end of the year, reports MarketWatch.

Nationally, average advertised one bedroom rents have already gone up by 4.1% between March 2011 and March 2012, according to Apartments.com. The cities showing the most aggressive hikes in rent include   Chicago where one bedrooms are, on average, priced at $1,451 in 2012, up 11% from $1,302 in 2011. In Denver, rents are $1,067 this year, up 12% from $950 last year and in Charlotte, rents are $876 this year, up 13% from $774 last year.

Bottom line: If you are in the market for a rental and the price looks reasonable, grab it immediately, before someone else does and you end up paying more for a place.

I can recall many years ago a landlord was showing office space to me and another potential tenant. The first space he showed was just what I was looking for and appeared priced under the market. I shouted out immediately, "I'll take it." The other prospect ended up taking other office space in the building, but I got the prime location.

When rents are rising and you see exactly what you want at what appears to be an under market price, don't mess around grab it. Some landlords are quicker than others to adjust to new market conditions. The under market apartments will go quickly, leaving apartments available that are at the new higher rent level.

Or, buy a home while mortgage rates are at an all time low. prices are rising and bidding wars are back on while Phoenix sits at a 1.9 month supply of homes on the market...less than 2005.

Valley Home Prices on the Upswing

Valley home prices on the upswing
With fewer houses for sale, buyer competition mounts

By Catherine Reagor
The Republic

Home prices are climbing in metroPhoenix faster than they have since the housing boom.

Some parts of the region experienced home-value increases of 5 to 10 percent a month this year because of a shortage of homes for sale that is sparking bidding wars between investors and regular buyers armed with pre-approvals for mortgages.

This emerging recovery of homeprices in the Phoenix area started late last year and has been building each month.

Home values still have a long way to go to recover to pre-boom levels. MetroPhoenix’s median existing-home price is currently $124,500, about $20,000 below the area’s median in 2002 and well below the $267,000 from the height of the boom in summer 2006.

But many housing-market analysts see this as the beginning of a long-awaited recovery for the area’s battered housing market. The uptick in prices is enticing more buyers who have been waiting for the market’s bottom to purchase a home and now have likely missed it.