After several months of hovering in the same tight range, Phoenix-area home prices are on the rise again. A new report from the W. P. Carey School of Business at Arizona State University reveals the numbers for Maricopa and Pinal counties, as of October:
After staying between $149,000 and $150,000 for four months in a row, the median single-family home price finally bounced up to $157,000 in October.
The short supply of homes available for sale on the market has gone up 31 percent over the last three months, but will likely level off for the winter.
New-home sales are skyrocketing – up 85 percent from the same time last year.
The median single-family home price reached $157,000 in October, up more than 34 percent from the same time last year. That’s when it was at just $116,800. Realtors will note the average price per square foot has also gone up almost 26 percent since last October. Prices have been rising sharply since September 2011, with the exception of one recent pause.
“After four months of limited movement in the median single-family home price, the Phoenix area is again seeing an upward trend,” says the report’s author, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “The summer lull ended, and we had an influx of snowbirds and other buyers. We’re seeing about 5 percent more sales activity this October than last October.”
Some of the increased activity is thanks to more homes becoming available on the market. As prices go up, more existing homeowners are willing to sell. The overall supply of homes and condos available on the Phoenix-area market went up 31 percent over the past three months. However, Orr suspects the supply peaked in November and will start declining again as winter begins. Even now, it’s a relatively tight supply, especially at the lower-priced end of the market.
“The overall number of active single-family home listings without an existing contract as of Nov. 1 was fewer than 12,500 in the greater Phoenix area,” says Orr. “Also, 76 percent of that supply is priced above $150,000, so ordinary buyers in the lower range still face rough competition from multiple bidders, including investors and others making preferred all-cash offers.”
Almost half of the homes bought for less than $150,000 in October were the result of all-cash deals. Though investor presence is declining somewhat in the Phoenix area, investors were still involved in almost 30 percent of the housing-market transactions.
Fewer cheap properties are flooding onto the market as foreclosure rates go down. Foreclosure starts – homeowners receiving notice their lenders may foreclose in 90 days – were down 41 percent this October from last October. Completed foreclosures were down 15 percent.
The market is starting to shift toward a much greater percentage of normal resales and new-home sales. Normal resales are up 100 percent from last October, and new-home sales are up an impressive 85 percent.
“New single-family home sales had a strong month in October, topping 1,000 for the first time since 2010,” says Orr. “As a result, developers are clamoring for new vacant lots on which to build. Because of competition, developers are being forced to pay higher prices than in the recent past, so we conclude new-home prices will rise substantially over the next year. That will also likely pull normal resale prices higher as long as there’s a shortage of housing inventory.”
Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Full-Report-201211.pdf. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.