Tag Archives: home prices

housing.prices

Phoenix Housing Market Affected by Government Shutdown

The government shutdown may have dampened interest in buying Phoenix-area homes this fall. A new report from the W. P. Carey School of Business at Arizona State University shows the latest data for Maricopa and Pinal counties, as of September:

* The median single-family-home price was up about 33 percent from last September, to $199,000.
* However, demand is waning, and that may be at least partly due to the recent government shutdown creating economic uncertainty.
* Meantime, housing supply continues to rise, with more people willing to put their homes on the market as prices go up.

Phoenix-area home prices have been rising since hitting a low point in September 2011. The median single-family-home price rose 32.7 percent — from $150,000 to $199,000 –from last September to this September. Realtors will note the average price per square foot went up 22 percent. The median townhouse/condo price went up 30 percent, to $117,000. However, the price gains are expected to slow down.

“Since the beginning of July, the Phoenix-area housing market has cooled dramatically,” 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 main change is a steep fall in demand, which we can see in the 12-percent drop in single-family-home sales activity just between August and September alone. Going forward, we anticipate a much slower rate of price appreciation than the furious pace we have witnessed over the last two years.”

Orr says the recent government shutdown may be at least partly to blame for the hard brakes on the housing market.

“The sudden weakness in owner-occupier demand since July is unusual and unexpected,” says Orr. “Poor consumer sentiment and concern over the government shutdown seem to have accelerated the decline. We also have no government information available yet on new-construction permits because of the shutdown.”

On the positive side, the number of available homes for sale continues to rise, after the area experienced a very tight supply for months. Active listings, not including those already under contract, went up 32 percent from Oct. 1 of last year to Oct. 1 of this year. More people appear willing to put their homes up for sale as prices rise.

“If the current trend continues, supply will exceed demand by the end of the year,” says Orr. “We now expect a balanced market to prevail during November. This is great news for buyers since they will experience less competition and be in a strong position to negotiate.”

The luxury market continues to perform well, thanks to the rising stock market and a big increase in the availability of jumbo loans. Sales of $500,000-plus, single-family homes grew an incredible 51 percent from September 2012 to September 2013.

However, cheap homes are tough to find, with fewer foreclosures coming onto the market. Foreclosure starts – owners receiving notice their lenders may foreclose in 90 days – dropped 61 percent from last September to this September. Completed foreclosures declined 63 percent. Orr expects foreclosures to keep falling over the next several years, thanks to tight underwriting standards.

Institutional investors and out-of-state buyers continue to lose interest in the Phoenix area, since better bargains can now be found elsewhere. The percentage of homes and condos bought by investors in September was down to 22.7 percent, from the peak of 39.7 percent in July 2012. Also, the percentage of Maricopa County residences sold to owners from outside Arizona was only 16.4 percent, the lowest percentage since January 2009.

Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed and downloaded at www.wpcarey.asu.edu/realtyreports. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

housing.prices

No Housing Bubble for the Phoenix Area?

Despite dramatic home-price boosts, don’t expect another housing bubble anytime soon in the Phoenix area. A new report from the W. P. Carey School of Business at Arizona State University breaks down what’s happening in the Maricopa and Pinal County housing market, as of April:

* The median single-family home price climbed again to $181,399, up almost 30 percent from April of last year.
* The report’s author sees no housing bubble on the way, with a very tight supply of available homes for sale.
* He also sees no significant negative effect yet from rising interest rates on local housing demand.

Phoenix-area home prices have been soaring since they reached a low point in September 2011. The median single-family home price rose 29.6 percent — from $140,000 to $181,399 — between April 2012 and April 2013. Realtors will note the average price per square foot went up 23.5 percent. The median townhouse/condo price went up 34.6 percent.

“In previous reports, we predicted prices would rise significantly during the strong annual buying season that lasts until June,” 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. “From February through April, the average price per square foot did rise more than 9 percent for single-family homes, but the upward pricing pressure may finally ease somewhat this month.”

One big reason for the price gains has been the chronic shortage of available homes for sale in the Phoenix area. The number of active single-family-home listings (not including those already under contract) fell 7.3 percent just from April 1 to May 1. Only 24 days of lower-end supply (priced under $150,000) is out there. However, the frequent drops in supply have at least slowed down enough to let the market accumulate 20 percent more listings than it had at the same time last year.

Investor interest in Phoenix has also waned as prices went up and better bargains were still available in other areas of the country. Orr says the institutional-investor buying spree here began in 2011, peaked in summer 2012, and is now in a downward trend. The percentage of homes purchased by both small and institutional investors in Maricopa and Pinal counties in April was 26.8 percent, down all the way from 39.7 percent in July 2012, and most of these purchases were actually made by small-scale investors.

Many of the investor-purchased homes have already been turned into rentals for people who lost their houses during the recession. Some commentators have been saying there might be another housing bubble when investors decide to sell these homes, but Orr strongly disagrees.

“Some commentators talk ominously of a bubble bursting when these homes come back onto the market,” he says. “Such talk gets a lot of attention because we are over-sensitized to bubble talk after the disruptive events of 2004 to 2006. However, this idea falls flat when we examine the actual number of homes involved. The entire institutional inventory of 10,000 to 11,000 rental homes here represents a tiny fraction, less than 1 percent, of our housing stock. If every single one were to be placed for sale next month, we would still have less supply than in a normal balanced market.”

Demand from investors is already being replaced by demand from owner-occupiers and second-home buyers. Most homes priced below $600,000 continue to attract multiple offers within a short time. The luxury market is also gaining some steam. Single-family-home sales activity overall went up 4 percent from April 2012 to this April, beginning to reverse a long downward trend in year-over-year activity.

“There has been much talk of the negative effect that rising interest rates might have on demand,” says Orr. “So far, the increases have been minor, and the main effect has been to reduce the motivation to refinance existing home loans. At the same time, higher interest rates often create a greater sense of urgency among home buyers, so if lenders simultaneously relax their underwriting rules, this could stimulate demand, rather than reduce it.”

The market also continues to recover from the foreclosure crisis. The number of completed foreclosures on homes and condos in April of this year was down 46 percent from April last year. Foreclosure starts – homeowners receiving notice their lenders may foreclose in 90 days – dropped 60 percent. Orr expects the rates to fall below long-term averages soon.

With fewer foreclosures coming on the market, some buyers have turned to new-home builders. However, Orr says the construction industry is still building far fewer homes than needed to keep up with rising population and demand in the area. This is partly because the prices of land, materials and construction labor are all rising as subcontractors struggle to attract more workers. He says the developers are also being very cautious in their expansion. They enjoy the fact that limited supply allows them to continue increasing prices faster than their costs and don’t want to disturb this trend by overbuilding.

“Given the balance between supply and population growth in Phoenix, home prices are unlikely to fall below today’s level and are more likely to continue to climb for a long time, though at a more gentle pace.”

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-201305.pdf. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

housing.prices

Phoenix leads nation in home price increase

U.S. home prices jumped 10.9 percent in March compared with a year ago, the most since April 2006. A growing number of buyers are bidding on a tight supply of homes, driving prices higher and helping the housing market recover.

The Standard & Poor’s/Case-Shiller home price index released Tuesday also showed that all 20 cities measured by the report posted year-over-year gains for the third straight month.

And prices rose in 15 cities in March from February. That’s up from only 11 in the previous month. The monthly figures aren’t seasonally adjusted and may reflect the beginning of the spring buying season.

Prices rose in Phoenix by 22.5 percent over the past 12 months, the biggest gain among cities. It was followed by San Francisco (22.2 percent) and Las Vegas (20.6 percent).

New York City had the smallest year-over-year increase at 2.6 percent, followed by Cleveland at 4.8 percent.

“Rising home prices may begin to alleviate a lack of housing inventory … by encouraging more homeowners to put their properties on the market,” said Maninder Sibia, an economist with Economic Advisory Service, in a note to clients. “The housing market is clearly improving.”

The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The March figures are the latest available.

The U.S. housing market is steadily recovering, buoyed by solid job gains and near-record low mortgage rates. Sales of new homes rose in April to nearly a five-year high. And sales of previously occupied homes ticked up in April to the highest level in three and a half years.

Despite the gains, a limited number of homeowners are putting their houses on the market. That’s helped lift home prices. And it’s made builders more willing to ramp up construction. Applications for building permits rose in April to the highest level in nearly five years.

Arizona Is Losing Economic Grounds To Other Southwestern States, 2008

Rebound for Arizona and U.S. Slows Down

Jobs, home prices and population growth are all slowly rebounding in Arizona. However, experts from the W. P. Carey School of Business at Arizona State University say we still have a long way to go, and the automatic federal budget cuts known as the sequester aren’t helping our momentum. The experts delivered their forecasts today at the annual Economic Outlook Luncheon sponsored by the Economic Club of Phoenix.

Research Professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School, confirmed Arizona is once again a Top 15 growth state for both employment and population, but we’re not back to normal levels. From 1960 to 2007, we routinely ranked among the Top 5 states for both employment and population growth. In the rough years from 2008 to 2011, we dropped down to No. 48 and No. 14 in those areas.

“Last year, we finally bounced back to No. 8 for employment growth and No. 7 for population growth,” said McPheters. “However, the sequester and other factors have been clouding the economy here in recent months, and the year-over-year job-growth ranking issued this March dropped Arizona down to No. 13. The state will have to wait a couple more years for full recovery.”

Arizona added 48,900 jobs in 2012. The state is projected to add 61,000 jobs this year. The fastest-growing industries are construction, wholesale trade, information, state government and leisure/hospitality.

“Arizona has gained back 39 percent of the 314,000 jobs we lost in the recession,” explained McPheters. “However, that’s a pace well behind the nation as a whole, which has regained 67 percent of its 8.8 million lost jobs.”

In recent years, population growth in Arizona had dropped from the state’s typical 2- to 3-percent range to less than 1 percent. Finally last year we popped back up to 1.3 percent.

Personal income may also be coming back. The consensus of Arizona Blue Chip economists shows growth in this area of 3.7 percent in 2012, 5.1 percent expected in 2013, and 6 percent expected in 2014.

“The bottom line is that Arizona is doing better than most states, but this will still be the seventh year in a row of lean, subpar growth for us,” said McPheters.

Dennis Hoffman, economics professor and director of the L. William Seidman Research Institute at the W. P. Carey School of Business, reiterated that Arizona is recovering more slowly from this recession than from others in the past. However, we are coming back stronger than the nation as a whole in most areas of the economy. Hoffman expects the United States to see 2- to 3-percent gross-domestic-product (GDP) growth this year. That will likely include more moderate job growth and low inflation.

“The economy is plodding along, assisted by the real-estate and stock-market recoveries, low fuel prices and innovation in the business world,” said Hoffman. “Still, we face a lot of uncertainty from our national-debt crisis, political squabbling in Washington, economic difficulties in Europe and China, and changing demographics. One huge issue remains the problem of future funding for Social Security and Medicare.”

At the state level, Hoffman says we’re going to be strongly affected by the decisions still to be made this year on possible Medicaid expansion, the loss of the temporary sales tax, the potential taxing of online sales, and other big issues. For now, state revenue has been coming back with the rebounding economy.

When it comes to the housing market, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business, delivered good news about the recovery. Specifically, the median Phoenix-area home price was up a whopping 58 percent from a low of $111,000 in May 2011 to $175,000 this March. Foreclosures were down 60 percent just over the last year from March 2012 to March 2013, and Orr expects foreclosure rates to dip below long-term averages by the end of next year. Also, less than 5 percent of Arizona home loans (not already in foreclosure) are delinquent now.

However, we do face some problems in the housing market. For one thing, there’s a chronic shortage of homes for sale. Now that there’s no flood of cheap foreclosures and short sales coming onto the market, buyers are dependent mostly on normal resales and new-home sales.

“Higher prices would normally bring more ordinary home sellers into the market, but many are either locked into their homes because of negative equity, or they’re simply waiting for prices to go up more,” explained Orr. “As a result, some buyers are turning to new-home sales, but developers are reluctant to overbuild as much as they did at the market peak. Therefore, we may see about 50,000 to 60,000 new people being added to our local population this year, but only around 12,000 new single-family homes being built.”

Today’s Economic Outlook Luncheon was held at the JW Marriott Desert Ridge Resort & Spa in Phoenix. The Economic Club of Phoenix hosts this event every spring, as one of its opportunities for Valley business leaders and others to network and engage. The club was founded by a group of prominent business executives called the Dean’s Council of 100, in conjunction with the W. P. Carey School of Business. More information about the club can be found at www.wpcarey.asu.edu/ecp.

Today’s presentations will be posted at knowWPCarey, the business school’s online resource, at http://knowwpcarey.com.

home.prices

Phoenix-area Housing Prices Keep Soaring

Home prices continue their upward climb in the Phoenix area, with more momentum expected until at least June. A new report from the W. P. Carey School of Business at Arizona State University reveals the latest information about the Maricopa and Pinal County housing market, as of March:

The median single-family home price was all the way up to $175,000, about a 30-percent increase from March of last year.
The supply of homes for sale continued to fall, but the problem is not so much the high demand, but more the lack of sellers getting into the market.
Rebounding population growth in the Phoenix area is also blasting past the rate at which builders are constructing new homes.

Phoenix-area home prices reached a low in September 2011 and have largely shot up since then. The median single-family home price went up 29.7 percent – from $134,900 to $175,000 – in the year from March 2012 to March 2013. Realtors will note the average price per square foot went up 23.6 percent during the same time. The median townhouse/condo price increased 43.2 percent – from $81,000 to $116,000. A big reason for all this upward movement is the scarcity of affordable homes for sale.

“The number of active single-family listings has been dropping fast and went down another 4 percent from March 1 to April 1,” 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. “Fewer than 12,000 single-family homes were up for sale (without an existing contract) on April 1, and 80 percent of those were priced above $150,000, making it very tough to find properties in the lower price range.”

Orr adds it’s actually not high demand that’s the major culprit here.

“The low number of sellers is what’s unusual, not the number of buyers, which is only slightly above normal,” he says. “Higher prices would normally encourage more ordinary home sellers into the market, but many are either locked into their homes because of negative equity, or they’re simply waiting for prices to go up more.”

Orr says most homes priced below $600,000 continue to attract multiple offers, and March is the peak of the buying season that lasts from January to June. However, due to the chronic supply shortage, the amount of single-family home sales actually went down 8 percent from March 2012 to March 2013.

Investors are also starting to lose some interest in the Phoenix area, since bigger bargains can be found in other areas of the country that haven’t rebounded as fast. The percentage of residential properties bought by investors dropped from 29.2 percent in February to 27.1 percent in March, the lowest percentage in several years. The market is now seeing increased demand from owner-occupiers and second-home buyers, instead.

Completed foreclosures were down an incredible 60 percent from March 2012 to March 2013. Foreclosure starts – homeowners receiving notice their lenders may foreclose in 90 days – dropped 53 percent. Orr believes we’ll see foreclosure-notice rates “below long-term averages” by the end of next year.

Meantime, new-home sales are also going up, in tandem with resale prices. In Maricopa County alone, new-home sales increased 37 percent from March 2012 to March 2013. However, new-home construction isn’t keeping pace with the Phoenix area’s rebounding post-recession population growth. The U.S. Census reports 1,220 single-family-home construction permits were issued in March, a very small number by historic standards. For example, the total in March 1996 was 3,071, and the total in March 2004 was 5,490.

“The population is growing much faster than the housing supply, with an expected 50,000 to 60,000 people being added to the Phoenix-area population this year, but only around 12,000 new single-family homes being built,” Orr explains. “Builders are scratching their heads, trying to figure out what to do. They don’t want to overbuild like they did during the peak, and they don’t want to build a bunch of new homes for people who can’t secure the mortgages needed to buy them with such tight lending conditions.”

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-201304.pdf. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

homes

Prices Up, Foreclosures Down, Investors Losing Interest

Phoenix-area home prices are back on their way up again, after a short drop in January. The latest housing report from the W. P. Carey School of Business at Arizona State University shows soaring prices, dropping foreclosures and waning interest from investors looking at Maricopa and Pinal counties, as of February.

* The median single-family home price shot up more than 4 percent in just one month — January to February.
* The median single-family home price went up 36.5 percent from February 2012 to February 2013.
* Foreclosures have resumed their downward trend, after a brief post-holiday bump, and they are likely to fall below the “normal,” long-term level by the end of next year.

Phoenix-area home prices have risen sharply since hitting a low point in September 2011. The median single-family home price went up 4.3 percent from January to February. It went up 36.5 percent – $124,500 to $170,000 – from last February to this February. Realtors will note the average price per square foot rose 30.9 percent year-over-year. The median townhouse/condo price increased 39.4 percent – from $77,500 to $108,000.

“These substantial increases were predicted in our last report and are almost certain to continue in March,” 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 at Arizona State University. “Pricing typically strengthens during the peak buying season from February to June each year.”

Orr adds the market is still dealing with a chronic shortage of homes available for sale. The number of active single-family-home listings (without an existing contract) in the greater Phoenix area fell about 5 percent just from February 1 to March 1. Also, 79 percent of the available supply is priced above $150,000, creating a real problem in the lower range.

“The shortage continues to get more severe among the most affordable housing sectors,” says Orr. “Overall, ‘distressed,’ bargain supply is down 32 percent from last February, since we’re seeing fewer foreclosures and short sales. First-time home buyers face tough competition from investors and other bidders for the relatively small number of properties available in their target price range.”

Thanks to the tight inventory, the amount of single-family-home sales activity was down 10 percent this February from last February. Things don’t appear to be getting better.

“Higher prices would normally encourage more ordinary home sellers to enter the market, but it seems many potential sellers are either locked in by negative equity and/or staying on the sidelines, waiting for prices to rise further,” explains Orr. “At some point, we will reach a pricing level where resale supply will free up, but we are not there yet.”

While high-end, luxury-home resales are picking up some steam, many frustrated home buyers in the lower price range have been turning to new-home construction. As a result, new-home sales were up an incredible 67 percent from last February to this February. New-home sales have almost doubled their market share from 6 percent to 11 percent over the last 12 months. Still, Orr says new-home sales have a long way to go to recover their normal percentage of the market.

He adds, “New homes are not being built in sufficient quantity to match the population growth in the Phoenix area. The construction industry remembers overbuilding from 2003 to 2007, contributing to the disaster in 2008 that resulted in layoffs and bankruptcies for some developers. For now, it looks like they will probably build fewer than half the homes needed to keep pace with current population trends.”

Investor interest also continues to wane in the Phoenix area. The percentage of homes bought by investors from 2011 to mid-2012 was way up, but it declined in Maricopa County from 37 percent last February to 29.7 percent this February. Many investors are looking at other areas of the nation where prices haven’t recovered as much and more bargains are available. Orr labels it a “significant down trend” here.

Foreclosures and foreclosure starts (homeowners receiving notice their lenders may foreclose in 90 days) are both back on a downward trend, too, after a short post-holiday bump. Completed foreclosures on single-family homes and townhome/condos fell 25 percent from January to February alone. They were down 52 percent from last February. Foreclosure starts were down 61 percent from last February. Orr predicts foreclosure-notice rates may be down to “below long-term averages” by the end of 2014. Meantime, the lack of cheap foreclosed homes continues to help push prices up.

“The significant annual price increase over the last 12 months has now spread to all areas of greater Phoenix,” says Orr.

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-201303.pdf. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

housing.prices

Bankers: Don’t try to time the market

Timing is everything.

But when it comes to buying a house, Valley banking leaders says it’s best not to rely too much on timing.

“Potential buyers who are still on the sidelines waiting for housing prices to decline further may see themselves priced out of the market if interest rates rise,” says Carl Streicher, regional sales executive at Bank of America. “Timing the market is risky in that we never really know when the bottom has hit until it has passed us by. Also, buyers should be sure they are ready financially and personally to own a home before they purchase, so timing the market shouldn’t be the sole driver of a home purchase.”

According to Streicher, home affordability is at an all-time high, interest rates are at historic lows and home values are increasing. According to a Case-Shiller report released in December, Phoenix home prices have increased nearly 22 percent, leading the nation and indicating that the real estate market is on the rebound.

“Interest rates are starting to rise and home prices are rising due to greater demand, a relatively low supply of homes for sale and foreclosure sales falling,” says Kevin Sellers, executive vice president with First Fidelity Bank in Arizona. “So, if you’re able to take advantage of the lower current market with still affordable homes and historically low mortgage rates, chances are you’ll be making a good investment.”

Valley bankers are warning potential buyers that if they are waiting for home prices to “hit bottom,” they may miss the chance to be a homeowner altogether; prices may rise before we realize they were at their lowest point; or a rise in interest rate could potentially price buyers (particularly first-time buyers) out of the market.

“Trying to time the market when it comes to the purchase of a home is very difficult in any environment considering the complex market dynamics,” says Robert Winter, Arizona manager of mortgage lending for Mutual of Omaha Bank. “For example, if you try to time the market when it comes to home pricing, you risk missing a low interest rate environment. If you try to time the market when it comes to interest rates, you risk purchasing something you don’t necessarily like and possibly paying more than necessary. This doesn’t even take into consideration the fact that not all transactions close successfully, potentially leading to a loss of the time invested.”

While the real estate market and lending are starting to find their new normal, it depends on where you’re positioned as to whether we are currently experiencing a buyer’s market or seller’s market, Winter says.

“The market advantage differs depending on the price point,” Winter says. “In general, the market favors sellers. However, the advantage shifts to buyers when it comes to higher priced homes.”

If you are in a position to take advantage of the favorable climate in the real estate market, Streicher says to ask yourself a few questions before getting started in the home buying process:
• Are you ready to settle in one location for a while?
• What is the total cost of home ownership?
• Is your job stable?

“Buyers should also research their target neighborhood to establish a baseline for local selling prices and the amount of time properties in their target area stay on the market,” he says. “For those considering an upgrade to a larger home, there are still good options available to purchase higher-end properties using jumbo loans. Bank of America continues its jumbo financing, and offers competitive rates, when many other lenders were forced to discontinue these loans due to a lack of a secondary market.”

While bankers say it’s not wise to try to time the market, they agree that working with a mortgage professional and real estate professional to help meet your real estate goals and objectives is a sure-fire formula for success.

Affordability is great,” says Tim Disbrow, senior vice president, Wells Fargo Home Mortgage. “Rates are incredibly low. It is a great time to buy as long as it meets your financial needs.”

housing.prices

Bankers: Don't try to time the market

Timing is everything.

But when it comes to buying a house, Valley banking leaders says it’s best not to rely too much on timing.

“Potential buyers who are still on the sidelines waiting for housing prices to decline further may see themselves priced out of the market if interest rates rise,” says Carl Streicher, regional sales executive at Bank of America. “Timing the market is risky in that we never really know when the bottom has hit until it has passed us by. Also, buyers should be sure they are ready financially and personally to own a home before they purchase, so timing the market shouldn’t be the sole driver of a home purchase.”

According to Streicher, home affordability is at an all-time high, interest rates are at historic lows and home values are increasing. According to a Case-Shiller report released in December, Phoenix home prices have increased nearly 22 percent, leading the nation and indicating that the real estate market is on the rebound.

“Interest rates are starting to rise and home prices are rising due to greater demand, a relatively low supply of homes for sale and foreclosure sales falling,” says Kevin Sellers, executive vice president with First Fidelity Bank in Arizona. “So, if you’re able to take advantage of the lower current market with still affordable homes and historically low mortgage rates, chances are you’ll be making a good investment.”

Valley bankers are warning potential buyers that if they are waiting for home prices to “hit bottom,” they may miss the chance to be a homeowner altogether; prices may rise before we realize they were at their lowest point; or a rise in interest rate could potentially price buyers (particularly first-time buyers) out of the market.

“Trying to time the market when it comes to the purchase of a home is very difficult in any environment considering the complex market dynamics,” says Robert Winter, Arizona manager of mortgage lending for Mutual of Omaha Bank. “For example, if you try to time the market when it comes to home pricing, you risk missing a low interest rate environment. If you try to time the market when it comes to interest rates, you risk purchasing something you don’t necessarily like and possibly paying more than necessary. This doesn’t even take into consideration the fact that not all transactions close successfully, potentially leading to a loss of the time invested.”

While the real estate market and lending are starting to find their new normal, it depends on where you’re positioned as to whether we are currently experiencing a buyer’s market or seller’s market, Winter says.

“The market advantage differs depending on the price point,” Winter says. “In general, the market favors sellers. However, the advantage shifts to buyers when it comes to higher priced homes.”

If you are in a position to take advantage of the favorable climate in the real estate market, Streicher says to ask yourself a few questions before getting started in the home buying process:
• Are you ready to settle in one location for a while?
• What is the total cost of home ownership?
• Is your job stable?

“Buyers should also research their target neighborhood to establish a baseline for local selling prices and the amount of time properties in their target area stay on the market,” he says. “For those considering an upgrade to a larger home, there are still good options available to purchase higher-end properties using jumbo loans. Bank of America continues its jumbo financing, and offers competitive rates, when many other lenders were forced to discontinue these loans due to a lack of a secondary market.”

While bankers say it’s not wise to try to time the market, they agree that working with a mortgage professional and real estate professional to help meet your real estate goals and objectives is a sure-fire formula for success.

Affordability is great,” says Tim Disbrow, senior vice president, Wells Fargo Home Mortgage. “Rates are incredibly low. It is a great time to buy as long as it meets your financial needs.”

housing.prices

Phoenix Area Ready for Even Higher Home Prices

Even though the median Phoenix-area home price shot up by more than a third last year, we can expect area prices to keep soaring in 2013. That’s according to a new housing report from the W. P. Carey School of Business at Arizona State University, which offers the latest numbers for Maricopa and Pinal counties, as of January:

The median single-family home price went up 35.3 percent — from $120,500 to $163,000 – between January 2012 and January 2013.
The very limited supply of homes available for sale in the lower price range is expected to keep pushing prices higher.
Foreclosures went up somewhat in January, but it’s believed to be a normal, post-holiday-season bump that is already reversing.

Home prices have risen dramatically in the Phoenix area since reaching a low point in September 2011. The median single-family home price actually went slightly down between December 2012 and January 2013, but it’s expected to be a tiny blip on the radar. The new report by Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business, says low inventory will keep forcing home prices higher in the Phoenix area this year.

“The recent decline was predicted in our last report and is a seasonal effect,” explains Orr. “Pricing is almost always weaker in January, but February signals the start of peak buying season that lasts until the end of June. Make no mistake – prices are going to rise significantly during this period. There is nowhere else for them to go until a significant new source of active listings enters this supply-constrained market.”

The median single-family home price was already up 35.3 percent – from $120,500 to $163,000 – from January 2012 to this January. Realtors will note the average price per square foot went up 28.5 percent at the same time. The median price of a townhouse/condominium went up a whopping 45 percent – from $70,000 to $101,500.

Sales activity fell 12 percent from January to January, largely because of the lack of inexpensive homes available for sale. At the higher end of the market, sales are up somewhat from last year, but at the low end, multiple bidders face tough competition for few homes. Discounted, “distressed supply” – like homes from foreclosures and short sales — dropped 38 percent from the beginning of February 2012 to the beginning of February 2013. Overall, the number of single-family homes for sale priced under $150,000 (without a signed contract) is only a 43-day supply. Still, this is better than the 18 days of inventory available in June.

“We still have a long-term supply shortage with only about 50 percent of the active listings (without contracts) that we would expect to see in a normal market,” says Orr. “Consequently, the trend is for prices to continue to rise across most sectors. Most homes priced reasonably below $500,000 continue to attract multiple offers in a short time. Sellers are firmly in control.”

Since the number of bargain foreclosed homes and short sales available is generally dropping, many buyers are turning to alternatives like new-home sales, which are up an incredible 61 percent this January from last January. New-home construction permits are up 42 percent from a year ago. Home builders bought up a massive 2,272 lots in December to help meet demand. However, the trend dropped off in January, with only 143 lots changing hands, so Orr says the sales appear to have been timed for tax purposes by sellers concerned about paying higher tax rates in 2013.

Also, investor purchases are declining slowly after peaking in late summer, and Orr anticipates they will decline further as fewer bargains can be found. The percentage of investor purchases in Maricopa County dropped from 39.2 percent in January 2012 to 31.8 percent this January. Orr adds he doesn’t think large investors are driving the market as much as some analysts would have you believe.

“Some commentators have suggested that the presence of large investors is causing the recent price rise,” says Orr. “This vastly exaggerates their effect on our market. Large investors account for only around 8 percent of purchases, and if they disappeared overnight, there still would not be enough homes on the market to satisfy the small investors, second-home buyers and regular owner-occupiers.”

Foreclosures and foreclosure starts (homeowners receiving notice their lenders may foreclose in 90 days) went up a little from December to January. However, this is a normal yearly occurrence, because banks typically pull back on foreclosures during the holiday season. Completed foreclosures on single-family homes and condos were still down 45 percent this January from last January. Foreclosure starts went down 33 percent at the same time.

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-201302.pdf. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

housing.prices

Phoenix-area Home Prices continue to Rise

More ordinary buyers are finally getting into the Phoenix-area housing market as home prices continue to rise and investors find fewer bargains to snap up. That’s according to a new report from the W. P. Carey School of Business at Arizona State University, which reveals the numbers for Maricopa and Pinal counties, as of November:

> The median single-family home price continued to rise, jumping from $157,000 in October to $162,500 in November.
> The tight housing supply grew 31 percent between September and December, but another drop may be coming in the spring.
> All-cash offers are finally on a downward trend, signaling that investor interest may be waning a bit and more ordinary buyers are able to successfully compete for homes.

Phoenix-area home prices reached a low point in September 2011, followed by a sharp rise that’s expected to continue into 2013. The median single-family home price in November was up to $162,500 from just $120,000 last November — a 35.4-percent increase. Realtors will note the average price per square foot rose 27.4 percent year-over-year. The townhouse/condo median price is up almost 43 percent, from $70,000 to $100,000.

However, according to the report’s author, Mike Orr, the market is unbalanced, with not enough homes available for the many buyers, especially at the lower end. The number of homes for sale, but not under contract, was down 7 percent year-over-year at the start of December. Specifically, the amount of bargains or “distressed supply” was down a whopping 43 percent from last year. Things started to improve this fall, with total supply up 31 percent from September to December, but Orr doesn’t see more good news coming.

“We don’t see a strong flow of new listings coming onto the market,” says Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “For example, short-sale listings are down about 70 percent compared to this same time last year. As the market improves, it seems many people may have decided to hang onto their homes in an effort to let values keep going up. I also anticipate another possible drop in supply this spring. Unless new-home builders can start keeping up with rising demand, we may have a chronic supply problem.”

Ordinary buyers, who usually need financing, still face multiple bids and tough competition from investors offering sellers preferred all-cash deals. In fact, almost half (48.4 percent) of the single-family-home sales under $150,000 in November were all-cash purchases. However, the percentage of homes bought by investors declined from 35.5 percent in August to 27.5 percent in November. Orr says investor activity peaked around August and is on a long-term downward trend. With the possible exception of a brief, normal holiday spike in December/January, he expects a continued drop in investor activity.

“As prices go up each month, price-sensitive buyers, such as investors, get a little less enthusiastic,” explains Orr. “Bargain hunters haven’t got much left to pick over, which is allowing more normal buyers to jump into the market before prices rise past what they can afford.”

Foreclosures are down in the market. Completed foreclosures on single-family and condo homes dropped 34 percent from November 2011 to November 2012. Foreclosure starts – homeowners receiving notice their lenders may foreclose in 90 days – went down 48 percent.

Sales activity stayed relatively level, dipping just 1 percent from November to November. The most expensive types of sales, new-home sales and regular resales, are up 32 percent and 84 percent. All types of discount sales, such as short sales and bank-owned-home sales, are down.

Almost every area of the Valley has seen prices explode over the past year, led by Pinal County, including Eloy, Arizona City and Maricopa.

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-201212.pdf. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

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Phoenix leads all cities in housing price gains

US home prices rose in most major cities in October compared with a year ago, pushed up by rising sales and a decline in the supply of available homes. Higher prices show the housing market is improving even as it moves into the more dormant fall and winter sales period.

The Standard & Poor’s/Case-Shiller national home price index released Wednesday increased 4.3 percent in October compared with a year ago. That’s the largest year-over-year increase in two and a half years, when a homebuyer tax credit temporarily boosted sales.

Prices rose in October from a year ago in 18 of 20 cities. Phoenix led all cities with a 21.7 percent gain, followed Detroit, where prices increased 10 percent. Prices declined in Chicago and New York.

Home prices fell in 12 of 20 cities in October compared with September. Monthly prices are not seasonally adjusted, so the decreases reflect the end of the peak buying season.

Still, the broader trend is encouraging. October marked the fifth straight month of year-over-year gains, after nearly two years of declines. Prices rose in mid-2010 in the final months before the tax credit expired. They had fallen sharply in 2008 and 2009.

“It is clear that the housing recovery is gaining strength,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indexes.

The improvement in housing is adding to economic growth and most analysts expect that to continue in 2013.

But automatic tax increases and spending cuts that are set to take effect next week could drag down growth. The White House and Congress have so far failed to reach agreement on a way to avoid the “fiscal cliff.” President Barack Obama and congressional lawmakers will return to Washington on Thursday to resume talks.

“We expect home price appreciation to continue for the foreseeable future, because inventories are lean amid rising sales,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. “This assumes that a resolution to the ‘fiscal cliff’ is found … otherwise, the recent positive trend in housing would most certainly be in jeopardy along with the rest of the current economic expansion.”

Prices nationwide have recovered to about the same level as in the fall of 2003, according to the Case-Shiller index. They remain about 30 percent below the peak reached in the summer of 2006.

The S&P/Case-Shiller index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The October figures are the latest available.

Solid gains in home prices have helped drive a modest recovery in the housing market. Rising prices encourage more potential buyers to come off the sidelines and purchase homes. And more people may put their homes on the market as they gain confidence that they can sell at a good price.

Higher home prices can also make homeowners feel wealthier and more likely to spend more. Consumer spending accounts for about 70 percent of the U.S. economy.

Steady job gains and record-low mortgage rates have also helped propel the housing recovery. And the low supply of houses for sale is encouraging builders to start work on more homes. That should lead to more construction jobs.

The pace of home construction slipped in November but was still nearly 22 percent higher than a year earlier. Builders are on track this year to start work on the most homes in four years.

Builder confidence rose in December for a seventh straight month to the highest level in more than 6½ years, according to a survey released last week by the National Association of Home Builders/Wells Fargo.

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Arizona home prices jump 21.3%

A measure of U.S. home prices rose 6.3 percent in October compared with a year ago, the largest yearly gain since July 2006. The jump adds to signs of a comeback in the once-battered housing market.

Core Logic also said Tuesday that prices declined 0.2 percent in October from September, the second drop after six straight monthly increases. The monthly figures are not seasonally adjusted. The real estate data provider says the decline reflects the end of the summer home-buying season.

Steady price increases are helping fuel a housing recovery. They encourage more homeowners to sell their homes. And they entice would-be buyers to purchase homes before prices rise further.

Home values are rising in more states and cities, according to the report. Prices increased in 45 states in October, up from 43 the previous month. The biggest increases were in Arizona, where prices rose 21.3 percent, and in Hawaii, where they were up 13.2 percent.

The five states where prices declined were: Illinois, Delaware, Rhode Island, New Jersey, and Alabama.

In 100 large metro areas, only 17 reported price declines. That’s an improvement September, when 21 reported declines.

Mortgage rates are near record lows, while rents in many cities are rising. That makes home buying more affordable, pushing up demand.

And more people are looking to buy or rent a home after living with relatives or friends during and immediately after the Great Recession.

At the same time, the number of available homes is at the lowest level in 10 years, according to the National Association of Realtors. The combination of low inventory and rising demand pushes up prices.

Last week, an index measuring the number of Americans who signed contracts to buy homes in October jumped to the highest level in almost six years. That suggests sales of previously occupied homes will rise in the coming months.

Builders, meanwhile, are more optimistic that the recovery will endure. A measure of their confidence rose to the highest level in six and a half years last month. And builders broke ground on new homes and apartments at the fastest pace in more than four years in October.

housing.prices

Phoenix-area Home Prices Rising Again

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.

housing.prices

Phoenix home prices jump 20.4%

Home prices increased in September in most major U.S. cities, more evidence of a housing recovery that is providing a lift to the fragile economy.

Standard & Poor’s/Case-Shiller reported Tuesday that its 20-city index of home prices rose 3 percent in September compared with the same month last year. Prices also gained 3.6 percent in the July-September quarter compared with the same quarter in 2011.

Across the nation, prices increased in 18 of 20 cities over the 12-month period. In Phoenix, prices jumped 20.4 percent over that stretch to lead all cities. Prices in Atlanta showed a modest 0.1 percent increase, ending 26 straight consecutive year-over-year declines.

Prices also rose in September from August in 13 cities. Five metro regions posted declines, while two were unchanged.

In Las Vegas, one of the hardest hit during the housing crisis, prices increased 1.4 percent — the biggest month-over-month gain. Prices rose 1.1 percent in Phoenix and Minneapolis. The largest decline was in Cleveland, where prices fell 0.9 percent.

Monthly prices are not seasonally adjusted, so some of the declines may signal the end of the summer buying period.

David M. Blitzer, chairman of the Case-Shiller index, said that when adjusting for seasonal factors, only one city showed a decline in September versus two in August. “Despite the seasons, housing continues to improve,” Blitzer said.

The S&P/Case-Shiller index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The September figures are the latest available.

Steady increases in home prices have helped drive a modest recovery in the housing market. Rising prices encourage more potential buyers to come off the sidelines and purchase homes. And more people may put their homes on the market as they gain confidence that they can sell at a good price.

Higher home prices can also make homeowners feel wealthier and more likely to spend more. Consumer spending accounts for about 70 percent of the U.S. economy.

A big reason for the rebound is that the excess supply of homes that built up before the housing crisis has finally thinned out. The number of previously occupied homes available for sale has fallen to a 10-year low. The inventory of new homes is also near the lowest level since 1963.

At the same time, more people are looking to buy or rent a home after living with relatives or friends during and immediately after the Great Recession.

Those trends are also pushing up home sales and construction. Sales of previously occupied homes are near five-year highs, excluding temporary spikes in 2009 and 2010 when a homebuyer tax credit boosted purchases.

Builders, meanwhile, are more optimistic that the recovery will endure. A measure of their confidence rose to the highest level in six and a half years this month. And builders broke ground on new homes and apartments at the fastest pace in more than four years last month.

housing.prices

Phoenix-area Home Prices Stable

Phoenix-area home prices stabilized from August to September, but we’re now seeing some other types of movement in the market. A new report from the W. P. Carey School of Business at Arizona State University shows the following numbers for Maricopa and Pinal counties, as of September:

The median single-family home price stayed at $150,000 from August to September, but prices are expected to start rising again this fall.
The overall supply of houses for sale in the market is finally going up – already 24 percent over just the past three months.
Big investors are showing less interest in the market, as the bargains here become tougher to find and some other cities’ housing markets become more attractive.

Though the median single-family home price in the Phoenix area remained at $150,000 from August to September, it is still up more than 27 percent from last year. The median last September was at a low of just $118,000, but it has risen sharply since then. Realtors will note the average price per square foot went up 23.3 percent just from last September to this September, and the report’s author, Mike Orr, expects the upward price movement to continue this fall.

“Prices are firming here as we enter the season when snowbirds return to the Valley,” says Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “Now that cooler weather has returned and the normal summer lull is over, prices are resuming their advance with greater speed, though on weaker sales volumes.”

The amount of sales activity has been down, with many homeowners reluctant to sell at low prices. Specifically, single-family home sales were down more than 12 percent this September from last September. However, the situation may change as prices rise, attracting more sellers. Over the last three months, housing supply has already gone up 24 percent.

“Though supply was still down 15 percent from last September, it increased 9 percent just from this August to this September,” explains Orr. “We’re now in a strong growing trend. For example, the number of homes for sale under $150,000 with no existing contract is up to 35 days’ worth, from just 15 days’ worth in May.”

In spite of this, the lower price range remains very unbalanced, with more buyers than sellers. Ordinary home buyers who need financing face tough competition in the form of both multiple bids and investors’ all-cash offers, which are typically more attractive to sellers. At the lower end of the spectrum — homes priced under $150,000 – 50 percent of the transactions are still all-cash. However, the frenzy of investors in the market is beginning to slow, moving on a downward trend.

“The percentage of homes acquired by investors rose significantly between 2011 and 2012, but declined from August to September of this year,” says Orr. “Investor purchases are down from the peak in July and August and will probably decline further.”

Orr also has some news for those who worry about another bursting bubble in the market.

“This market is relatively well behaved,” he says. “Investors are risking their own money, rather than borrowed funds, so risk is being more carefully managed than in the previous boom. Also, ordinary homebuyers drawn into the market now are less likely to regret their actions than those who did so in 2005 and 2006.”

Meantime, foreclosures continue their downward trend in the Phoenix market. Foreclosure starts – homeowners receiving notice their lenders may foreclose in 90 days – went down 18 percent from August to September. Completed foreclosures dropped 31 percent at the same time. Short sales are also becoming less common.

“Lenders are aware of how much prices have increased for the post-foreclosure homes they have sold recently, so they have been requiring higher prices for short sales before they will agree to them,” says Orr.

The most expensive types of transactions — new-home sales and normal resales – are on the rise. In fact, the number of normal single-family home resales jumped 76 percent from last September to this September. At the same time, the number of investor flips, short sales, and sales of bank- and government-owned homes are all falling, and bargains become tougher to find. Orr says the gap between the pricing of “distressed” and “non-distressed” properties has been closing.

Most areas of the Valley are showing double-digit percentage increases in price year over year. However, those with mostly expensive homes or active adult communities are showing only relatively modest annual gains.

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/FullReport201210.pdf. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

housing.prices

Phoenix home prices jump 18.8% in year

Home prices rose in August in nearly all U.S. cities, and many of the markets hit hardest during the crisis are starting to show sustained gains. The increases are the latest evidence of a steady housing recovery.

The Standard & Poor’s/Case Shiller index reported Tuesday that national home prices increased 2 percent in August compared with the same month a year ago. That’s the third straight increase and a faster pace than in July.

The report also said that prices rose in August from July in 19 of the 20 cities tracked by the index. Prices had risen in all 20 cities in the previous three months.

Cities that had suffered some of the worst price declines during the housing crisis are starting to come back. Prices in Las Vegas rose 0.9 percent, the first year-over-year gain since January 2007. Prices in Phoenix are 18.8 percent higher in August than a year ago. Home values in Tampa and Miami have also posted solid increases over the period.

Seattle was the only city to report a monthly decline. Still, prices there fell just 0.1 percent in August from July and are 3.4 percent higher than a year ago.

Prices in Atlanta have fallen 6.1 percent over the 12 months that ended in August, the largest year-over-year decline. But Atlanta has posted the largest price gain among the 20 cities over the past three months, according to Trulia, a housing data analysis firm.

“The sustained good news in home prices over the past five months makes us optimistic for continued recovery in the housing market,” David Blitzer, chairman of the Case-Shiller index, said.

The steady increase in prices, along with the lowest mortgage rates in decades, has helped many home markets slowly rebound nearly six years after the housing bubble burst.

Rising home prices encourage more people to put their homes on the market. They may also entice would-be buyers to purchase homes before prices rise further.

The S&P/Case-Shiller index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The August figures are the latest available.

The figures aren’t seasonally adjusted, so some of the gains in August reflect the benefit of the summer buying season.

Stan Humphries, chief economist at the housing website Zillow, expects the monthly price figures will decline in the fall and winter.

“This doesn’t mean the housing recovery has been derailed,” he said. “This is exactly what bouncing along bottom looks like.”

Other recent reports show that the housing market is improving, albeit from depressed levels.

Home builders started construction on new homes and apartments at the fastest pace in more than four years last month. They also requested the most building permits in four years, a sign that many are confident that home sales gains will continue. Home building is still far below the pace that economists say is consistent with a healthy housing market.

New home sales jumped last month to the highest annual pace in the past two and a half years.

Sales of previously-occupied homes dipped in September but have risen steadily in the past year.

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Phoenix-area Home Prices, Supply Slowly Inching Up

Both Phoenix-area home prices and the number of homes available for sale are slowly inching up. 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 August:

> The median single-family home price went up from $149,000 in July to $150,000 in August — about 1 percent.
> The median price is up by more than one-third (about 34 percent) from last August.
Supply of available homes for sale finally went slightly up in most areas of the Valley, but overall, low supply continues to limit market activity.

“Overall prices reached a low point in September 2011 and have risen sharply since then,” 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. “We’re experiencing a normal summer slowdown, and I expect prices to continue their advance as we move into cooler months.”

The median single-family home price in the Phoenix area went up about 0.7 percent, from $149,000 in July to $150,000 in August. The current median is 33.7 percent higher than last August, when it was $112,205. Realtors will also note the average price per square foot is up 24.6 percent from last August.

Sales activity has been relatively slow, due to the traditional summer lull in the market and the limited number of homes for sale in the area. Still, there was a small bump up in available supply.

“Supply increased 3 percent from July to August, but the inventory of homes for sale remains well below the average for the last 10 years,” says Orr. “The number of active single-family homes without an existing contract was just over 10,000 for the greater Phoenix area as of Sept. 1, and 77 percent of those homes were priced above $150,000. That inventory should last only about 27 days. At least it’s up from the low of just 15 days of inventory in May.”

Average buyers have to compete for relatively few homes priced under $250,000. They face multiple bids, including those from investors who can offer all cash and no appraisal required. The situation is moderately improving, though. Orr says, as prices go up, more people are becoming willing to sell their homes. He believes supply recently moved higher in about 80 percent of the Valley, especially the outlying areas.

“August home sales were up 3.6 percent from July,” says Orr. “However, activity was still down 9.2 percent from August of last year. The reduction is primarily due to a huge decline in distressed sales: short sales and sales of homes that recently went through a foreclosure. Also, the number of bank-owned homes sold in August was down a huge 78 percent from last August.”

Foreclosure starts – homeowners receiving notice their lenders may foreclose in 90 days – went down 2.5 percent from July to August. Foreclosure starts are down almost 38 percent from last August. Still, Orr says this number is about 2.3 times normal for a typical month in the Valley. The number of completed foreclosures in August was down 22 percent from last August.

Investors continue to play a key role in the Phoenix area housing market. Almost 36 percent of the homes sold in Maricopa County in August went to investors. That’s up from 28 percent last August. More than half of the homes sold this August for $150,000 or less went to all-cash buyers.

“Some large investment companies have been buying homes in bulk from other investment companies,” explains Orr. “They are clearly frustrated by the difficulty of acquiring large numbers of homes through normal channels. Most of the properties are being used as rentals for tenants who have lost their former homes to foreclosure or through a short sale. In greater Phoenix, we have never seen so many single-family homes used as rental accommodation, and it will be interesting to see how elastic the demand is over the coming year.”

Many average buyers are turning to new-home sales, given the difficulty of getting a bargain resale. New-home sales went up 55 percent from August to August, and some developers are starting to cap sales to conserve lots. The number of active subdivisions is down 18 percent since the beginning of the year, and about 63 percent of those currently active are expected to sell out within 12 months.

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/FullReport201209.pdf. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

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Arizona home prices soar 18.2 percent in 12 months

A measure of U.S. home prices jumped 4.6 percent in August compared with a year ago, the largest year-over-year increase in more than six years, according to an Associated Press report.

CoreLogic, a private real estate data provider, also said Tuesday that prices rose 0.3 percent in August from July, the sixth straight monthly gain.

States with the biggest price increases in the past 12 months were Arizona, Idaho, Nevada, Utah and Hawaii. Prices soared 18.2 percent in Arizona, partly because the supply of homes for sale is low and foreclosure sales have slowed. Prices have risen 10.4 percent in Idaho.

The states with the biggest declines were Rhode Island, Illinois, New Jersey, Alabama and Connecticut.

Steady price increases, combined with greater home sales and rising builder confidence, suggest the housing recovery may be sustainable.

Other measures of home prices have also increased. The Standard & Poor’s/Case Shiller index rose in July compared with a year ago, the second straight yearly increase after two years of declines. And an index compiled by a federal housing regulator has also reported annual increases.

Housing prices are rising in most areas, according to CoreLogic. Only 20 large cities out of 100 tracked showed declines in the 12 months ending in August. That compared with 26 in July.

“The housing market’s gains are increasingly geographically diverse with only six states continuing to show declining prices,” said Mark Fleming, chief economist for CoreLogic.

The housing market has begun to rebound this year more than five years after the bubble burst.

Sales of previously occupied homes jumped in August to the highest level since May 2010. The rate at which builders started single-family homes rose last month to the fastest in more than two years. Builders have also increased their spending on single-family home construction for five straight months. And the lowest mortgage rates on record have made home buying more attractive.

Even with the gains, the housing market has a long way back. Many would-be buyers can’t qualify for stricter lending standards or save enough money for larger down payments that most banks now require. Home sales, housing starts and prices all remain below healthy levels.

CoreLogic said its measure of prices is 26.7 percent below a nationwide peak in April 2006.

Still, the broader economy will likely benefit from rising home values. When prices rise, people typically feel wealthier and spend more. And more Americans are likely to put their houses up for sale, which could further energize the market.

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Home prices rise in July in 20 major U.S. cities

Home prices kept rising in July across the United States, buoyed by greater sales and fewer foreclosures.

National home prices increased 1.2 percent in July, compared to the same month last year, according to the Standard & Poor’s/Case Shiller index released Tuesday. That’s the second straight year-over-year gain after two years without one.

The report also says prices rose in July from June in all 20 cities tracked by the index. That’s the third straight month in which prices rose in every city.

Steady price increases and record-low mortgage rates are helping drive a housing recovery.

In the 12 months ending in July, prices have risen in 16 of 20 cities. In Phoenix, one of the cities hardest hit by the housing bust, prices are up 16.6 percent in that stretch. Prices in Minneapolis and Detroit have risen more than 6 percent.

“We are more optimistic about housing,” David Blitzer, chairman of the S&P’s index committee. “Stronger housing numbers are a positive factor for other measures, including consumer confidence.”

Prices fell from a year earlier in Atlanta, Chicago, New York and Las Vegas.

The S&P/Case-Shiller index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The July figures are the latest available.

Home prices are still 30 percent below their peak in June 2006, according to Case-Shiller. That was the height of the housing boom.

Other measures of home prices are also showing steady gains. CoreLogic, a private real estate data provider, said earlier this month that prices rose in July from a year earlier by the most in six years. And a federal government housing agency has also reported annual increases.

Rising home prices are one of many signs that the housing market is slowly recovering.

Sales of previously occupied homes jumped in August to the highest level since May 2010. Builder confidence is at a six-year high and construction of single-family homes rose last month to the fastest annual rate in more than two years. Even with the gains, home sales and construction remain well below healthy levels.

The broader economy is likely to benefit from rising home prices. When home prices rise, people typically feel wealthier and spend more. And more Americans are likely to put their houses up for sale, which could further energize the market.

Home sales have been bolstered by the lowest mortgage rates on record. The average rate on the 30-year fixed mortgage touched a record low of 3.49 percent last week and has been below 4 percent all year. A limited supply of homes has also helped drive prices higher.

Prices are also rising because of a decline in foreclosures and sales of other deeply discounted homes. Many homes in the foreclosure process will likely come on the market in the coming months, which could drag on prices.

Still, many Americans, particularly first-time homebuyers, are unable to qualify for a mortgage or can’t afford larger down payments required by banks. That’s holding back sales.

Home sales could get a further boost from the Federal Reserve. The Fed said two weeks ago that it would purchase $40 billion of mortgage-backed securities each month until the economy and hiring improve substantially. That’s likely to keep mortgage rates at record-low rates for some time.

Home Prices

Soaring Phoenix Area Home Prices Finally Slow Down

Phoenix-area home prices, which had been sharply and steadily rising since last September, finally went down a little this summer.

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 July:

  • The median single-family home price dropped slightly between June and July this year – down less than 1%.
  • The median single-family home price was still up almost 31% from last July.
  • Sales of bank-owned homes plunged 73% from July 2011 to July 2012, with fewer foreclosures coming into the pipeline.

The median single-family home price in Maricopa and Pinal counties in July was $149,000, very slightly down from $150,000 in June. Even though this was the first monthly median drop since last summer, the report’s author, Mike Orr, does not think it indicates a reversal.

“This small drop is likely a reflection of both the normal, annual summer slowdown in the Phoenix-area housing market and a natural pause in the soaring prices we’ve seen here,” explains Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “I expect it will continue through August, but prices are likely to resume their upward direction in late September or October.”

The median single-family price was still up 30.7% from last July, when it was at $114,000. Realtors will note the average price per square foot went up 21.1% from last July. The median price for townhomes and condos was up 17.3% from $69,900 to $82,000.

Activity in the market remains limited by the amount of homes available for sale, with the number of transactions down 7.7% from July last year. As of Aug. 1, the supply of homes for sale — excluding those already under contract – was down 26% from the same time last year. Many homeowners still don’t want to sell, since their homes are worth much less than when they bought them.

Also, so-called “distressed supply,” the number of homes up for short sale or that recently went through foreclosure, went down a whopping 69% from last July to this July, meaning fewer bargains are out there.

“Seventy-eight percent of the existing homes available for sale are priced above $150,000,” says Orr. “That means competition for the other 22% is fierce. Most homes priced below even $250,000 are attracting a large number of offers within a short time, and offers often exceed the asking price. Ordinary home buyers are still struggling to compete with investors who offer all-cash, with no appraisal required.”

In fact, 54% of the homes that sold for $150,000 or less in July went to all-cash buyers. The low supply in this range has many people turning to new-home construction. As a result, new construction permits went up a massive 87% from July 2011 to July 2012. New-home sales went up 58% year-over-year.

Completed foreclosures for both single-family homes and townhome/condos went up 13% from June to July. However, Orr believes this is the beginning of a short, passing wave that came from the February signing of a legal settlement between the states and five of the nation’s largest lenders. Foreclosure starts — homeowners receiving notice their lenders may foreclose in 90 days – went down 14% from June to July.

“Most lenders are strongly encouraging homeowners facing financial hardship to use short sales as a preferred alternative to foreclosure,” Orr says. “Consequently, we have seen single-family short sales grow by 12 percent over the last year, while foreclosure rates have declined sharply.”

Almost all parts of the Phoenix area have seen prices go up since last summer. Even the high-end areas of Scottsdale and Paradise Valley have had average prices per square foot go up 9 and 12%, respectively. The only areas still showing a decline in average price per square foot are Rio Verde and Sun Lakes.

Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at wpcarey.asu.edu/finance/real-estate/upload/FullReport201208.pdf.

More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at knowwpcarey.com/index.cfm?cid=13.

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Soaring Phoenix-area Home Prices Finally Slow Down

Phoenix-area home prices, which had been sharply and steadily rising since last September, finally went down a little this summer. 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 July:

The median single-family home price dropped slightly between June and July this year – down less than 1 percent.
The median single-family home price was still up almost 31 percent from last July.
Sales of bank-owned homes plunged 73 percent from July 2011 to July 2012, with fewer foreclosures coming into the pipeline.

The median single-family home price in Maricopa and Pinal counties in July was $149,000, very slightly down from $150,000 in June. Even though this was the first monthly median drop since last summer, the report’s author, Mike Orr, does not think it indicates a reversal.

“This small drop is likely a reflection of both the normal, annual summer slowdown in the Phoenix-area housing market and a natural pause in the soaring prices we’ve seen here,” explains Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “I expect it will continue through August, but prices are likely to resume their upward direction in late September or October.”

The median single-family price was still up 30.7 percent from last July, when it was at $114,000. Realtors will note the average price per square foot went up 21.1 percent from last July. The median price for townhomes and condos was up 17.3 percent from $69,900 to $82,000.

Activity in the market remains limited by the amount of homes available for sale, with the number of transactions down 7.7 percent from July last year. As of Aug. 1, the supply of homes for sale — excluding those already under contract – was down 26 percent from the same time last year. Many homeowners still don’t want to sell, since their homes are worth much less than when they bought them. Also, so-called “distressed supply,” the number of homes up for short sale or that recently went through foreclosure, went down a whopping 69 percent from last July to this July, meaning fewer bargains are out there.

“Seventy-eight percent of the existing homes available for sale are priced above $150,000,” says Orr. “That means competition for the other 22 percent is fierce. Most homes priced below even $250,000 are attracting a large number of offers within a short time, and offers often exceed the asking price. Ordinary home buyers are still struggling to compete with investors who offer all-cash, with no appraisal required.”

In fact, 54 percent of the homes that sold for $150,000 or less in July went to all-cash buyers. The low supply in this range has many people turning to new-home construction. As a result, new construction permits went up a massive 87 percent from July 2011 to July 2012. New-home sales went up 58 percent year-over-year.

Completed foreclosures for both single-family homes and townhome/condos went up 13 percent from June to July. However, Orr believes this is the beginning of a short, passing wave that came from the February signing of a legal settlement between the states and five of the nation’s largest lenders. Foreclosure starts — homeowners receiving notice their lenders may foreclose in 90 days – went down 14 percent from June to July.

“Most lenders are strongly encouraging homeowners facing financial hardship to use short sales as a preferred alternative to foreclosure,” says Orr. “Consequently, we have seen single-family short sales grow by 12 percent over the last year, while foreclosure rates have declined sharply.”

Almost all parts of the Phoenix area have seen prices go up since last summer. Even the high-end areas of Scottsdale and Paradise Valley have had average prices per square foot go up 9 and 12 percent, respectively. The only areas still showing a decline in average price per square foot are Rio Verde and Sun Lakes.

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/FullReport201208.pdf. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.

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Home prices rise in July by most in 6 years

U.S. home prices jumped 3.8 percent in the 12 months ending in July, according to a private real estate data provider. The year-over-year increase was the biggest in six years, further evidence that the housing market is steadily recovering.

CoreLogic said Tuesday that home prices also rose 1.3 percent in July from June. That’s the fifth straight increase in both the monthly and year-over-year price indexes.

The index is the third national measure to show steady increases. The Standard & Poor’s/Case-Shiller index posted its first annual increase in nearly two years last week. And a federal government housing agency has also reported annual increases.

The states with the biggest gains according to CoreLogic over the past 12 months were Arizona, Idaho, Utah, South Dakota and Colorado. In Arizona, prices have risen 16.6 percent since July 2011. Idaho has posted a 10-percent gain in that time.

But not all states are seeing increases. In Delaware, prices dropped 4.8 percent in the 12-month period. Prices fell 4.6 percent in Alabama in that stretch.

The housing market has been slowly recovering this year. Sales of new and previously occupied homes are up. Builders are more confident and starting work on more homes. And mortgage rates are near their lowest levels of the past six decades.

Prices are also rising because the supply of available homes remains tight.

Still, the housing market’s recovery is just beginning. Prices remain 27 percent below their peak in April 2006, CoreLogic said.

The recent improvements have been widespread. Out of 100 large cities tracked by CoreLogic, only 23 posted year-over-year declines in July. That’s four fewer than in June.

Home-Sales

Phoenix-area home prices begin to stabilize

The huge price increases we’ve seen in the Phoenix-area housing market over the past several months are now slowing down. A new report from the W. P. Carey School of Business at Arizona State University breaks down the numbers for Maricopa and Pinal counties, as of June.

* The median single-family home price only went up 2 percent from May 2012 to June 2012, but it’s still up more than 29 percent from last June.
* The amount of single-family-home sales activity went down about 16 percent from last June, largely due to the limited supply of homes for sale.
* The foreclosure rate is dropping, with no “shadow inventory” in sight.

The median single-family-home price in the Phoenix area reached $150,000 in June. That’s a small increase from $147,000 in May and a huge increase from last June, when it was at $116,000. It’s an annual increase of 29.3 percent, and realtors will note the price-per-square-foot went up 21.3 percent.

The Phoenix-area housing market continues to be fueled by a lack of inventory under $150,000. Competition for homes at that lower end of the market is intense.

“This market remains extremely unbalanced, with far more buyers than sellers,” 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 number of single-family homes in the Greater Phoenix area without an existing contract was down to just over 9,000 as of July 1, and most of it – 78 percent – is above the $150,000 mark.”

If you don’t count homes already under contract, supply went down 33 percent from Aug. 1 of last year to Aug. 1 of this year. In particular, the inexpensive “distressed supply” of homes is down a whopping 68 percent. However, Orr says things have eased slightly. There was only a 15-day inventory of single-family homes for sale under $150,000 in May, and that went up to 18 days in June.

“On the seller side, most homes priced below $250,000 are attracting a large number of offers and often exceed the asking price,” says Orr. “However, the situation for the average home buyer remains dire, despite low interest rates and historically cheap prices. That’s because of the low inventory, and any offer from an ordinary home buyer is typically going to be less attractive than the multiple all-cash offers from investors with few strings attached and no appraisal required. Many ordinary buyers are coming away empty-handed after submitting 10 or more offers.”

Orr adds that, in frustration, many home buyers are turning to new-home sales and construction. This has fueled a 39-percent increase in new-home sales from June 2011 to June 2012. Permits for single-family-home construction were up 49 percent over last June.

“We’re also seeing an unusual number of large companies buying up single-family homes to turn into rental properties, and they may wind up having to lower their standards for tenants’ credit ratings, in order to keep the homes occupied,” explains Orr. “In fact, investors are maintaining such a high presence overall in Maricopa County that the number of properties purchased without financing jumped to 38.4 percent this June. For historical comparison, in June 2007, that number was just 8.3 percent.”

Sales activity leveled off for the summer, just as Orr predicted in his previous report. Sales of single-family homes in the Phoenix area were down 15.7 percent this June from last June, primarily because of the short supply – in particular, fewer foreclosed homes coming onto the market.

Completed foreclosures on single-family homes and condos fell 14 percent between May and June of this year. Also, foreclosure starts (homeowners receiving notice their lenders may foreclose in 90 days) went down about 15 percent between May and June. Orr thinks this downward trend will continue.

“Since the signing in February of the legal settlement between the states and five of the nation’s largest lenders, we saw a slight uptick in the rate of foreclosure notices, but this has now subsided and is far below the peak levels of March 2009,” says Orr. “There is still no sign of any significant new supply of homes coming onto the market, and those who anticipate a flood of bank-owned ‘shadow inventory’ are likely to be very disappointed.”

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/FullReport201207.pdf. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com.

home prices

Phoenix-Area Home Prices Continue To Soar

Phoenix-area home prices have been zooming up for months, and the streak continued in May. However, a new report from the W. P. Carey School of Business at Arizona State University takes a closer look at the short supply of available houses, an increase in foreclosures, and a possible leveling off of skyrocketing home prices this summer.

The report on Maricopa and Pinal counties reveals:

  • The median single-family home price went up more than 32 percent from May 2011 to May 2012.
  • The overall housing supply dropped by 50 percent in the same time frame.
  • The number of completed foreclosures of single-family homes and condos combined went up 18 percent from April to May.

The median single-family home price jumped 32.4 percent from May 2011 to May 2012. It went from $111,000 up to $147,000. At the same time, the median townhouse/condo price soared 37.3 percent, from $69,900 to $96,000, and the average price per-square-foot shot up more than 22 percent. Prices have been increasing since they reached a low point in September 2011.

The report’s author, Mike Orr, says high demand and low supply remain the dominant factors in the Phoenix-area housing market. For example, the number of active listings for single-family homes without a contract in the greater Phoenix area was down to 8,550 as of June 1. Fierce competition for available homes has continued to push home prices up.

“Most houses below $250,000 priced realistically are attracting large numbers of offers in a short time, and many exceed the asking price,” says Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “We recently saw a Chandler home get 84 offers and a Glendale home receive 95. The Glendale house closed within four weeks for 17 percent above asking price. Needless to say, this is not something we would see in a normal market.”

The amount of overall sales activity is down, due to the short supply. The number of single-family home sales fell 5.8 percent compared to last May. Orr says things are especially quiet in the luxury and active-adult sectors of the market, where there’s less demand. But new-home sales are up 57 percent over last May, as buyers look for alternatives to the intense competition for existing homes under $250,000.

Orr says, “Contractors are trying to keep up with the new construction demand by supplementing a small skilled labor pool. They’re attempting to lure away competitors’ employees with higher pay and to attract back foremen who’ve gone on to other housing markets or industries.”

Investors are also playing an influential role in the area. In May, almost 28 percent of home purchases were made by investors. Orr says the average area home buyer faces an uphill battle against those offering all cash, instead of a financed offer requiring an appraisal. He does believe, though, that things are about to calm down somewhat.

“Prices gained further strength over the last month, but I suspect they cannot continue to rise at the extremely fast rate we experienced this spring,” says Orr. “This rate can’t be sustained long term, and the most likely time for prices to stabilize is during the hot summer months of June through September.”

At the same time, foreclosures are unfortunately going up in the area. The new report shows completed foreclosures of single-family homes and townhome/condos combined went up 18 percent from April to May this year. However, Orr doesn’t see this as reason to worry yet.

“Completed foreclosures were still down 52 percent year-over-year in May,” he explains. “Since the signing of a legal agreement between the states and five of the nation’s largest lenders, we have seen a slight uptick in the rate of foreclosure notices, but we are still a long way below the peak levels of March 2009.”

The areas of the Valley most affected by the foreclosure crisis are now seeing the biggest surge in home prices. For example, El Mirage, Maricopa, San Tan Valley, Glendale and Apache Junction are doing much better. The areas least affected by foreclosures have seen home prices improving slowest. Still, some are moving into positive territory, such as Cave Creek, Fountain Hills and Sun City. The only areas still showing a decline in average home prices per-square-foot over the past year are Eloy, Paradise Valley, Rio Verde, Sun City West and Sun Lakes.

Orr’s full report, including home prices, 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-201206.pdf. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com.