News Article From: 03-06-2006
On Sunday, March 5th, the Arizona Republic released its semi-annual housing market recap with a complete section on our housing market called Valley Home Values, Buy? Sell? Hold? . It contains eight articles about our real estate market and links to charts showing appreciation, median home prices, number of listings and information on each submarket area.
The following is a quick summary of the eight articles:
The first article, Valley tackles cooling market, reports that Metro Phoenix's housing market had big gains in the first half of 2005, but the market started showing signs of cooling in September, and by October, prices had dipped slightly. Increases of 30 to 50 percent were common in some zip codes as Metro Phoenix led the nation in percentage gain of housing price. The slowing has continued this year with resale listings exceeding 30,000 in January, nearly nine times the level for January 2005. Selling time has increased from 5 1/2 days to 49. Sellers are frustrated because they are getting few offers, and many are cutting prices. Most real estate watchers say the Valley's housing market is only reverting back to a stable one after last years frenzy. Jay Butler, head of the Arizona Real Estate Center at ASU says the housing market needs to "cool down to sustain the appreciation it gained last year. I wouldn't be surprised to see prices fall this year."
The second article, Slowing trend may force owner to be landlords, reports that with the slowing real estate market, some investors who bought homes looking to flip them and make a quick profit may be forced to rent them and become landlords. But the article cautions that there is a lot to know and consider before becoming a landlord, including tenant phone calls, fair housing issues, registering the property as a rental with the county Assessor, and cash flow. The article gives several good resources and links for landlord help, and gives a link for a copy of the Arizona Landlord Tenant Act.
The third article, Many home buyers still being priced out , reports that due to the big increases in home prices in metro Phoenix in 2005, fewer buyers can afford a home in the Valley. Even the "fringe" areas of Maricopa, Apache Junction, Goodyear and Surprise now have home prices that rival or exceed those of closer in cities. The Phoenix market has had a long-standing reputation of affordability, but now its median price is higher than the national average. Some analyst point out that Valley housing is still affordable when compared to other western cities, but incomes are not keeping up with home prices, and spending power is being cut by higher energy costs.
The fourth article, Prices, traffic take away from Pinal's appeal, reports that Pinal county, know for its affordable housing that drew thousands to areas like Maricopa, Johnson Ranch and Casa Grande, has lost some its "affordable" sheen with rising prices and rising gas prices. "Part of the challenge is that values have gone up an extraordinary degree from where they started out," said local housing analyst RL Brown. "The market equation for new housing for Pinal County is changing, and (buyers) are going to have more reasons to go (there)." Both median resale prices and new-home prices rose dramatically in Pinal County in 2005, up to 57 percent in the Johnson Ranch area. Bigger worries for Pinal County include traffic problems and availability of shopping.
The fifth article, Move-up buyers face widening gap , reports that last year's unprecedented price run-up in Valley home prices has widened the gap between current home values and the price prospective buyers can expect to pay for their next, bigger home. Some real estate agents are now advising their clients to adjust their expectations, which may mean sacrificing square footage for location or visa versa. Even the new financing plans designed to keep monthly mortgage payments affordable can't keep a lid on the growing gap between the current house payment and one for a house at the next step up.The "move down" market seems to be the best right now, with people cashing out of their larger homes for a smaller home.
The sixth article, Home builders add special deals to lure buyers, reports that homebuilders are now offering incentives to homebuyers, such as a new pool or financing incentives, in an effort to lure buyers to purchase new homes in their subdivisions. These kinds of deals were unheard of last summer, when people camped out overnight and builders held lotteries for new homes. Now that the frenzy is gone, and traffic is down in home builders models, home builders are willing to deal. "Most of the investors are gone, and traffic is down in home builders sales trailers," said Jay Butler, director of the Arizona Real Estate Center at ASU. "Just look at the ads. Builders are trying to move homes fast." "There's no question the overall marketplace has changed," said RL Brown. "The consumer is saying, 'Excuse me. The prices are too high'".
The seventh article, For now, condo conversion boom continues, reports that nobody knows for sure how the Valley's booming condo market will fare going forward. Concerns about a glut are widespread, but advocates say that the baby boomers wanting a different lifestyle will keep interest high. The depth of demand is what has some housing analyst's, such as RL Brown, concerned. He believes that only 15 to 20 percent of the new high-rise condo developments will actually be built. Apartment conversions to condos make up the fastest growing segment of the condo market. Jay Butler at ASU believes the most successful conversions will be those that exude a home and not apartments.
The eight article, Buyers gain upper hand as homes sell less quickly, reports that the number of listings Valleywide are up, housed are taking longer to sell, and Buyers now have the upper hand in our real estate market. The number of homes on the market has nearly tripled in the past year, according to the Arizona Regional MLS. The reasons why? Speculative investors are selling after realizing gains of 40 to 50 percent. Prices are higher and buyers, including investors, are saying "no" to these higher prices. Mortgage rates have nudged higher, making housing even more expensive. Valley homes have not bee so difficult to afford since 1990. Incomes are not keeping pace with housing price increases