(Source: AZCentral): Catherine Reagor – It’s been a long, hard road to recovery for metro Phoenix’s boom-and-bust-battered housing market.
But some Valley neighborhoods are there — back to 2006 price levels, and higher. And other neighborhoods are very close.
As expected, millennial first-time homebuyers are propelling the recovery.
Metro Phoenix home prices are rising the fastest in many of its most affordable, centrally located neighborhoods, from downtown Phoenix to central Mesa, where young buyers want to live and can afford houses.
2017 was a good year for the housing recovery in the Phoenix area. Almost one-third of the Valley’s ZIP codes posted double-digit-percentage increases in prices last year, according to The Arizona Republic/azcentral Street Scout Home Values report.
Street Scout is azcentral’s neighborhood and housing site that provides property valuations, home sales data, real estate news and listings.
But there is concern buyer demand for affordable homes is beginning to outpace the supply. And there’s always worry in Arizona about the possibility of another housing bust when prices climb for a few years.
In nearly 30 Phoenix-area neighborhoods, prices have rebounded to 2006 levels or even higher, data from The Information Market shows.
Most of those areas still have median home prices below $300,000.
“Last year was a strong one for the Valley’s housing market, particularly the more affordable neighborhoods closer in,” said Tina Tamboer, senior housing analyst with the Cromford Report. “Only 2004, ’05 and 2011 were better years for home sales, and those weren’t normal years.”
The housing boom inflated home prices and sales between 2004 and 2006, and then investors drove up sales as foreclosures climbed and prices plummeted from 2010 to 2012.
Home prices have doubled in many Phoenix-area neighborhoods since the bottom of the market. Besides the 30 ZIP codes where home prices have bounced back from the crash, values in another 40 neighborhoods are within 10 percent of recovering.
Fastest-growing home prices
Aysia Williams and Benjamin Hughes rented in downtown Phoenix’s historic Woodland district for about a year before deciding to buy their first home.
“We fell in love with the area, but saw prices and rents climbing fast,” Williams said. “We knew we wanted to buy, but there was a lot of competition for the houses we liked.”
Woodland is part of the 85007 ZIP code,one of central Phoenix’s more affordable neighborhoods. The area, which has also attracted many investors, saw its overall median home price climb 10 percent to more than $192,000 in 2017. Sales in the area jumped nearly 20 percent last year.
Home prices in their neighborhood on the western side of downtown have rebounded from the crash and are almost 2 percent higher than they were in 2006.
“Aysia and Benjamin were so lucky and bought from their wonderful neighbor, who didn’t want to sell to an investor,” said Sherry Rampy, a downtown Phoenix real estate agent with HomeSmart.
The couple’s house, for which they paid less than $250,000 a few months ago, wasn’t even listed for sale.
“People talk about the gentrification of central Phoenix pricing too many first-time buyers out,” Rampy said. “But more high-end home sales in the area help other more affordable areas like Woodland and Coronado improve, too.”
Buying a house in the hot 85007 neighborhood of Phoenix included graffiti art in the backyard of Ben Hughes and Aysia Williams’s home. Michael Chow/azcentral.com
‘First-time homebuyer market is exploding’
Stephanie Silva and Billy Horner moved to Chandler from Chicago for the warmth last March.
“We wanted to rent first to see if we liked the area and a ‘shovel-free life,’ ” said Silva, who works in Tempe. Horner works in downtown Chandler.
The couple recently bought a home for under $275,000 in the central Mesa ZIP 85210, almost halfway between their jobs. Prices in the still-affordable neighborhood climbed 9 percent, and sales rose 38 percent last year.
Home values just rebounded back to 2006 levels in their neighborhood, where the median price is about $215,000.
“We are on a quiet, cozy block in a home with a pool and a yard,” Silva said. “So far, it is everything these Midwest transplants could ask for.”
The couple’s real-estate agents Matthew and Tia Coatesof Chandler-based Revelation Real Estate said if more people don’t decide to sell in the popular, affordable neighborhoods closer in, then it will soon get even tougher for first-time buyers.
“The first-time homebuyer market is exploding. So many people are done with renting and dealing with landlords,” Matthew Coates said. “But we are seeing a deficit of homes available.”
The number of Valley homes for sale priced under $350,000 is down almost 20 percent from last year, according to the Cromford Report.
Some potential buyers are giving up
Nils and Heather Hofmann began looking for a home midway between their jobs in Deer Valley and Chandler more than a year ago. Their budget was $300,000.
The couple, who was renting in north-central Phoenix, put their home search on hold last fall after seeing dozens of houses. The ones they liked usually sold before they could get an offer in.
“I think we must have seen more than 80 houses,” Heather Hofmann said. “We wanted to buy where we were renting, but prices were too high.”
The couple decided to stop looking for a while late last summer because it became too frustrating. But then they found out Heather was pregnant, resumed their search and upped their price to $400,000.
The Hofmanns bought a home last month in north Phoenix’s Desert Ridge neighborhood, close to several freeways for their commute.
The median home price in the Desert Ridge area is about $485,000, up 5 percent from 2016.
David Meek of Keller Williams Arizona Realty said the Hofmanns saw the house they bought on the day it was listed and made the first offer. A couple of offers quickly followed theirs, but they got the house.
“Several of my first-time and move-up buyers have quit or paused their home search due to lack of acceptable inventory,” said Meek, who is about to put his own north Phoenix house on the market for $250,000 to move a bigger one farther north for his growing family.
His client, Bonnie Jordan, who rents in the upscale Kierland community and works in north Scottsdale, doesn’t want to move too much farther out to buy her first home. Rising prices have made her decide to put her home-buying search on hold.
“I have been looking for a home to buy for the past few years. Whenever we found one for around $200,000, the investors swooped in first,” she said. “I don’t want to move far out west and take my son away from his school. I am done looking for a while.”
Looking farther out
Valley real-estate agent Diane Brennan of Coldwell Banker is working with a first-time buyer who is looking to the West Valley suburb Buckeye because that’s the only place he can afford to purchase.
Before the housing market crash, the “drive until you qualify” mentality was how many buyers were able to afford their first houses in the Valley. The farther out they went, the lower the prices on the houses.
The metro Phoenix suburbs farthest out were hardest hit by the crash and have been the slowest to recover.
But both sales and prices are again climbing in those areas, including the West Valley suburbs of Goodyear, Surprise and Buckeye and southeast Valley areas of Queen Creek and Maricopa.
The median home price in the Buckeye ZIP code 85326 is up almost 10 percent from last year to $192,000. But the area’s home values are still about 19 percent off the 2006 peak.
Will this be the year?
Metro Phoenix home prices continue to climb in most neighborhoods.
The median Valley home price is now about $253,000, up from $235,000 a year ago.
Some homeowners and national market watchers see price increases in the Valley and are concerned about another bubble.
“The housing market is very solid now. The deals are gone, but that’s not a bad thing,” said veteran real-estate agent Joseph Callaway, who with his wife, JoAnn, are the team known as “Those Callaways.” “But there’s nothing that shows we are heading for another crash.”
Metro Phoenix’s December 2017 median price of $250,000 is still below the high of $260,000 from 2006.
Housing market watchers say 2018 could be better than 2017 for prices and sales.
Whether this is the year the area’s median market reaches that 2006 level depends on whether first-time buyers can find homes they can afford.
“Either low inventory numbers for homes for sale will restrict sales because buyers can’t find houses in their price range or Millennials, the driving force behind our market, will be able to and decide to buy,” said Tom Ruff, housing analyst with The Information Market, owned by the Arizona Regional Multiple Listing Service.
“That, coupled with an improving economy, will lead to increased sales in 2018,” he said.