The Valley's 'extraordinary state' of real estate. Plus, the hottest ZIP codes
The Valley’s median home price hit a record $359,300 in March and is expected to climb another $15,000 in April based on pending sales. The rise is widespread from Peoria to Chandler to Paradise Valley.
StreetScout.com - May 9, 2021
Buying a home in metro Phoenix is tougher than ever for many.
Bidding wars for a shrinking supply of homes for sale are driving up prices. Houses are selling before they are even listed, and buyers pre-approved for mortgages are losing homes to those who pay cash and close fast.
The Valley’s median home price hit a record $359,300 in March and is expected to have climbed by another $15,000 in April based on pending sales.
Home sales in the Phoenix area are up almost 14%, according to the Arizona Regional Multiple Listing Service’s latest report.
The number of Valley homes for sale is down 50% from April 2020.
Houses are selling in an average of 37 days, about 20 days faster than a year ago.
Arizona is attracting many out-of-state buyers coming from pricier areas on both coasts who still consider metro Phoenix home prices a deal.
Housing expert Tom Ruff of ARMLS’ Information Market said he has run out of cliches to describe the “extraordinary state” of metro Phoenix’s housing market now, and he doesn’t see it slowing any time soon.
TOP ZIP CODES FOR GROWTH
During the past decade, metro Phoenix’s more affordable neighborhoods have seen home values climb the fastest. But now home prices are climbing fast in some of the Valley’s priciest areas, too.
• Peoria’s 85342 ZIP code saw the biggest jump in home prices during the past year. The area’s median shot up 42.4% from March 2020 to hit $292,000 in March of this year.
• Chandler’s 85249 ZIP ranked No. 2 for the biggest home price gain, with a 39.4% jump to a median of $585,000.
• In ZIP 85253, home to Arizona’s priciest community Paradise Valley, the median price climbed 34.8% to $2.15 million.
• In north Scottsdale’s 85262, another high-end housing area, the typical price rose 34.3% to $1.175 million.
• Tying for No. 5 with 34% price increases are the central Mesa area, 85205, with a median of $335,000, and the Phoenix neighborhood around Sky Harbor International Airport, 85034, at $268,000.
BOOM AND BUST?
Metro Phoenix’s overall median home price is up 25% from last year. The area’s rapid price increases are prompting more homeowners and homebuyers to compare the Valley’s current market with the boom of 2005-06.
Homeowners are concerned about another potential bust like in 2007-11 that caused home values to crash to less than half of boom levels. Homebuyers want prices to drop so they can find deals.
Ruff and other housing analysts don’t see that happening anytime soon. Here’s why: Most Phoenix-area buyers are purchasing houses to move into. More than 80% of recent Valley homebuyers marked the “primary residence” box on their sales deed, and many are paying cash.
During the boom a decade ago, at least 40% of buyers were investors who put very little down and used subprime loans that required very small down payments. When home prices started to fall in 2007, most of those speculative buyers walked away from houses and those cheap mortgages, which led to the crash.
The bad predatory loans with hidden fees and rapidly rising interest rates that too many buyers were approved for during the boom due to lending guidelines that were too loose are gone.
“Real estate markets are cyclical, and this cycle will end too, but I do not see our current market following the disastrous path of 2005,” Ruff said.
That's good news for metro Phoenix homeowners, but not what many buyers want to hear.
Story by Catherine Reagor of the Arizona Republic and StreetScout.com