- Kristena Hansen
- Reporter- Phoenix Business Journal
The dramatic surge in metro Phoenix home prices has finally leveled off, but improvements in overall supply, foreclosures and investor activity indicate the local housing market is still on the upswing, according to the latest housing report released Wednesday by Arizona State University.
The median single-family home price in the Valley in September — $150,000 — remained unchanged from the previous month, the report said.
However, the median home price was still up 27 percent year-over-year and prices are expected to pick up again before the year ends, the report said.
“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,” Michael Orr, the report’s author and real estate expert at ASU’s W.P. Carey School of Business, said in the report.
Both sales activity and the number of homes for sale on the market have seen a notable slowdown due to homeowners’ reluctance to sell at a time when prices, despite recent improvements, are still low.
For instance, the number of homes sold last month was down 12 percent year-over-year, while supply — meaning the number of homes for sale on the market — was down by 15 percent during the same time period, Orr said.
However, this year’s record-low supply of homes for sale has been notably improving in recent months.
Between July and September, the Valley’s housing supply improved by 24 percent. Last month, supply jumped by 9 percent just from August, Orr said.
Another positive sign for the Phoenix market is the decline in distressed properties, meaning foreclosures and short sales.
Foreclosures dropped a whopping 31 percent between August and September; the number of homeowners who received notice that their lenders may foreclose within 90 days, also called foreclosure starts, fell by 18 during the same time period, the report said.
Investor activity — the latest source of frustration for traditional home buyers who have found it near impossible to compete with cash offers — has also begun to temper.
“The percentage of homes acquired by investors rose significantly between 2011 and 2012, but declined from August to September of this year,” Orr said. “Investor purchases are down from the peak in July and August and will probably decline further.”
Orr also addressed emerging concerns that Phoenix was on its way toward another bubble, saying the market was so far acting “relatively well behaved.”
“Investors are risking their own money, rather than borrowed funds, so risk is being more carefully managed than in the previous boom,” he said. “Also, ordinary home buyers drawn into the market now are less likely to regret their actions than those who did so in 2005 and 2006.”