The number of houses for sale in metro Phoenix has climbed almost 40 percent in the past year. With many more properties from which to choose, the market is tilting away from sellers toward people looking to buy.
The entire region can’t yet be called a buyer’s market, but certain areas, including the northwest Valley and Pinal County, have enough houses listed for sale to exceed demand.
The nearly 72 percent increase in home prices since August 2011, to $199,000 from $116,000, is one key reason more homeowners are looking to sell. And the sprouting of for-sale signs can be just the motivation some potential buyers need.
Prospective buyers already have leverage in many out-on-the-fringes areas. In closer-in communities and in luxury enclaves, that advantage hasn’t quite reached the would-be buyers, but the number of potential buyers and sellers is about at break-even.
As a result, monthly home-price increases are expected to continue but have slowed dramatically from last year’s breakneck pace, which is keeping properties generally affordable. And with the rising number of homes on the market, prospective buyers who qualify for loans under new, tougher mortgage guidelines have lots of choices.
Cory Coffey and Kayla Repasky checked out nine houses for sale in the West Valley last weekend. They wanted a newer house close to Luke Air Force Base, where Coffey is stationed. A year ago, they wouldn’t have been able to tour half that many because affordable houses were being snatched up by investors who often paid cash within hours of a property being listed.
The couple found a two-story house for about $155,000 in north Buckeye and made an offer.
“Some markets farther out, like Surprise and Buckeye, have become buyer’s markets,” said Linda Allison, an agent with Russ Lyon Sotheby's, who worked with the couple.
The number of listings is expected to keep climbing in the Phoenix area. With the past year’s price increases, more owners can sell for a profit. And more houses for sale will swing the market in buyers’ favor.
“It won’t be long before supply will exceed demand,” said Mike Orr, director of the Center for Real Estate Theory and Practice at the W.P. Carey School of Business at Arizona State University.
Sellers, who have seen many properties sell within 30 days over the past year, may have to bide their time before they get an offer.
Bobby Lieb, an agent with HomeSmart, said people now are taking more time and want to see more properties before deciding on a house.
“There’s not the urgency among buyers there was last year,” he said. “Buyers now typically want to see 20 to 30 houses and want a few weeks to make a decision.”
More choices farther out
The metro Phoenix market is not uniform in its rises and falls. Certain areas recovered more quickly
from the housing crash than others. The shift toward buyers also varies in degree by house location and price.People such as Coffey and Repasky are finding they have the most choices to buy a house in areas farther from the Valley’s core.
Besides the far West Valley, Pinal County communities on the fringe of the southeast Valley are also considered a big buyer’s market.
Market analysts say some key areas of the market remain more competitive for buyers.
Houses priced between $250,000 and $500,000 in the central and northeast Valley, as well as properties in the same price range in the southeast Valley cities of Tempe, Chandler and Gilbert, are the most popular among buyers now.
Rigby Cilley of Realty Executives is working with Debbie and Steve Araya, who recently had a baby boy and want to move into a bigger house in Scottsdale.
Cilley helped the couple buy a house for about $260,000 less than two years ago, which they now have listed at more than $350,000. The Arayas want to spend about $500,000 on their next house.
“It is not really a buyer’s market yet in north Scottsdale or the northeast Valley, but the market is becoming more even between the number of sellers and buyers,” Cilley said.
She said she has several clients in the area who bought a few years ago and now want to sell for a profit and move up to a better house in the same area.
Healthier luxury market
The Valley’s luxury housing segment, which lagged in the early stages of the market rebound, is now following the rest of the housing market into recovery.
The supply of homes for sale priced above $500,000 in the northeast Valley is up about 24 percent since last year, according to Walt Danley Realty. The number of buyers is up by almost 15 percent.
Home sales overall were down 27 percent in November, according to the latest data from ASU. The low end of the market dragged down the number, with sales of homes below $150,000 down 52 percent. But rising prices also mean there are fewer homes on the market priced below $150,000.
Sales of houses priced above $500,000 were up 14 percent in November, Orr said.
Based on recent deals, high-end home sales will continue to climb, market watchers say.
Julie Antunes of Russ Lyon had the listing for a $990,000 house in Scottsdale, which was on the market for 90 days. Then, on Jan. 11, two buyers made offers and one was for the full list price.
“Homebuyers are back in the higher price ranges,” she said. “The market for homes priced between $800,000 and $1.5 million is pretty healthy again.”
Interest ‘reignited’
Investors and foreclosures dominated metro Phoenix’s housing market from 2010 until early 2013. The buyers were looking for bargains, and houses were cheap.
Now, potential buyers don’t have as many bargains, but they have choices. Those fearful of higher interest rates or continued rising prices are jumping into the market.
“With the real-estate market picking back up, we thought it was a good time to invest into a house,” Repasky said. “It will help us build equity and get on track to buy our dream house later in life.”
New mortgage rules requiring borrowers to have better credit and higher debt-to-credit ratios could make it more difficult for some people looking to buy.
Also, the limit on Federal Housing Administration mortgage loans has been lowered to $271,050 from $346,250 in metro Phoenix, so new borrowers either have to come up with bigger down payments or find less expensive houses to buy.
But the shift toward potential buyers is expected to continue.
Homeowners trapped for five years or more because they owed more than their home was worth now are selling for a profit.
“Buyers’ interest has been reignited,” said Diane Brennan of Keller Williams Arizona.“I just received 25 buyer leads in the past week. Traffic at my homes for sale has seen a huge increase, and more sellers are now making concessions.”
A steady increase in the number of properties for sale is expected to lead to slower appreciation. But home prices are not projected to fall.
Instead of double-digit monthly median home-price gains, real-estate analysts, including Orr, are calling for single-digit gains over the next few months.
Year-over-year price appreciation
The largest home-price increases for a 12-month period, as shown in the most recent month of data available, are in some of the very communities where demand is lowest, according to Arizona State University’s Mike Orr. Continued rising prices can cause demand to fall, he said.
Top five metro Phoenix communities for price appreciation as of November
1. Tonopah: 42 percent
2. Maricopa: 37 percent
3. El Mirage: 33 percent
4. Youngtown: 33 percent
5. San Tan Valley: 32 percent
Bottom five metro Phoenix communities for price appreciation as of November
1. Carefree: 6 percent
2. Sun Lakes: 10 percent
3. Sun City West: 10 percent
4. Gold Canyon: 12 percent
5. Paradise Valley: 12 percent
Sources: ASU’s W.P. Carey School of Business, the Cromford Report.
More houses to choose from
Listings on the market, Jan. 15, 2014: 28,000
Listings on the market, Jan. 15, 2013: 20,200
Source: Arizona Regional Multiple Listing Service
Reach the reporter at catherine.reagor@arizonarepublic.com.
