Phoenix Housing Prices Up - But Use Caution (Gilbert: short sale, 2013) - Arizona (AZ) - City-Data Forum

Captain Bill · 10-25-2012, 08:51 AM

The Phoenix Housing prices have increased dramatically over the past 13 months, and we're seeing articles showing Phoenix as one of the top 7 best markets now. 7 Cities Where House Prices Are Jumping

Mike Orr of the Cromford Report urges caution because expectations could be getting set too high. Phoenix has gained 27.5% in the past 13 months; however we should not expect the same gain during the next 12 months because a 27% gain in a year is unusual, and we should not expect it to be repeated. As Mike said, "we really don't know what will happen during the next 12 months."

My personal opinion is that more inventory will come on the market because people will have learned of the last year increase, and they will price their homes optimistically. If these new resales are placed on the market above the current market price, they won't sell and that can slow up the market.

The inventory is low today, but buyers will still not "overpay" for a home. I believe prices must be increased gradually in order to be sustainable. Sellers need to understand that it is the "market" that sets the price. Sellers cannot place their home on the market at a price "they must have", or "they think the house is worth". The house may very well be "worth" a certain amount, but if the "market" doesn't place that value on it, then it won't sell at that price.

Phoenix Interrupted · 10-25-2012, 02:44 PM

Inventory is already up 11% since July 2011 per HousingTracker.

It's a great time to buy or sell a home!

El_Waiboi · 10-25-2012, 04:57 PM

We are witnessing the beginnings of the next housing bubble.

Phoenix Interrupted · 10-25-2012, 08:09 PM

That should say inventory is up 11% since July 2012.

It's a great time to buy or sell a home!

youthinkso · 10-25-2012, 09:09 PM

Quote:

Originally Posted by El_Waiboi

We are witnessing the beginnings of the next housing bubble.

the "bubble boys" are present in every market... always screaming dome and gloom

This isn't a bubble, but reality, with rock bottom interest rates snooze you lose.

Prices will still rise in the next 12 months but not at the present rate. The Canadian dollar is still hot and foreigners will continue to devour the cheap market. Phoenix housing is an absolute bargain.

Bungalows are hot, but the larger homes will start to rise in price by next spring.

Captain Bill · 10-26-2012, 05:32 AM

Today the monthly average price per square foot in Phoenix metro for all type residence is $103.92. That's a large increase from last year, and because of that increase in price we have had a decrease in demand.

The Cromford Report has an index called the Cromford Demand Index™ which measures overall demand. In September 2011 that demand index was 127.5 and has dropped to 112.3 as of last month.

Because of the price increases, more sellers have entered the market, which has increased supply. The Cromford Report also has an index called the Cromford Supply Index™. On July 15, 2012 the supply index was 61.6 and last month it had risen to 67.6.

Our inventory is still low, and there are still more buyers than sellers in many sub markets, but it has changed some because more sellers have come into the market.

We can always speculate on what may happen as we enter the Phoenix area buying season in February, 2013, but it may be wise to watch the statistics which tells us exactly what is happening, and gives an indication of what may happen within the next few months.

miran · 10-26-2012, 06:58 AM

I have also noticed that asking prices have been dropping, not sure if the home owners were trying to see if anyone bit at the higher price or just that the market is now slowing down resulting in the drop in prices.

El_Waiboi · 10-26-2012, 07:18 AM

Quote:

Originally Posted by youthinkso

the "bubble boys" are present in every market... always screaming dome and gloom

This isn't a bubble, but reality, with rock bottom interest rates snooze you lose.

Prices will still rise in the next 12 months but not at the present rate. The Canadian dollar is still hot and foreigners will continue to devour the cheap market. Phoenix housing is an absolute bargain.

Bungalows are hot, but the larger homes will start to rise in price by next spring.

I guess I sounded more "doom and gloom" than I meant to be. I do agree that now is a great time to get in and lock in those rates, as the market will only go up from here. I personally bought my house exactly 12 months ago and have been steadily watching the market since then and the prices have risen quickly and steeply (IMO). If I would have waited until today to buy my house, I don't think I would have been able to afford it! So anyone who is pondering whether to purchase or not - I would say hurry up an buy now! And what I meant about the bubble comment was that with the way prices have risen in the past 12 months, I could easily foresee 2005-like prices within the next few years, and those are the prices which I feel are overinflated and dangerous. The higher prices go, the more likely a bubble has already formed and the more likely it is to pop. Right now though it is still a buyers market (for the mean time).

And personally I think the areas that are/will rise the fastest are the areas near downtown and the historical districts.

liz451 · 10-26-2012, 08:38 AM

Interesting information. Personally I bought less than 2 months ago, and although the large pricing increase over the past year concerned me, with the interest rates where they are (I got in at 3.75%!) my total townhouse payment including HOA, taxes, and insurance is still $300 less than it would have cost to rent. I did decide going in that I'm prepared to rent it out in 5+ years if housing prices level out and a profit isn't possible, a bubble bursts, etc. when I'm ready to move onto more of a "forever" home.

Captain Bill · 10-26-2012, 09:18 AM

Quote:

Originally Posted by liz451

Interesting information. Personally I bought less than 2 months ago, and although the large pricing increase over the past year concerned me, with the interest rates where they are (I got in at 3.75%!) my total townhouse payment including HOA, taxes, and insurance is still $300 less than it would have cost to rent. I did decide going in that I'm prepared to rent it out in 5+ years if housing prices level out and a profit isn't possible, a bubble bursts, etc. when I'm ready to move onto more of a "forever" home.

It's difficult to go wrong when you buy near the bottom at such low interest rates.

I'm buying another house in Gilbert for rental and it should close soon. It was a short sale that one of my clients had under contract for 9 months. The bank finally came back with a price 10,000 higher than the contract price, so my buyer decided to bail. I felt it was still a bargain to buy and rent for 5 years, and fortunately the bank allowed the change of names from my clients to my name on the contract without requiring it to be placed back on the market.

In order to be fair to two of my clients who wanted a house in that price range, I offered it to them first. The home wasn't a match for either of them so I bought it.