Home Value Increases for Phoenix Proper

[Zippyman]

I really don't like or trust Zillow much & just from what I've seen, I think the appreciation numbers are way low.

I just sold my parent's rental for them & it was the *only* 3 bed SFR in the zip code for under $200k. Nice as a seller, but crazy to be in the position where buyers have exactly zero other options besides waiting & hoping for something else to pop or going elsewhere. Houses do pop on mls in that zip for under $200k, but they're gone in a day or two - and there aren't many popping. I had pretty much the same experience selling one of my rentals last fall - different zip code, but same basic deal, no competition that would qualify for financing under $220k. I only watch a couple small areas of town closely, and in those areas pricing has to go up significantly to maintain supply - 10% or more seems likely by peak summer season.

[ScottsdaleMark]

Originally Posted by Zippyman

I really don't like or trust Zillow much & just from what I've seen, I think the appreciation numbers are way low.

I just sold my parent's rental for them & it was the *only* 3 bed SFR in the zip code for under $200k. Nice as a seller, but crazy to be in the position where buyers have exactly zero other options besides waiting & hoping for something else to pop or going elsewhere. Houses do pop on mls in that zip for under $200k, but they're gone in a day or two - and there aren't many popping. I had pretty much the same experience selling one of my rentals last fall - different zip code, but same basic deal, no competition that would qualify for financing under $220k. I only watch a couple small areas of town closely, and in those areas pricing has to go up significantly to maintain supply - 10% or more seems likely by peak summer season.

I know someone who was looking in the 150-200k range in a certain area and basically gave up the search...every new day/week/month, the inventory lessened and the quality of what was available decreased as well...when people get caught in that cycle it's hard for them to ever pull the trigger because what they can afford gets less and less attractive compared to the stuff they passed up as not good enough in their first weeks/months of looking.

Given the huge imbalance between starter home demand and inventory the last couple years, I have always told friends/family to view new listings daily and be ready to make offers same-day or next-day at the latest if they're in a lower price range, but that's easier said than done for a lot of people, especially for first-time buyers for whom it's a huge scary purchase for them mentally. Some people just need days or weeks to build themselves up to filing all that scary-looking paperwork...and they usually miss out, over and over again, on homes that they liked but didn't move fast enough to get.

I don't really follow condo trends too much but I've noticed some new construction. Once we see developers converting uglier/older apartment blocks into condos all over the place, I'll start to get more worried. There were some terrible condo conversions toward the height of the last boom just because anything would sell and a lot of people could only afford a condo anymore so they'd bite on some ugly/bare-bones conversions. Of course, condos tend to crater much worse than SFHs do.

Originally Posted by AZJD

There's stuff in Desert Ridge now pushing $250+ square foot.

That area in particular has crazy-strong real estate. People just love them some Desert Ridge. It's remarkable how strong it's been.

[Zippyman]

Originally Posted by ScottsdaleMark

I know someone who was looking in the 150-200k range in a certain area and basically gave up the search...every new day/week/month, the inventory lessened and the quality of what was available decreased as well...when people get caught in that cycle it's hard for them to ever pull the trigger because what they can afford gets less and less attractive compared to the stuff they passed up as not good enough in their first weeks/months of looking.

I always tell people to move quickly and not be too too picky if you're in a lower price range, but I guess that's easier said than done, especially for first-time buyers for whom it's a huge scary purchase for them mentally.

What we'll see next is the eventual rebirth of the condo market...once we see them converting older apartment blocks into condos, that's another sign of a boom market. There were some terrible condo conversions toward the height of the last boom just because anything would sell and a lot of people could only afford a condo anymore. Of course, condos tend to crater much worse than SFHs do.



That area in particular has crazy-strong real estate. People just love them some Desert Ridge. It's remarkable.

I know during & after the bubble many blamed agents for "running up pricing", but my personal opinion now is that lazy/incompetent agents are actually acting as a bottleneck to clearing the market in the lower price ranges. If sellers knew they could get an extra $5-$10-$20k on those lower-priced properties, I'd bet a few more would list them & move up, more landlords would cash out & buyers would have more than one or two properties a /month/ to swarm over.

As it stands, some agents are so afraid of appraisals that they're not even trying to get actual /market/ pricing, even though there is no "product" in certain zip codes. I know on my last deal, I was *totally* ready to ask the appraiser where he could find *any* property for less, but it sailed through appraisal with no issues. Pricing needs to go up when there is no product, just as it needs to fall when there is lots of product.

We had one offer that was actually super-close to being accepted, and when I talked to the buyer's agent, he was all "yeah, but we don't think it will appraise".. - $5k = $25 /mo to the buyer @ 4% interest, and if it didn't actually appraise, he would have had a great (effective) stick to get us to lower the pricing to match the appraisal, but wouldn't budge. That buyer is still in an apartment & the one who took the chance owns a house today.

Just yesterday, another house popped in the same neighborhood, listed at exactly the same price as my parent's place, and it even had nicer features - pending in 24 hours - personally, I think they left five or ten grand on the table & made it harder for anyone else to buy a house in that hood.

[man4857]

Originally Posted by Prickly Pear

Average Phoenix proper home value increase by next year: 3.5%

Ahwatukee: 1.7%
Alhambra: 4.4%
Camelback East: 2.9%
Central City (Downtown): 2.9%*
Deer Valley: 3.4%
Desert View: 1.6%
Encanto: 5%
Laveen: 3%
Maryvale: 5.9%
North Gateway: 2.3%
North Mountain: 3.7%
Paradise Valley: 2.4%
South Mountain: 3.7%

*Downtown percentages vary on zip code. Listed is the highest is 85004 home value increase, the highest of all zip codes that serve Downtown. Some went as low as 0.3%

Percentages predicted by Zillow.

Thoughts?

I hope prices don't increase anymore past inflation per year. Phoenix doesn't need to become the next city with unaffordable housing.

[Zippyman]

Originally Posted by man4857

I hope prices don't increase anymore past inflation per year. Phoenix doesn't need to become the next city with unaffordable housing.

Without appreciation - and with continued growth - you'll end up with /no/ product for sale.

It's just like the bread lines in the old soviet states - bread might only be "worth" a nickel, but there isn't any for sale. Would you rather pay a dime & actually get some bread, or insist that the pricing stays at a nickel and stay hungry?

[man4857]

Originally Posted by Zippyman

Without appreciation - and with continued growth - you'll end up with /no/ product for sale.

It's just like the bread lines in the old soviet states - bread might only be "worth" a nickel, but there isn't any for sale. Would you rather pay a dime & actually get some bread, or insist that the pricing stays at a nickel and stay hungry?

At the same time, would you want houses to cost $500K-750K just like in CA? There's a fine line here since housing is a necessity that's being dictated by the market.

[SMG]

"Percentages predicted by Zillow."

That was all I needed to see to dismiss this study.

[ScottsdaleMark]

Originally Posted by Zippyman

I know during & after the bubble many blamed agents for "running up pricing", but my personal opinion now is that lazy/incompetent agents are actually acting as a bottleneck to clearing the market in the lower price ranges. If sellers knew they could get an extra $5-$10-$20k on those lower-priced properties, I'd bet a few more would list them & move up, more landlords would cash out & buyers would have more than one or two properties a /month/ to swarm over.

As it stands, some agents are so afraid of appraisals that they're not even trying to get actual /market/ pricing, even though there is no "product" in certain zip codes. I know on my last deal, I was *totally* ready to ask the appraiser where he could find *any* property for less, but it sailed through appraisal with no issues. Pricing needs to go up when there is no product, just as it needs to fall when there is lots of product.

We had one offer that was actually super-close to being accepted, and when I talked to the buyer's agent, he was all "yeah, but we don't think it will appraise".. - $5k = $25 /mo to the buyer @ 4% interest, and if it didn't actually appraise, he would have had a great (effective) stick to get us to lower the pricing to match the appraisal, but wouldn't budge. That buyer is still in an apartment & the one who took the chance owns a house today.

Just yesterday, another house popped in the same neighborhood, listed at exactly the same price as my parent's place, and it even had nicer features - pending in 24 hours - personally, I think they left five or ten grand on the table & made it harder for anyone else to buy a house in that hood.

Good post and I agree with you. I'm more of the school of ask for the high end in times like this, but I'm not afraid of a little time on market. Whereas I know a lot of people are big believers in wanting to sit that sweet spot and catch multiple offers on day one. I just think it's a seller's market so I tend to shoot higher as a seller when there are a lot of fish looking to bite.

[Zippyman]

Originally Posted by man4857

At the same time, would you want houses to cost $500K-750K just like in CA? There's a fine line here since housing is a necessity that's being dictated by the market.

There's really no danger of that - what we have in both of the zip-codes that I watch is something you might call "stratification" - in my parent's zip-code, if you have say, $180k to spend, you really just don't have enough money.. if you've got $225k, there's probably a dozen to pick from. The homes in the $225 range are still selling fast enough, that they are never going to reduce the prices - but they are not selling nearly as fast as the lower-end homes.

So, there's effectively a "cap" in place - If you want $210k for your low-end home, you're not gonna get it - buyers in that range can pop for another ten or fifteen grand and get a bigger/better house.. But the homes selling today for $180-ish are really probably "worth" more like $190k or $200k.. And if the folks in truly comparable homes saw their neighbors selling for $190-ish, a few more might decide to move. Sellers have mental "price thresholds" just like buyers do. "I'd sell for $200k, but not for $190k, less fees"..

What you have now is most agents listing homes exactly at, or sometimes even (way) below previous sale pricing, so you aren't drawing new sellers out & buyers are getting to fight over scraps.