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Valley Home Resale Market Perks Up

Valley Home Resale Market Perks Up

3/22/2006

Sales, prices rise as buyers seek deals

Metropolitan Phoenix’s resale housing market regained some momentum in February as sales perked up and the price for a typical house hit a record high.

Home buyers and sellers and real estate agents all can find something to like about the latest numbers from the Arizona Real Estate Center at Arizona State University Polytechnic.

Yet, the figures also show the conflicting forces roiling a market still struggling to regain the equilibrium it lost in last year’s selling frenzy.

Jay Butler, head of the real estate center, believes that the higher prices are caused by more people buying move-up homes. He said that is typical in a slowing housing market while cautioning that the market’s direction wouldn’t be clear until the second quarter. The holidays interrupt the recording of sales and distract buyers from serious house shopping.

“Everybody is sort of in transition,” he said. “Some people say this is just a hiccup. Some are arguing a disaster scenario. I don’t think things are going back to the hypermarket. But I don’t think we are going to have a disaster scenario. If we do, it won’t come from the housing industry itself. It will come from outside the industry.”

Here are some of the key numbers:

  • 5,455 sales in February. Up from January but down from February 2005.
  • Median price in February of $265,000. Up from January and a substantial increase from February 2005. Previous record was $263,000 in September.
  • Condominiums and townhouses. Sales up slightly between January and February in the sector that has become popular with first-time buyers who can’t afford a single-family home. But prices are rising, to a median of $175,000 in February from $125,000 a year ago.

Investors move on

Many people close to the housing market say it has begun to slow from what some analysts said was an unsustainable pace. A big reason, according to real estate agents: Investors are taking their profits and moving to other cities. Listings are up, as is the time it takes to sell a house as buyers no longer are forced to jump at the first deal they see or get into bidding wars.

“We’re getting a few more buyers coming out and looking around, but the inventory is going through the roof,” said Floyd Scott, designated broker of Century 21 Arizona Foothills, which has offices throughout the Valley. “Investors are rotating out, going to Dallas and Austin. They bought the resale market last year, took the inventory right out of the market and everyone raised prices. . . . We’re still trying to find our legs on whether these prices will hold up or there will be a small decline this year. It might soften a little bit because of the price increase last year.”

Julie Bieganski, a real estate agent and investor with First USA Realty, has bought and sold houses in northeast Phoenix, Casa Grande and in the West Valley, chasing affordable homes that could be fixed up and resold. She said there is still very strong demand for houses selling for $200,000 or less.

“These are not investors, these are people who want to move in, mostly first-time buyers,” she said. “The resale market is still OK. Things are still selling but the price has to be right. You can’t overprice now. There are too many houses.”

Unloading new homes

The new-home market is feeling the effects of longer selling times and pickier buyers on the resale side. Some builders say that some of their inventory of speculative homes comes from contracts canceled by buyers who couldn’t sell their resale home.

That has led builders to offer incentives to unload these properties, creating short-term buying opportunity for bargain hunters. But Butler also said that he thinks builders are starting construction on houses that don’t have sales contracts just to keep the action moving in subdivisions.

Larry Seay, chief financial officer of Scottsdale-based Meritage Homes, said buyers have gotten accustomed to a red-hot resale market. They think they can wait until the last minute to sell their current home, expecting the rush of buyers typical in last year’s market.

Then the house doesn’t sell before the time to close on the new house. That can be costly in terms of lost earnest money.

“We’re definitely counseling people that as soon as they sign a sales contract with us, sell their current home so they don’t get squeezed,” Seay said.

By Glen Creno, Arizona Republic, March 22, 2006

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