Phoenix housing prices have seen a substantial increase in the past 12 months with as much as 20-40% growth rates in certain parts of the city. With limited inventory available for many new home buyers, many builders have seen an increase in sales. As investors flocked to the Valley over the past 2 year, with housing prices at historic lows, many of the distressed properties for sale have been either scooped up as rentals or resold as “Fix and Flips”. Investors often times going in and doing a nice re-model of the home in order to improve the property and sell to an end user.
The Phoenix housing market has a number of factors influencing home sales:
- Price Increases
- Consumer Demand
- Historically Low Mortgage Rates
- The overall improvement in the economy and job growth
First-time home buyers feel the pressure.
Many first time home buyers and buyers with a price-point under $200,000 are often getting outbid to “Cash” investors. Many offers that are made by these cash investors are often made sight unseen. That is because the market has been climbing so quickly that investors could buy a home, hold it and renovate it for a month or two and re-sell the house for a nice profit. This often leaves owner occupant buyer’s left in the dust, and wondering why they didn’t get the home. This has lead to buyer’s making “above list price” offers and hoping that they have a chance to get the home.
This activity has fueled the market in a challenging way. Primarily it causes bidding wars that often leads to people feeling like they are paying too much for a home or even discouraged to the point that they don’t want to bother trying to purchase a home all together. Another big challenge lends to the circumstances of an appraisal for anyone buying and obtaining mortgage financing. Often appraisers are now forced to try and justify the higher price on accepted contracts, even though many similar comparable homes that have recently sold, have sold for less.
Opportunity still exists
Despite the rampant price increases, buyers should not be discouraged. Many investors are realizing that the market can no longer support the quick gains as seen in the past 12-24 months and many are no longer buying. That will leave plenty of opportunity for first-time buyers and move up buyers to find nice homes that they can purchase and enjoy. After all- buying a home and getting a 30 year rate in the range of 3.25-3.75% will not be around forever!