Shrinking number of homes available below $300,000 drives increase in prices; sales soar by 19 percent
Temperatures have cooled, and most of metro Phoenix’s housing market is heating back up.
Valley home sales and prices waned a bit in August, after several months of increases.
But home prices, home sales and home building are all on the rise again, according to two new reports.
The median home price of a Phoenix-area home climbed to $225,000 in September. That compares to $221,859 in August, according to Arizona State University’s W.P. Carey School of Business.
Home sales through September of this year are up 19 percent compared 2014. And sales ticked upabout 3 percent from August.
Home building in the Valley has been steadily increasing this year, even during the summer months. New home construction through October is 46 percent ahead of last year’s lackluster pace, according to the Phoenix Housing Market Letter.
Housing analysts are pretty optimistic Phoenix’s market will continue to show at least modest gains for the rest of the year.
But most price increases will be driven by a growing number of buyers trying to purchase a shrinking number of houses priced below $300,000, said Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business.
“The biggest problem we face is a huge mismatch between supply and demand below $300,000," he said. "This is likely to keep prices rising strongly and fastest for areas where the vast majority of homes are under the median sales price of $225,000."
Boomerang and first-time buyers continue to drive the region’s housing market increases.
The first group lost homes to foreclosure and can now qualify for loans again. Many of the first timers are tapping FHA loans that require lower down payments and now come with lower fees.
But many of these buyers can’t afford to pay more than $300,000 for a house. And they certainly can't afford a million-dollar home, which is why that end of the Valley's housing market is slowing.
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