Metro Phoenix’s housing’s market is drawing many of the different types of buyers needed to propel it to a full recovery from the crash. More first-timers, buyers returning from foreclosure, new-home purchasers and Baby Boomers are in the market for Valley houses now than at any time since the crash.
Homes priced right and in the areas and price ranges these buyers want are selling faster than they have in a decade.
Phoenix-area home prices are still down about 10 percent from the peak of the housing boom in 2006. But home sales are up 11 percent during the first three months of this year compared with the same period a year ago, according to Street Scout Home Values, an annual analysis of metro Phoenix’s housing market done with The Information Market.
And buyers looking for homes prices below $400,000 are driving much of metro Phoenix's housing market now.
“It’s all about the homebuyers now. Who’s in the market and who’s out,” said Tom Ruff, real-estate analyst with The Information Market, owned by the Arizona Regional Multiple Listing Service. “There’s an almost frenzy for homes under $350,000 and houses in popular central areas, but there aren’t enough buyers for high-priced homes too far away.”
The Millennials: First time's the charm
Most young buyers aren’t flocking to the Valley’s farthest-flung suburbs to find the most affordable homes.
In January, Billy Day and Jessica Simms, who got married recently, bought a 1950s home in central Scottsdale. It's close to their jobs in Tempe and Chandler and already had been renovated, complete with a new kitchen.
“Our price range was set at $300,000 to $350,000,” said Simms, 30, who is a veterinarian. “We wanted to be in a safe neighborhood close to the 101 and Old Town, but were also very much looking for a renovated house with a yard that didn't require a lot of work on the weekend."
Home prices climbed 12 percent in Old Town Scottsdale during the past year.
Many Valley neighborhoods, where home prices are typically below $400,000, are seeing double-digit increases.
The median price of a house in central Phoenix’s Cheery Lynn/The Yard neighborhood shot up 50 percent during the past year. The area’s overall median price is now about $285,000.
Experts believe young people are helping drive up the prices.
Anecdotally, housing analysts and real-estate agents say they have never seen so many Millennials buying Valley homes. But there's no good data because public records for home sales don't require buyers' ages.
“Many younger buyers now want to be able to walk out their door and hit a coffee shop, bar, place to eat or a market,” Catherine Schaeffer of West USA Realty Revelation said. “Many have their minds set on Tempe, Scottsdale or central Phoenix and aren’t interested in more affordable neighborhoods farther out.”
Central Valley neighborhoods are drawing buyers who want to be near downtowns with shopping, local restaurants and jobs as well as freeways or light rail. And they are willing to pay more for the location.
David and Anne Bernath love their north-central Phoenix home and hadn’t planned to move for a while. The couple bought the foreclosure home in 2013 and spent time and money renovating their kitchen and bathrooms, including replacing a 1970s yellow bathtub.
But when they found out they needed to relocated for Anne's job, the couple put their house on the market. It sold within a day for $1,000 more than the asking price.
“We may have priced the house a little too well,” Anne Bernath joked, because it sold so fast.
Their house sold for about $250,000 more than they paid for it.
Historic neighborhoods in central Phoenix are also drawing buyers willing to pay for the location.
“Lots of demand for historic homes are pushing prices up,” said Vicki Vanderhoff of HomeSmart Elite. “Some of the most expensive homes in the Willo neighborhood are coming on the market and selling fast.”
Recently, a home in Willo on Cypress Street sold for $895,000, the highest price paid for a home in the area since 2007, she said.
The coveted Arcadia neighborhood that straddles east Phoenix and central Scottsdale is one area of the Valley that is still drawing million-dollar homebuyers. Home sales and prices in the area climbed almost 10 percent during the past year.
The boomerang buyers: Back in own house
More people who lost houses to foreclosure can now qualify for mortgages again and are buying.
Housing analysts have dubbed this big group "boomerang buyers" because they were bounced out of the housing market and are now coming back.
Jason and Jessica Duncan and their three teenagers were renting a home in central Mesa when one of their friends saw a sign for a new community not far from where they were living.
The couple, who had lost a home to foreclosure during the crash, camped out to be third in line to buy a new house built by Blandford Homes in Mulberry. They moved into their new home last summer and are already looking to move up to a bigger new home in their neighborhood.
“We had a home but went through a foreclosure during the bad years,” said Jason Duncan, who works for the city of Mesa. “But we were back in the market to buy. We thought we would buy a resale, but Mulberry’s location and prices were so good we camped out to buy there.”
Home prices in the development started in the low $200,000s, almost $100,000 below the typical price for a new Valley house.
The Duncans paid $272,000 for theirs and are already seeing home prices climb around them. They are considering selling and buying a bigger house in the neighborhood.
“This could be the Valley’s strongest year for boomerang buyers,” said Arizona housing analyst Mike Orr of the Cromford Report.
Boomerang buyers are also fueling demand for houses below $500,000.
Metro Phoenix’s new-home market has rebounded much slower than expected with several stalls and starts to a recovery during the past few years.
But last summer, new-home sales started to steadily climb for the first time. New-home sales so far this year are up almost 37 percent from last year, signaling the end of a seven-year slump, according to the RL Brown Housing Reports.
When Blandford Homes opened Mulberry to buyers last spring, it was the first time buyers had camped out for houses since the housing boom a decade ago. The community was one of the top for sales in metro Phoenix last year.
New homes have typically cost $100,000 more than existing ones in the Valley. To court more buyers, builders have been offering more affordable houses and interesting designs.
Mary and David Clift are moving with her mother and their daughter from Southern California to a new home in Surprise they bought a few months ago in Asante, a community stalled during the housing crash but now drawing buyers in droves.
The Clifts had been looking for a home where they could retire with their daughter, who has autism. Their new house has an apartment tucked inside that Mary Clift’s 90-year-old mom will live in now, and then their daughter will in future years. The multigenerational house design has drawn many buyers for Lennar in metro Phoenix.
They haven't closed yet because the home is still under construction, but prices in that development range from $218,000 to $300,000.
“Our NextGen house is perfect for us, and believe me, we looked at a lot of homes,” Mary Clift said. “We couldn’t have afforded to retire like this in California.”
Lennar reopened Asante, where the Clifts are moving, in January. The development stalled seven years ago during the crash.
The Boomers: Downsizing downtown
In March, Victoria and Steve Lindley sold their Scottsdale home, located on an acre lot complete with guesthouse and art studio, to buy a new condo penthouse in downtown Phoenix’s Portland on the Park development. It only took eight days for their large home to sell.
Both of their children will soon be in college, and the Lindleys were ready to downsize. Their new home is a short light-rail ride away from Victoria Lindley’s boutique Muse Apparel in uptown Phoenix. Steve Lindley sells commercial real estate and specializes in central Phoenix.
They haven't closed on their penthouse condo because it's not done yet. But home prices at Portland on the Park range from $235,000 to $1.25 million.
“Our Scottsdale home became a place we just slept,” Victoria Lindley said. “We both work a lot and spend a lot of our time doing things socially and exploring the Valley.”
Steve Lindley said the couple had always wanted “a more walkable lifestyle,” but couldn’t find it in Arizona before.
A growing number of Baby Boomers with equity in their homes are opting to sell and move to small digs, closer in.
"The major urban cores of Phoenix, Scottsdale and Tempe have transformed to the extent that the population is now demanding planners make them increasingly vibrant," said David Newcombe of Launch Real Estate. He is handling sales at Portland on the Park.
Home prices in Paradise Valley, the original luxury home enclave in metro Phoenix, are down more than 12 percent from last year.
“The hardest-hit price range is for homes over $1 million,” said Bobby Lieb of HomeSmart Elite. “Part of the problem is the volatile stock market, and part of the problem is that sellers price their homes too high.”
March through June is typically considered the peak time for high-end home sales in metro Phoenix. Million-dollar home sales typically take more time to close, and buyers often start shopping in January and February, when the Valley draws many big events and visitors.
“Valley home prices will go down as well as up this year,” said Orr. “The luxury sector is weak, and I am expecting small price declines in areas like north Scottsdale, Cave Creek, Gold Canyon, Las Sendas, Fountain Hills, Ahwatukee, Biltmore and Paradise Valley.”
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