The real estate market in Arizona is showing signs of vitality. Values are up, investors are still buying, but more regular buyers are entering the market. Arizona Republic real estate reporter Catherine Reagor will bring us up to date.
Ted Simons: Phoenix area housing Sales and home prices were Up in January. It's the latest in a series of positive signs for the valley's housing market. Joining us now to help make sense of it all is "Arizona republic's" real estate Reporter Catherine Reagor. Always a pleasure. Good to have you here.
Catherine Reagor: Good to be here.
Ted Simons: Home values are increasing. How much are they increasing and why are they increasing?
Catherine Reagor: Up 16 %, and that is different than the median price. That is based on home sales. That was up 34 %. Home values includes every value of the home whether sold or not. When the assessor, all homeowers should have now -- this is the first time residential assessed values in Maricopa county have gone up in six years.
Ted Simons: We're talking pre-recession times then.
Catherine Reagor: Yes.
Ted Simons: What is going on out there? Why is this happening?
Catherine Reagor: Home market is going. We have buyers. Investors have been snatching up homes. We watched that. They are the big investors. They're buying from the small investors. People who want to take advantage of the low interest rates. First-time home buyers trying to buy, competing, and in some cases able to buy finally because home values have increased, those homeowners who have been setting in their house for seven years, eight year, feeling trapped, a lot are freed and they can sell and move up.
Ted Simons: So, what price ranges are moving the most?
Catherine Reagor: Really $250,000 below.
Ted Simons: Still that market.
Catherine Reagor: Yes. Surprisingly, the luxury market, $500,000, and above, they thought it would be years before it started to recover. But these great values that have drawn many people from out of the country, out of the state, Canadians have bought those luxury homes and really that market is now improving as well.
Ted Simons: Interesting. As far as investors, you mentioned how much are they driving this market?
Catherine Reagor: Well, in the past year, they have made up a significant portion. But as home prices have gone up and there are -- there are not as many foreclosure homes at all to purchase or short sales. They're a smaller part of the market but they're still buying. Good news for the overall market and stability. Number of regular buyers and regular sellers, you know, not using a short sale or foreclosure, is now 65 % of the market. Two years ago it was 30% of the market. That is stability. Homeowners can sell and regular buyers can buy we are going in the right direction.
Ted Simons: These are people who would buy the home to actually live in. What a concept.
Catherine Reagor: Yes.
Ted Simons: Investors, are they buying them to flip them or buying them to hold?
Catherine Reagor: I have asked several of them. Blackstone, colony capital, American residential, they have a lot of wall street money. Wall street loves these firms and they love Phoenix. Wall street loves Phoenix right now. They say to hold. They have this formula. These people who lost their homes to foreclosure and they want a short sale and they can't buy anything yet. They want to live in that neighborhood. They don't want to be in an apartment, they want to be in a four bedroom, three bath, same school district. So far it has not oversaturated the market, not too many rentals. We are hearing that, you know, last summer rentals -- good rents were going in days and people were lining up. Now it is taking longer. Supply and demand are kicking in. We are watching to see what they do. They say they will not sell all at once. If they did, some of these neighborhoods --30 %, what would that mean --
Ted Simons: You mentioned foreclosures down. What about pre-foreclosures.
Catherine Reagor: Those are down as well. Foreclosures fell below a 1,000 a month in February and that is the first time they have fallen below a thousand since 2007 . It is just not the indicator of the housing market anymore, which is good news. That also means also there is fewer cheap foreclosure homes for investors and others to buy.
Ted Simons: And in that regard, you mentioned more regular folks buying homes to live in. Are we seeing a loosening with the banks as far as lending is concerned?
Catherine Reagor: Not really. There is still very much in many cases -- unless you can get one of the government backed loans, FHA or a BA, you know, it is 20 % down. Many housing analysts say this is a good thing. You know, if you can't afford to put to 10 or 20% down not the right time to buy a house. Save and be in that position. The flipping mode for a profit, unless you can get a foreclosure house for $50,000, and flip it a couple of months later for $80,000, you cannot find them anymore. It is not out there. We go back to living in our houses.
Ted Simons: The tighter credit, that forces the rental market to stay strong because these folks are waiting to get to the20 %.
Catherine Reagor: Investors are all paying cash. You can't compete with that. They don't need appraisals and anything like that. They believe they have a formula. And some of these wall street investors they have very smart minds behind it. A lot is riding on it in our housing market for their decisions.
Ted Simons: You mentioned the $500,000 and up luxury market if you will. Investor activity there as well?
Catherine Reagor: Some, but not a lot. It is really second home buyers. People, Canadians -- Canadian home prices have jumped, you know. Surprising -- $1 million home here would be $2 million there. Just an example. These are considered great deals. And people are still very interested in investing in a nice home, a second home. And we are drawing buyers from around the world.
Ted Simons: And you mentioned that wall street was liking what they saw or it saw in Arizona. There is an IPO out there, home builders getting ready to make big-time bucks?
Catherine Reagor: Yes, Taylor Morrison Based in Scottsdale, last December went out and wanted to raise $250 million dollars. A couple of weeks ago, they refiled, and this was a nod from wall street, they could raise up to half a billion.
Ted Simons: Oh, my goodness. That is a sign that wall street thinks that -- investors think that Arizona is on the uptake.
Catherine Reagor: We are really in our home price and home building market we are leading the nation. We led it down and we are leading it up.
Ted Simons: Are people still concerned that --
Catherine Reagor: I don't hear that concern. There is not this big inventory of foreclosures out there. That is slowing. Home prices climbed a lot last year but are moderating. And buyers -- and we're still an affordable market. That has been our big draw for a long time. And we are creating jobs.
Ted Simons: We usually have you on when the market does a belly up. It is good to have you here with good news.
Catherine Reagor: I'm glad to be here.
Ted Simons: Thank you.
Catherine Reagor:Real Estate Reporter, The Arizona Republic;