Valley home values rebounding to pre-recession levels
April 30, 2018
Better days have arrived for the housing market, with many neighborhoods back to pre-crash levels and high demand from first-time buyers.
Out of the rough 150 metro Phoenix zip codes, 30 of them are back to pre-crash levels and 40 are within 10 percent of those levels, says Catherine Reagor of The Arizona Republic. Other neighborhoods were hit harder in the crash and will take longer to recover.
There has been an increase of houses on the affordable side, which is generally considered to be $300,000 or less. Many of those affordable neighborhoods – central Mesa, central Glendale, central and northwest Phoenix – are being filled by younger, first-time buyers. Those areas are becoming stronger because it’s what people can afford, Reagor says.
Neighborhoods around Buckeye and Pinal Country are still struggling, but they are showing signs of improvement, Reagor says. The percentage of homeowners underwater is at eight percent today compared to 50 percent in 2009.
Nearly 8,000 apartment units went up last year, and over 9,000 more are planned to be finished by the end of this year. Many of them are concentrated in central Phoenix, with some popping up in central Scottsdale as well. However, the market is seeing that more people are looking to buy and not rent. Reagor says she could see some of the luxury apartments downtown be converted into condos if the demand is there.
“There’s more demand than supply and not only from millennial buyers but also investors,” Reagor says. “Home prices under 300k easily get a dozen offers within an hour on the market. Investors are coming in and gobbling up everything and they all pay cash.”
Reagor says she is happy to see the market doing so well, but she still has her guard up, saying she’s “always cautious because of the tears from the crash.” However, the rampant subprime mortgage issue that was at the root of the last crash isn’t present this time. Also, if prices climb too high, first-time buyers won’t be able to afford them. That will cause the demand to drop, Reagor says, and prices will drop soon after.