4 Signs the Housing Market Crash in Phoenix Is Long Gone

Written by Posted On Wednesday, 16 August 2017 16:04

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Phoenix’s economy was booming in the months leading up to the 2007-08 recession. Job numbers and per capita incomes were strong, which allowed the state and city to stave off the impact of the market crash — for a short period of time. Soon, though, the city’s housing market mirrored that of the country at large. In some cases, it even looked worse: mortgage debt in Arizona was higher than the national average, and the unemployment rate was on the rise.

But a lot can change in a few short years, and Phoenix and Arizona are now back on top. Being a residential market gem isn’t new for Phoenix — it had one of the best residential markets before the housing crash. The market has now bounced back magnificently, and is showing no sign of slowing. Here are four indicators that the housing market crash is long gone (and will not be missed).

1. Home Values Are Rising

This is a definite sign that a lagging housing market is in the rearview mirror. The average Phoenix-area home has climbed in value by about 8% in the past year, according to the county’s assessor. The assessor typically undervalues Phoenix homes by 10% to 20% in order to avoid market inflation.

“The housing market in Maricopa County has now nearly recovered from the recession,” Maricopa County Assessor Paul Petersen told azcentral.com.

Condominium prices are also on the rise, with azcentral.com reporting that condo sales in the Valley have nearly tripled in just one year, with prices up 17% — outpacing the single-family home market. Luxury condo sales, meanwhile, have quadrupled. Condominium properties are attracting people of all ages, but have the strongest appeal to the millennial and baby boomer markets. The median price for a new condo has risen to $384,000.

While prices are rising, the city remains relatively affordable when compared to other major cities, which is a good predictor of continued future growth. With a median home price of $300,000, Phoenix is the most affordable city in realtor.com’s 2017 top five list of desirable markets.

2. Phoenix Is a Housing Market Destination

Phoenix’s growing population is just one demonstrator of the city’s appealing housing market. Population numbers released by the U.S. Census Bureau in May placed Phoenix as the country’s fifth largest city, with the population growing faster than any other American city — at a rate of 88 people per day, on average. That’s a lot of new residents hunting for homes in the city. It’s not surprising, given all the reasons people have to be attracted to the city and the state.

The snowbird market — particularly from Canada — has played a significant role in making Phoenix a premier housing market destination. Forbes took a look at the bilateral relationship between our neighbor to the north and the state of Arizona. The Canadian residential cohort makes up the largest expat community in Maricopa County, and they helped the Phoenix and Arizona market recover from the recession — in 2012, Canadians accounted for 5% of all home sales in Arizona. With Canada’s baby boomer population climbing (and winters not getting any more pleasant), it’s near certain that Canadians will continue to play a large role in the growth of the Phoenix housing market.

Ironically, the surge in homebuilding in the Phoenix area has resulted in a shortage of Arizona lumber, so lumber is being increasingly imported from — you guessed it — Canada.

3. Home Sales at an All-Time High

Demand for new housing in Phoenix reached historical highs this spring. A residential market research firm reported new home sales were up 22% at the end of May. The firm also found that April and May of 2017 were the best pair of months the market has experienced in a decade.

While Phoenix has many affordable single-home and condo properties, luxury mansion sales are also on the rise. More people bought seven-figure homes in the first quarter of 2017 than in previous years, and more than 300 seven-figure homes were sold during those three months. While multimillion dollar properties are selling at high levels, buyers should be wary — the growth experienced by these homes is not nearly as high as with condos or six-figure single-family homes.

4. New Developers Coming to Town

Homes are selling quickly, and real estate developers are taking note. The Downtown Phoenix Journal has chronicled some of the latest residential developments in the city’s urban core, including unique new offerings like shipping containers repurposed as contemporary, one-bedroom apartments. Meanwhile, the growth and success of condo developments continue to surprise skeptics. In the past two years, more than 4,000 new condos were started or completed, and the first quarter of 2017 saw four times more condos sold than in the same period the previous year.  

The city’s booming real estate market has recently attracted the likes of billionaire investor Warren Buffett. His company, Berkshire Hathaway, just invested $377 million in a Scottsdale-based real estate trust, which will give his investors access to the city’s growing single-tenant real estate market.

As a bit of a welcome wagon to new Phoenix residents, the city’s commercial offerings are also getting a makeover. Scottsdale Fashion Square, the city’s luxury shopping complex, just unveiled details of a multimillion-dollar renovation. Macerich, the company that manages the complex, has openly stated that the makeover comes in response to Greater Phoenix’s “strong growth” and “attractive and buoyant metropolitan area.”

If you’re considering buying in Phoenix, now is the time to do it. With housing prices making rapid leaps while still in affordable territory, there is no time like today to get in on one of the country’s hottest markets.

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Melanie Sanders

Aderra’s sales is headed by Melanie Sanders of Platinum Living Realty. Melanie comes with 25 years of experience as an Associate Broker/Team Leader, specializing in New Homes and Model Home Sales. Melanie was the former Vice President and Designated Broker of DR Horton and Ryland Homes, running sales and marketing. Melanie and her team have the knowledge, experience and friendly attitude required to manage all aspects of sales at Aderra.

www.liveaderra.com

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