The long way HOME

As Mil­len­ni­als drive Val­ley hous­ing re­cov­ery, prices in many ar­eas see dou­ble-digit spikes

The Arizona Republic - - Front Page - Cather­ine Reagor

It’s been a long, hard road to re­cov­ery for metro Phoenix’s boom-and-bust-bat­tered hous­ing mar­ket.

But some Val­ley neigh­bor­hoods are there — back to 2006 price lev­els, and higher. And other neigh­bor­hoods are very close.

As ex­pected, Mil­len­nial first-time home­buy­ers are pro­pel­ling the re­cov­ery.

Metro Phoenix home prices are rising the fastest in many of its most af­ford­able, cen­trally lo­cated neigh­bor­hoods, from down­town Phoenix to cen­tral Mesa, where young buy­ers want to live and can af­ford houses.

2017 was a good year for the hous­ing re­cov­ery in the Phoenix area. Al­most one-third of the Val­ley’s ZIP codes posted dou­ble-digit per­cent­age in­creases in prices last year, ac­cord­ing to The Ari­zona

Repub­lic/az­cen­tral Street Scout Home Val­ues report.

Street Scout is az­cen­tral’s neigh­bor­hood and hous­ing site that pro­vides prop­erty valu­a­tions, home sales data, real-es­tate news and list­ings.

Street Scout ex­ists to make our com­mu­nity stronger, more in­formed and more con­nected. We’re a news or­ga­ni­za­tion with deep

roots here, but we’re also a mod­ern me­dia com­pany that’s push­ing the bound­aries of what we think about when we say “con­tent.” Stun­ning pho­tog­ra­phy, com­pre­hen­sive neigh­bor­hood guides, ac­cu­rate and timely data, and ex­pert anal­y­sis pro­vide you with what you need to find the best place to call home.

But there is con­cern buyer de­mand for af­ford­able homes is be­gin­ning to out­pace the sup­ply. And there’s al­ways worry in Ari­zona about the pos­si­bil­ity of an­other hous­ing bust when prices climb for a few years.

In nearly 30 Phoenix-area neigh­bor­hoods, prices have re­bounded to 2006 lev­els or even higher, data from the In­for­ma­tion Mar­ket shows.

Most of those ar­eas still have me­dian home prices be­low $300,000.

“Last year was a strong one for the Val­ley’s hous­ing mar­ket, par­tic­u­larly the more af­ford­able neigh­bor­hoods closer in,” said Tina Tam­boer, se­nior hous­ing an­a­lyst with the Crom­ford Report. “Only 2004, ’05 and 2011 were bet­ter years for home sales, and those weren’t nor­mal years.”

The hous­ing boom in­flated home prices and sales be­tween 2004 and 2006, and then in­vestors drove up sales as fore­clo­sures climbed and prices plum­meted from 2010 to 2012.

Home prices have dou­bled in many Phoenix-area neigh­bor­hoods since the bot­tom of the mar­ket. Be­sides the 30 ZIP codes where home prices have bounced back from the crash, val­ues in an­other 40 neigh­bor­hoods are within 10 per­cent of re­cov­er­ing.

Aysia Williams and Ben­jamin Hughes rented in down­town Phoenix’s his­toric Wood­land district for about a year be­fore de­cid­ing to buy their first home.

“We fell in love with the area but saw prices and rents climb­ing fast,” Williams said. “We knew we wanted to buy, but there was a lot of com­pe­ti­tion for the houses we liked.”

Wood­land is part of the 85007 ZIP code, one of cen­tral Phoenix’s more af­ford­able neigh­bor­hoods. The area, which has also at­tracted many in­vestors, saw its over­all me­dian home price climb 10 per­cent, to more than $192,000, in 2017. Sales in the area jumped nearly 20 per­cent last year.

Home prices in their neigh­bor­hood on the west­ern side of down­town have re­bounded from the crash and are al­most 2 per­cent higher than they were in 2006.

“Aysia and Ben­jamin were so lucky and bought from their won­der­ful neigh­bor, who didn’t want to sell to an in­vestor,” said Sherry Rampy, a down­town Phoenix real-es­tate agent with HomeS­mart.

The cou­ple’s house, for which they paid less than $250,000 a few months ago, wasn’t even listed for sale.

“Peo­ple talk about the gen­tri­fi­ca­tion of cen­tral Phoenix pric­ing too many first-time buy­ers out,” Rampy said. “But more high-end home sales in the area help other more af­ford­able ar­eas like Wood­land and Coron­ado im­prove, too.”

Stephanie Silva and Billy Horner moved to Chan­dler from Chicago for the warmth last March.

“We wanted to rent first to see if we liked the area and a ‘shovel-free life,’ ” said Silva, who works in Tempe. Horner works in down­town Chan­dler.

The cou­ple re­cently bought a home for un­der $275,000 in the cen­tral Mesa ZIP 85210, al­most half­way be­tween their jobs. Prices in the still-af­ford­able neigh­bor­hood climbed 9 per­cent, and sales rose 38 per­cent, last year.

Home val­ues just re­bounded back to 2006 lev­els in their neigh­bor­hood, where the me­dian price is about $215,000.

“We are on a quiet, cozy block in a home with a pool and a yard,” Silva said. “So far, it is ev­ery­thing these Mid­west trans­plants could ask for.”

The cou­ple’s real-es­tate agents, Matthew and Tia Coates of Chan­dler-based Rev­e­la­tion Real Es­tate, said if more peo­ple don’t de­cide to sell in the pop­u­lar, af­ford­able neigh­bor­hoods closer in, then it will soon get even tougher for first­time buy­ers.

“The first-time-home­buyer mar­ket is ex­plod­ing. So many peo­ple are done with rent­ing and deal­ing with land­lords,” Matthew Coates said. “But we are see­ing a deficit of homes avail­able.”

The num­ber of Val­ley homes for sale priced un­der $350,000 is down al­most 20 per­cent from last year, ac­cord­ing to the Crom­ford Report.

Nils and Heather Hof­mann be­gan look­ing for a home mid­way be­tween their jobs in Deer Val­ley and Chan­dler more than a year ago. Their bud­get was $300,000.

The cou­ple, who were rent­ing in north-cen­tral Phoenix, put their home search on hold last fall af­ter see­ing dozens of houses. The ones they liked usu­ally sold be­fore they could get an of­fer in.

“I think we must have seen more than 80 houses,” Heather Hof­mann said. “We wanted to buy where we were rent­ing, but prices were too high.”

The cou­ple de­cided to stop look­ing for a while late last sum­mer be­cause it be­came too frus­trat­ing. But then they found out Heather was preg­nant, re­sumed their search and upped their price to $400,000.

The Hof­manns bought a home last month in north Phoenix’s Desert Ridge neigh­bor­hood, close to sev­eral free­ways for their com­mute.

The me­dian home price in the Desert Ridge area is about $485,000, up 5 per­cent from 2016.

David Meek of Keller Williams Ari­zona Realty said the Hof­manns saw the house they bought on the day it was listed and made the first of­fer. A cou­ple of of­fers quickly fol­lowed theirs, but they got the house.

“Sev­eral of my first-time and move-

up buy­ers have quit or paused their home search due to lack of ac­cept­able in­ven­tory,” said Meek, who is about to put his own north Phoenix house on the mar­ket for $250,000 to move a big­ger one far­ther north for his grow­ing fam­ily.

His client, Bon­nie Jor­dan, who rents in the up­scale Kier­land com­mu­nity and works in north Scotts­dale, doesn’t want to move too much far­ther out to buy her first home. Rising prices have made her de­cide to put her home search on hold.

“I have been look­ing for a home to buy for the past few years. When­ever we found one for around $200,000, the in­vestors swooped in first,” she said. “I don’t want to move far out west and take my son away from his school. I am done look­ing for a while.”

Val­ley real-es­tate agent Diane Bren­nan of Cold­well Banker is work­ing with a first-time buyer who is look­ing to the West Val­ley sub­urb Buck­eye be­cause that’s the only place he can af­ford to pur­chase.

Be­fore the hous­ing-mar­ket crash, the “drive un­til you qual­ify” men­tal­ity was how many buy­ers were able to af­ford their first houses in the Val­ley. The far­ther out they went, the lower the prices on the houses.

The metro Phoenix sub­urbs far­thest out were hard­est hit by the crash and have been the slow­est to re­cover.

But both sales and prices are again climb­ing in those ar­eas, in­clud­ing the West Val­ley sub­urbs of Goodyear, Sur­prise and Buck­eye, and the south­east Val­ley ar­eas of Queen Creek and Mari­copa.

The me­dian home price in the Buck­eye ZIP code 85326 is up al­most 10 per­cent from last year, to $192,000. But the area’s home val­ues are still about 19 per­cent off the 2006 peak.

Metro Phoenix home prices con­tinue to climb in most neigh­bor­hoods.

The me­dian Val­ley home price is now about $253,000, up from $235,000 a year ago. Some home­own­ers and na­tional mar­ket watch­ers see price in­creases in the Val­ley and are con­cerned about an­other bub­ble.

“The hous­ing mar­ket is very solid now. The deals are gone, but that’s not a bad thing,” said vet­eran real-es­tate agent Joseph Call­away, who with his wife, JoAnn, forms the team known as “Those Call­aways.” “But there’s noth­ing that shows we are head­ing for an­other crash.”

Metro Phoenix’s De­cem­ber 2017 me­dian price of $250,000 is still be­low the high of $260,000 from 2006.

MICHAEL CHOW/THE REPUB­LIC

Ben­jamin Hughes and Aysia Williams bought a house in Phoenix.

PA­TRICK BREEN/THE REPUB­LIC

Billy Horner and Stephanie Silva moved to the Val­ley from Chicago last year and re­cently bought a home in Mesa for un­der $275,000.

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