cjcj
New member
Valley tackles cooling market
Catherine Reagor, Glen Creno, & Ryan Konig
The Arizona Republic
Mar. 5, 2006 12:00 AM
Metropolitan Phoenix's housing market started 2005 with a bang but ended it amid concerns of a price bubble. Home values soared and houses sold within days in most neighborhoods during the first six months of the year. But then investors began to bail, listings climbed and asking prices stared surpassing home appraisals.
By September, the market was showing signs of cooling. In October, home prices slipped slightly.
advertisement
The Arizona Republic's Valley Home Values analysis of housing prices and sales by postal ZIP codes that shows all neighborhoods racked up big gains early in 2005. Increases from 30 to 50 percent were common as metropolitan Phoenix led the country in percentage gain of housing price. But prices began to level or dip during the last three months of the year.
The slowing has continued this year with metropolitan Phoenix's overall median existing home prices inching down again. Resale listings exceeded 30,000 in January, nearly nine times the level of the same month of last year, says the Arizona Regional Multiple Listing Service. Selling time increased from about 5 1/2 days to 49. Sellers are frustrated because they are getting few offers, and many are cutting prices. Buyers seeing the slowing have become much more cautious.
Neil Brooks, a Century 21 agent in northeast Phoenix, said shoppers are trying lowball offers of $30,000 to $50,000 less than asking prices as a starting spot in negotiations.
"Last year, it was the sellers who were being very aggressive, and now it's the buyers," he said. "There's so much inventory, they can sit back and spend their time looking at bazillions of homes."
Most real estate market watchers say the Valley's housing market is only reverting to a stable one after last year's frenzy. Metropolitan Phoenix led the nation for home price increases with an almost 50 percent run-up during 2005. And that price includes a few dips late in the year.
Now sellers need to be more realistic and realize their homes aren't going to be sold in just a few days, or a couple of hours, for thousands more than they are worth.
"The market has done a complete about-face," said Barbara Sage, a northwest Valley and Sun City specialist at ERA Encore Realty. "Last year, 14 offers for a home would come across at once, clogging up the fax machine."
Now, she said, after showing a property the seller's agent will call and tell her the "owner is anxious to sell." She tells them with a "yawn" that her buyer has a few more properties to look at.
"The days of multiple offers made on sight-unseen properties and offers well above list price are gone for now," said Cecil Duarte of Serving Valleywide Realty. "The market has softened. Inventory ballooned, and the days are here again for buyers to negotiate on price, terms and even seller contributions toward closing costs."
"Homes lasting on the market longer will affect prices," he said. "If we get that speculated 'dump and run' by investors, I expect to see prices to get competitive, and sellers offering incentives like they did in the early 1990s."
The slowdown has hit the new-home market as well. Builders that were overwhelmed with demand a year ago now are offering such freebies as thousands off spec homes, free pools or price cuts on upgrades to bring back the buyers. Top players and industry analysts disagree about the prospects for this year after a record 2005 when 63,570 new homes were permitted in the Valley.
Some look for a performance similar to last year as population gains and new jobs keep buyers coming. Others look for a steeper decline. The new-home median price increased nearly $100,000 to $299,000 last year, said analyst RL Brown, publisher of the Phoenix Housing Market Letter. And there is worry across the board that even with demand softening, higher costs for land and for materials, labor and city-approvals are pushing new-home prices beyond the comfort level of the mass-market buyer that volume builders rely on. High prices also remove a key incentive for people to move to Arizona.
Healthy slowdown
"Those kind of price increases cannot be sustained," said Brown, who sees a slowing market as a positive change and predicts a 4 percent price increase for new homes this year.
Doug Fulton, of Tempe-based Fulton Homes, said the slowdown was obvious to him on a recent flying tour of Pinal County. He said the number of new-house slabs in Maricopa was down by a third or more compared with six months ago.
Catherine Reagor, Glen Creno, & Ryan Konig
The Arizona Republic
Mar. 5, 2006 12:00 AM
Metropolitan Phoenix's housing market started 2005 with a bang but ended it amid concerns of a price bubble. Home values soared and houses sold within days in most neighborhoods during the first six months of the year. But then investors began to bail, listings climbed and asking prices stared surpassing home appraisals.
By September, the market was showing signs of cooling. In October, home prices slipped slightly.
advertisement
The Arizona Republic's Valley Home Values analysis of housing prices and sales by postal ZIP codes that shows all neighborhoods racked up big gains early in 2005. Increases from 30 to 50 percent were common as metropolitan Phoenix led the country in percentage gain of housing price. But prices began to level or dip during the last three months of the year.
The slowing has continued this year with metropolitan Phoenix's overall median existing home prices inching down again. Resale listings exceeded 30,000 in January, nearly nine times the level of the same month of last year, says the Arizona Regional Multiple Listing Service. Selling time increased from about 5 1/2 days to 49. Sellers are frustrated because they are getting few offers, and many are cutting prices. Buyers seeing the slowing have become much more cautious.
Neil Brooks, a Century 21 agent in northeast Phoenix, said shoppers are trying lowball offers of $30,000 to $50,000 less than asking prices as a starting spot in negotiations.
"Last year, it was the sellers who were being very aggressive, and now it's the buyers," he said. "There's so much inventory, they can sit back and spend their time looking at bazillions of homes."
Most real estate market watchers say the Valley's housing market is only reverting to a stable one after last year's frenzy. Metropolitan Phoenix led the nation for home price increases with an almost 50 percent run-up during 2005. And that price includes a few dips late in the year.
Now sellers need to be more realistic and realize their homes aren't going to be sold in just a few days, or a couple of hours, for thousands more than they are worth.
"The market has done a complete about-face," said Barbara Sage, a northwest Valley and Sun City specialist at ERA Encore Realty. "Last year, 14 offers for a home would come across at once, clogging up the fax machine."
Now, she said, after showing a property the seller's agent will call and tell her the "owner is anxious to sell." She tells them with a "yawn" that her buyer has a few more properties to look at.
"The days of multiple offers made on sight-unseen properties and offers well above list price are gone for now," said Cecil Duarte of Serving Valleywide Realty. "The market has softened. Inventory ballooned, and the days are here again for buyers to negotiate on price, terms and even seller contributions toward closing costs."
"Homes lasting on the market longer will affect prices," he said. "If we get that speculated 'dump and run' by investors, I expect to see prices to get competitive, and sellers offering incentives like they did in the early 1990s."
The slowdown has hit the new-home market as well. Builders that were overwhelmed with demand a year ago now are offering such freebies as thousands off spec homes, free pools or price cuts on upgrades to bring back the buyers. Top players and industry analysts disagree about the prospects for this year after a record 2005 when 63,570 new homes were permitted in the Valley.
Some look for a performance similar to last year as population gains and new jobs keep buyers coming. Others look for a steeper decline. The new-home median price increased nearly $100,000 to $299,000 last year, said analyst RL Brown, publisher of the Phoenix Housing Market Letter. And there is worry across the board that even with demand softening, higher costs for land and for materials, labor and city-approvals are pushing new-home prices beyond the comfort level of the mass-market buyer that volume builders rely on. High prices also remove a key incentive for people to move to Arizona.
Healthy slowdown
"Those kind of price increases cannot be sustained," said Brown, who sees a slowing market as a positive change and predicts a 4 percent price increase for new homes this year.
Doug Fulton, of Tempe-based Fulton Homes, said the slowdown was obvious to him on a recent flying tour of Pinal County. He said the number of new-house slabs in Maricopa was down by a third or more compared with six months ago.
