Home prices are expected to continue their rise — in the East Valley in particular — as a shortage of available homes creates an imbalance in the market, according to a report released last week by the W. P. Carey School of Business at Arizona State University.
The latest report by Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business, shows that the median single-family home price in Maricopa and Pinal counties went up 35.3 percent — from $120,500 to $163,000 — between January 2012 and January 2013.
“The biggest factor in the market is the shortage of supply. Just about everyone selling has more than one person interested in it, so they end up in a competitive situation, which causes prices to go up,” he said. “It’s definitely an imbalanced market. We only have about half of the homes we would have in a normal market this size and it’s been that way for some time now.”
In fact, according to a recent national report, Arizona home prices made the biggest one-year jump among all states and Phoenix home prices made the biggest jump among metropolitan areas. Nationwide, home prices in January were up 9.7 percent from a year ago, according to data released Tuesday by CoreLogic.
Median home prices for single family homes in Mesa are up 39 percent from January 2012 to January 2013. They’re up 40 percent in Gilbert and they’re up 23 percent in Chandler.
“Those are pretty big jumps and you can find them just about anywhere. The only areas that have not jumped a lot are those that are designed for active adults like Sun City and, to a certain extent, Sun Lakes, and the very expensive areas like Cave Creek and Paradise Valley. They’ve gone up, but not as much,” he said.
The competition to buy a home in the resale market is frustrating some buyers, he said. It’s not uncommon for home hunters to look two or three months as they’re outbid time after time.
Some of those buyers are turning to the new home market. There are several new developments in the East Valley.
Andy Warren, president of Arizona-based Maracay Homes – said that’s exactly what his customer service agents are reporting in Maracay’s new home developments. The builder just launched a new project at Gilbert’s Lyon’s Gate and Queen Creek’s Villagio. It will also open in Mesa’s Eastmark this summer – along with several other builders – this summer. Eastmark is a 3,200-acre community being developed by DMB Associates on the former GM Proving Grounds.
“A few years ago, the market was driven by short sales and foreclosures. Now, there are not a lot of resale homes out there. With Lyon’s Gate, we can offer new homes for customers looking for homes. They’re getting frustrated because there is not a lot of inventory.”
Standard Pacific Homes just opened a new phase at Highland Ridge in southeast Mesa and also will open at Mesa’s Eastmark.
“I think the East Valley is a growth area. There are a lot of jobs in the East Valley. There was a recent announcement of GM bringing 1,000 jobs to Chandler. Intel is doing a significant expansion. There is a lot of growth at the airport that is right next to Eastmark and near Highland Ridge,” said Pat Moroney, Phoenix president for Standard Pacific Homes. “The growth activity and the move-up buyer is significant in the East Valley, in Mesa, Gilbert and Chandler. That’s why we focus on the locations.”
Orr said there could be a number of reasons why homeowners – who could be in the market for a move-up home – are “sitting on their hands.”
“The sellers are not as enthusiastic as you’d expect. I would expect a year ago if prices went up 35 percent, they’d want to sell. Either they’re under water or they’ve got equity and they’re thinking, ‘If prices are going up, I can get more equity by sitting still than selling.’”
But Orr said for someone considering a move to a larger home, now may be the time.
“If you want to upgrade, you should do that now before the upgrade prices get bigger,” he said.
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