Valley home prices continue to rise swiftly but fewer homes are selling as the supply of for-sale properties is shrinking, according to an Arizona State University study.
The median single family home price was up 25 percent in April compared with a year ago, said Mike Orr, a real estate expert at the W.P. Carey School of Business. The median value for Maricopa and Pinal counties is $140,000.
While rising property values are good news for existing homeowners, Orr said the typical owner hasn’t enjoyed a 25 percent increase. The boost is the result of fewer bank-owned homes being sold at depressed values, meaning most of the increase can be accounted for by a relatively small number of homes.
Values should rise 4 percent to 6 percent per month for several months, he said.
While homeowners are enjoying the increase after years of decline, Orr said it’s getting tougher for potential buyers to make a deal. The supply of homes is down 54 percent from April 2011, to about 8,800 on the market today.
Potential buyers are getting frustrated at making multiple offers on homes only to be outbid, often by a cash buyer. That’s pushing some to purchase a new home that may cost more than a buyer intended to spend just to avoid the hassle, Orr said.
“It’s a very tough market,” Orr said. “Although the market is looking good to be in, it is actually very frustrating. There’s a lot of tension and stress.”
Homes that do appear on the market typically generate 20 to 30 offers. Orr is trying to verify some of the most extreme stories he’s heard.
“I’m up to 76 (offers) at the moment,” Orr said. “I’ve only been looking for a day, though. We may find a bigger one than that.”
Orr said the supply of homes is artificially low because so many homeowners have loans for more than their property is worth. The market can’t get back into balance until those homeowners are in the black and are willing to sell.
But values have finally risen enough so that most homeowners who bought before 2004 and after 2008 are in the black, Orr said.
The East Valley remains a hot spot for new home sales. Gilbert is still topping other communities, with 153 new homes sold in April. Chandler was second with 54 homes. ASU tracked 35 new home sales in Mesa and 44 in the San Tan Valley.
Other findings from the ASU housing report:
• Overall sales are down 11.5 percent from a year ago because of supply shortage.
• Median condo prices are up 23 percent in the last year, to $89,050.
• Median sale prices are up 3.8 percent from March to April.
• Foreclosures are down 62 percent in the past year, and the distressed supply of homes is down 81 percent.
• New home sales have risen 43 percent in the past year.
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