Prospective homebuyers who have their fingers crossed that metro Phoenix home prices will crash this year so they can find deals will be disappointed.
The Valley’s median home price is poised to hit another record.
Many buyers are scouring for deals as last year’s Phoenix-area median home price hit $268,000 in June, an all-time high.
More than half of metro Phoenix neighborhoods posted double-digit price increases in 2018, The Arizona Republic’s latest Street Scout Home Values report shows.
And most Valley neighborhoods, particularly ones closer in, have recovered from the Great Recession's bust.
“Expect home appreciation in the Phoenix area to climb again this year, though it will be a little weaker than last year’s pace,” said Tina Tamboer, a senior housing analyst with the Cromford Report. “Prices are on pace to climb 5 to 6 percent now, but last year it was 8 percent.”
Many of the neighborhoods with the lowest-priced houses posted the biggest gains in 2018.
First-time buyers, investors and flippers all are competing for houses in central areas that include Phoenix’s Garfield neighborhood, west Phoenix along Interstate 17, Maryvale, south Phoenix and the neighborhood around Phoenix Sky Harbor International Airport.
"First-time buyers are going to continue to struggle," said Christa Lawcock of Realty Executives. "Really, any buyer looking under $350,000 has very stiff competition."
One of the Valley’s priciest neighborhoods, Phoenix’s 85018 ZIP code that includes parts of the upscale Arcadia community, also posted one of the biggest price increases in 2018.
Some area's west and south of Arcadia proper are more affordable and drawing more buyers, including first-time buyers paying under $500,000. Demand from buyers in that central area called “Arcadia lite” drove up prices last year.
The Arcadia area’s median home price climbed 24 percent to nearly $680,000, well above the $440,000 it reached in 2006.
Homebuyers who want to live closer in still have a few options for houses priced below the Valley’s median. Just expect lots of competition.
Metro Phoenix’s most affordable central neighborhoods span from west Phoenix, including Maryvale, to south Phoenix. They also are areas that posted the biggest price increases in 2018.
“You most certainly get a big bang for your buck in south Phoenix,” said Sherry Rampy, a central Phoenix real-estate agent with Brokers Hub Realty.
SEE OUR DATABASE: Home values in metro Phoenix: See how your ZIP code fares
She said other neighborhoods, west of popular historic enclaves in central Phoenix and closer to I-17, also are seeing more buyers and rising prices.
One of the Valley’s most affordable neighborhoods is in the 85034 ZIP code around Sky Harbor airport, where buyers can find homes priced below $150,000. The trade-off for more affordable homes is noisy jet traffic.
The Sky Harbor area’s median home price climbed 25 percent to $131,509 in 2018, according to Street Scout housing data from The Information Market, owned by the Arizona Regional Multiple Listing Service.
Farther out, home prices in Pinal County in the far southeast Valley and in Buckeye in the far West Valley are much lower than suburbs closer in. The trade-off there is a longer commute.
Home prices in those affordable areas, too, are climbing faster than many other neighborhoods.
Median home prices in the suburbs of Apache Junction, Casa Grande, San Tan Valley, Maricopa, Avondale, El Mirage, Tolleson and Buckeye are below $250,000
Buyers can get a new home in Casa Grande for less than $180,000, according to Belfiore Consulting. The median new-home price in the Phoenix area is $320,000.
MORE: 5 neighborhoods that offer the best value for first-time homebuyers
West of the White Tank Mountains in Buckeye’s Tartesso community, buyers can get great deals, said Kevin Johnson, a Buckeye native and associate broker with RE/MAX Renaissance, who has sold a few of those new homes recently.
Properties in Tartesso at 298th Avenue and Interstate 10, about 40 miles from downtown Phoenix, start at $185,000.
Home prices in several of metro Phoenix’s edge suburbs haven’t yet recovered to 2006 boom levels.
Not every area saw prices soar in 2018.
A handful, including north-central Phoenix and a neighborhood in far north Scottsdale, saw slight dips.
Buyers may find deals in those neighborhoods, though the prices start high.
Downtown Phoenix is a pricey area to live and rent, but the cost of new homes and condominiums in the area dropped in 2018.
Some popular areas in central Phoenix, Scottsdale and Chandler only saw prices tick up a little last year, after much bigger increases the year before.
The forecast is for metro Phoenix’s median home price to hit a new record of $269,000 in April or May, according to Tom Ruff of The Information Market.
His forecast is based on pending sales and is usually right on or very close.
But there is some good news for buyers. Though it’s still a sellers’ market, there are more listings in metro Phoenix. That’s helping buyers gain some ground.
“There is a little bit more elbow room in the market now for first-time buyers than in 2018,” said David Meek of Keller Williams Arizona Realty. “Inventory (listings) is up 10 percent from 12 months ago.”
That means buyers have more houses to choose from and might not have to compete with as many other offers.
Valley home prices are on track to keep climbing because sales recently picked back up after dropping during the second half of last year. Higher interest rates and stock market drops are blamed for the dip in sales.
“The market looks much better than what I expected to see when looking at 2019 back in December 2018,” said Kerry Melcher, head of Opendoor’s metro Phoenix brokerage. “With interest rates in the 4 percent range again, I expect to see lots of people looking seriously at their home-buying options in mid-2019.
“When I bought my first home 26 years ago, interest rates were 10 percent, so I get very excited for first-time buyers now.”
Have housing questions? Reach the reporter at [email protected] or 602-444-8040. Follow her on Twitter @Catherinereagor.
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