Could June be the month metro Phoenix home prices rebound to the record they hit in 2006?
A new analysis of pending sales in the Valley shows prices are nearly there.
In May 2006, metro Phoenix’s median home price hit $259,900. Then in June, it set a record at $264,800, according to Arizona Regional Multiple Listing Service data.
Then the recession hit, and prices tumbled. We've been watching them slowly work their way back up since 2011.
The forecast is for the area’s median to reach $260,000 in May, according to housing analyst Tom Ruff's latest report for ARMLS. And then it's only a few more thousand dollars to bust the record.
That would be a heavy climb from $254,000 in April, just like in 2006. But May is often a peak month for home sales and prices.
Many Metro Phoenix home buyers who start seriously shopping in January and February like to close and move before summer. If more buyers are willing to brave the heat, June could be the month for a price rebound.
The Valley’s housing boom, fueled by subprime mortgages and speculators, started in 2004 and peaked in the summer of 2006.
Metro Phoenix’s housing market hit bottom in 2011, and investors snatched up a record number of bargain foreclosure homes that year. The Valleys’ median price then plummeted to $110,000.
So home values had a long way to rebound in metro Phoenix.
“In 2011, some government reports were forecasting it would take 50 years before prices returned to 2006 levels,” Ruff said.
Thankfully, it has only taken 12 years.
Home prices in some Valley neighborhoods, particularly affordable ones closer in, have already rebounded to 2006 record levels.
In nearly 30 Phoenix-area ZIP codes neighborhoods, prices have climbed back to 2006 levels or even higher, according to The Arizona Republic/azcentral Street Scout Home Values report.
Many of those areas still have median home prices below $300,000.
Values in another 40 Valley neighborhoods are within 10 percent of recovering.
2017 was the Valley’s best healthy year for home sales so far, and sales through April are up 4 percent from last year’s pace.
Home sales were higher in 2005 in the midst of the housing bubble, and in 2011 when investors snatched up bargain foreclosures at a record rate.
But those weren’t normal or healthy years.
Home sales do typically slow during the summer in metro Phoenix as fewer buyers want to check out houses when the temperatures climb above 100.
A summer slowdown in sales could lead to the same for price jumps. Maybe that’s not such a bad thing.
While we Valley homeowners are happily watching our values rebound from the crash, many buyers trying to purchase their first Valley house are having a hard time.
Metro Phoenix is still a very affordable housing market compared to the East and West coasts. But the number of houses priced near the area’s median in popular neighborhoods closer in are dwindling.
The number of Valley homes for sale priced below $350,000 is down 20 percent from last year, according to the Cromford Report.
Phoenix-area houses that aren’t on the fringes or complete wrecks in that price range are sparking bidding wars among buyers and can sell the day they’re listed.
And first-time buyers must compete with investors paying cash who either want to flip houses or turn them in into rentals.
If home prices climb too fast or high, demand will slump, and so will our values.