Metro Phoenix home prices and sales are bucking the COVID-19 recession and soaring.
The Valley’s median home price has hit a record high of $315,000, according to the Arizona Regional Multiple Listing Service.
Home sales climbed 12% to reach a monthly high for July, a typically slow time for the area’s housing market as buyers opt to avoid the heat.
A real estate boom in the Phoenix area typically sparks fears of the next bust, but market watchers don’t see that happening anytime soon.
The housing market’s current frenzy looks to be a continuation of the strong demand for homes from the area’s many new residents. The Valley has been one of the top five metro areas for population growth during the past few years.
Climbing prices and sales in metro Phoenix aren’t fueled by investors looking for bargain rental homes or scared sellers trying to get out because they can’t pay, say housing analysts.
Near record low interest rates and high rent payments are spurring many first-time buyers.
The pandemic also appears to be enticing more people who work from home to buy homes or sell and move to bigger ones.
“The housing market is hot,” said housing expert Tom Ruff of ARMLS’s Information Market group. “It is now clear that COVID-19 only paused sales, which in turn created pent up demand. Our market has shown remarkable resiliency.”
Home sales fell in March, April and May after the pandemic hit but then began to bounce back in June.
Based on pending sales, Ruff expects the area's median home price to set another record in August.
It's not investors driving the housing market now.
Almost 82% of the people who bought Valley homes in July and August plan to live in them, said Tina Tamboer, senior housing analyst with the Cromford Report.
That’s how many buyers marked “owner occupied” on home sales records.
She said that’s the highest level of owner-occupied home sales in metro Phoenix since at least 2012.
About 8% of Valley homebuyers during the past two months have been second-home buyers, and about 10% have been investors.
During the housing boom of 2004-2006, investors were behind as much as 40% of all Phoenix-area home sales.
During the crash of 2007-2011, investors paying cash for bargain foreclosure homes were the Valley's biggest group of homebuyers.
“Investors and flippers don’t make a market hot by themselves, but they can cause prices to rise faster,” said Tamboer.
Aggressive bidding wars for Valley homes priced below $500,000 are now the norm, and higher prices mean it will be tougher for many first-time buyers to afford a home.
The number of homes for sale in metro Phoenix ticked up last month but is still not high enough to meet demand. Hence the bidding wars.
Metro Phoenix’s median home price hit $315,000 in July, soaring past the record $305,000 it reached in June.
The median home price is expected to hit $320,000 in August. That’s $40,000 higher than in August 2019.
Valley home sales climbed 8.4% from June to July to reach 10,303, according to ARMLS.
The number of Phoenix-area houses for sale was down 28% in July, compared to last summer.
“Buyers are getting angry, and bidding wars are getting ugly,” said Phoenix real estate agent Christa Lawcock of Realty Executives.
She said many home sellersaren’t being greedy but instead of getting five to 10 offers on a home, they are getting more than 20.
Lawcock doesn’t see prices falling or even stabilizing anytime soon based on the current demand.
But housing market watchers all agree if interest rates and prices climb too high or unemployment starts climbing again, many buyers will be knocked out of the housing market.
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