By Catherine Reagor| April 10th, 2022
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Metro Phoenix’s median home price hit a record $450,000 in February — and likely soared to $455,000 in March.

Many homebuyers, particularly first-timers, can’t get a break from the Valley’s rising home prices.

Buyers who plan to rent out the homes or just live in them part time are driving the Valley’s housing market to a frenzy.

Those non-primary homebuyers were behind 36% of all home sales in February, according to the latest research from the Arizona Regional Multiple Listing Service’s Information Market group. And 29% of those buyers paid cash.

Most of those buyers, which include big groups backed by Wall Street and second-home buyers, are paying more than list price for the well-below normal number of Phoenix-area houses for sale.

“It’s been déjà vu” pretty much every month during the past year, with prices setting new records, said housing analyst Tom Ruff with the Information Market.

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More record prices coming

Metro Phoenix’s median could hit $470,000 in the next few months based on pending sales, Ruff said.

An increase in sales and a drop in supply are driving prices up. Home sales climbed 11% in February as the number of listings fell 1.3%.

And Valley houses are selling seven days faster than they did a year ago.

Since the beginning of 2021, corporate buyers have purchased or built 9,000 houses across the Phoenix area. Almost all of those homes have been turned into rentals that fledging buyers don’t have a chance at making their own.  

Where home prices climbed the fastest

Metro Phoenix overall median price is up 25% from a year ago.

These areas of the Valley saw the biggest jumps during 2021, according to ARMLS:

  • In the Carefree ZIP code 85377, the median home price shot up 51% to $1,175,000 during 2021.
  • Apache Junction’s ZIP 85120 saw prices jump 49% to $350,000.
  • The north central Phoenix ZIP 85021 posted a 46.8% increase to $480,000 last year.
  • Prices climbed 45% to hit $380,000 in the south Phoenix ZIP 85034.

Why home price run up has to slow

Most housing analysts agree that metro Phoenix’s red-hot housing market must cool down or too many buyers will be priced out and demand will sag.

“We don’t think the strength of the housing market is sustainable,” analyst Ivy Zelman, known and respected for pre-crash warnings during the housing boom of 2004-06, told more than 1,000 top real estate executives last month at ULI  Arizona’s annual Trends Day in Phoenix.

She said more young adults living with their parents, higher interest rates, growing affordability problems and fewer move-up buyers could slow the housing market.

But no one is calling for a crash in prices, particularly as metro Phoenix’s median is set to soar to $470,000 in the next few months.

Reach the reporter at [email protected]om or 602-444-8040. Follow her on Twitter @Catherinereagor.

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