Limited supply pushes Arizona home prices up
The moment Ben Bruce stepped into the living room of a new, 1,750-square-foot condo in Flagstaff, he knew he was home.
He and his fiancee, who had spent a year sifting through properties all over Flagstaff, quickly made up their minds to buy the first unit available in the complex for $240,000.
"We are excited to get in here," Bruce said. "We like the idea of having everything brand new."
The latest numbers on home prices and home sales in Arizona suggest that more people are jumping into the market.
In the Phoenix metropolitan area, the median price of single-family homes hit $150,000 in August, up 33.7 percent from a year earlier, according to a report by Arizona State University's W.P. Carey School of Business.
Meanwhile, sales of new homes were up 55 percent and resales that didn't involve investor flips, short sales or foreclosures were up 81 percent from August 2011, the report said.
"The market is definitely recovering," said Pete Dijkstra, realtor team leader of RE/MAX Infinity, a real estate agency based in Chandler.
Dijkstra said part of the reason is people who lost homes to foreclosures and short sales re-entering the market.
For all of Arizona, the median price of a single-family home sold in August was $155,000, up from $116,050 in August 2011, according to Arizona Regional Multiple Listing Service.
In Tucson, total home sales in August increased by 24 percent in a year, while the average sales price was up 16.3 percent to $180,193, according to the Tucson Association of Realtors.
"We are encouraged by the steady increase in the median price as well as the amount of activity," said Philip Tedesco, the group's CEO. "We are waiting for more strength in the market."
Mike Orr, author of the ASU report and director of the W.P. Carey School's Center for Real Estate Theory and Practice, said current prices and volume aren't even close to where they were in 2005 and 2006.
"The market needs more time," Orr said. "Each month we get slight improvement, but we are not back to the full-fledged recovery in the sense of the economy is all working nicely again."
Besides time, Orr and others said, the market needs a larger supply of homes for sale to achieve stronger growth.
"The limited supply is everywhere," said Jerome Naleski, CEO of the Northern Arizona Realtors Association in Flagstaff. "If the inventory picks up a little, the market prospects will be even better."
According to the ASU monthly report, the overall supply of Phoenix homes in August was down 28 percent from August 2011. The lack of supply results from fewer foreclosures and the small number of homeowners willing to sell caused by many waiting for prices to rise, Orr said.
Brisk demand and limited supply are especially pronounced in the market for new homes, said Fred Newman, president of Ultimate Information Systems, a Phoenix-based company offering new home information to real estate agents.
According to the company's data, the number of new homes available in Phoenix during August was half of the August 2011 inventory.
Newman said that in recent years most builders cut back on crews and contractors, who at present aren't readily available in great numbers.
"It's taking builders a while to respond to the change," he said.
Orr said the supply of all homes will grow as prices rise.
"Buyers are getting more and more competitive with each other," he said. "This pushes the price up."