Phoenix market lagging as home prices begin to rise
Aug 7, 2015, 11:59 AM
(AP Photo/John Bazemore)
(AP Photo/John Bazemore)
It’s true, home prices are on the rise in Phoenix.
But it’s a slow rise and one that’s keeping Phoenix behind the national average in the recovering housing market and trailing other markets in the West.
Year-over-year, Phoenix saw a 3.8 percent gain in home prices from May 2014 to May of 2015, according to Standard & Poor’s Case-Shiller Home Index.
Phoenix also reported six straight months of increases from November 2014 to May 2015. But its overall increase was relatively modest when compared to the 10 percent increase in home prices seen in Denver over the same time period, or the 9.7 percent or 8.4 percent gains in San Francisco and Dallas.
Nationally, a 20-city composite compiled by Case-Shiller showed a gain of 4.9 percent year-over-year.
Small or large, analysts consider the rise in home prices good indicators of a healthy housing market.
David Blitzer, managing director and chairman of the Index Committee, said, nationally, single-family home prices have settled into a steady 4 to 5 percent annual pace after double-digit patterns in 2013.
Blitzer also said he expects the rate of home prices to slow rather than accelerate over the next two years, noting that prices are increasing about twice as fast as inflation or wages.
Also pointing to the reduced number of housing starts annually, Blitzer noted that sales of new homes are low compared to sales of existing homes. He called first-time home buyers “the weak spot” in the housing market.
“Without a boost in first-timers, there is less housing market activity, fewer existing homes being put on the market, and more worry about inventory,” he said.
The Phoenix market still faces a number of challenges as the housing market continues to recover.
Among those challenges, according to Scottsdale-based RL Brown Reports, are restrictive mortgage loan qualification requirements, the difficulty of credit repair for potential home buyers and concerns about potential younger buyers delaying entry into home ownership.
Join Realtor Diane Brennan for That Real Estate Show Sundays at 8 a.m. on KTAR News 92.3 FM.
