PHOENIX — The Valley housing market took a turn for the worst in 2011, as home prices fell 56 percent from their peak set just five years earlier.
And according to a CNBC.com report, another ‘volatile’ housing cycle might be hitting the Phoenix metropolitan area.
As the report details, when the market bottomed out in 2011, a new set of investors came in to try and take advantage of the increasing number of foreclosures.
Those investors purchased properties not with the intention of flipping them, but rather with the intention of renting.
According to CNBC.com, this drove the prices back up by nearly 45 percent, but in turn the new investors have now essentially taken themselves out of the market.
The trouble now is they priced themselves out of the market and left Phoenix housing to regular, mortgage-dependent buyers. These buyers are faced with tighter credit standards and a still recovering economy.
“I think we have a lot of buyers on the fence right now, who are saying, ‘I want to buy something, I just don’t feel real compelled to do it right now, I just want to see how things play out,'” said Bob Hertzog, a Phoenix real estate agent. “There are a ton of fence-sitters out there.”
In the last year alone, regular resales in Phoenix reportedly went down two percent, sales for newly-built homes went down four percent, short sales and pre-foreclosure sales went down 73 percent and sales of bank-owned homes went down 20 percent.
The report suggests there are simple reasons for those staggering numbers:
1. Buyers are still in the process of picking up the pieces from the last foreclosure crisis
2. Homeowners don’t have the type of equity in their current property to sell and move up
3. Tighter credit standards are keeping younger Americans from buying
The Phoenix market has been cold for a long time,” said John Burns of John Burns Real Estate Consulting. “Fifty percent of builders last month dropped prices, including incentives. Demand is weak and weakening. Supply and affordability though is fine.”