Here’s what KTAR News learned about ‘Arizona’s Rising Real Estate’
PHOENIX — For many Arizonans and thousands who are migrating to the state, the pursuit of real estate has never been more competitive.
In a weeklong special report, “Arizona’s Rising Real Estate,” KTAR News 92.3 FM reporters chronicled the various effects the market has had on buyers, sellers, renters, professionals in the industry and others.
Here are series highlights that show some of the many ways real estate has become a hot topic in Arizona:
Valley home prices are up by approximately 18% from May of 2020, when the COVID-19 pandemic took a foothold in Arizona, according to Elliott Pollack with Elliott D. Pollack & Company.
According to the real estate consultant, Arizona is down to an eight-day supply of housing when it’s usually a six-month supply. That is the lowest inventory he has ever seen.
“The housing ‘boom’ really started with COVID,” Pollack said. “Most homebuilders didn’t expect it. Most people did not expect it. People found themselves with enough cash for down payments, getting married, in apartments that they didn’t want to be in and saying it’s time to do something.”
— Jim Cross
As Arizona’s housing market continues to boom, it seems as though the average buyer is getting squeezed out.
“It is 200% a sellers market,” Realtor Bobby Lieb said.
This is something first-time buyer Cynthia knows all too well.
“It was a little slim pickings,” she said with a bit of a laugh. “My limit for buying was comfortably around $250,000, no more than $300,000 was my max.
“When I was looking over $300,000, it would just be running tight for my income. It’s just me, so there’s no two-income, just sole income. So budget was really important to me.”
— Taylor Kinnerup
Due to the limited inventory of houses on the market, buyers are now looking to homebuilders in hopes of avoiding bidding wars and trying to compete with cash offers.
“The home building industry is busy, it’s robust, and it’s uncertain,” Jackson Moll, vice president of Municipal Affairs with the Arizona Home Builders Association of Central Arizona, said.
The industry has its own set of obstacles that are accompanied by a high price tag.
One item soaring in price is lumber.
The National Association of Home Builders has been tracking the phenomenon. It found the price of framing lumber is nearly 250% higher since last April, from $350 per thousand board feet to now $1,200.
That increase alone is adding nearly $36,000 to new home prices, according to NAHB.
— Ali Vetnar
Jordan Rose, founder and president of Rose Law Group, helps homebuilders process applications for things like zoning and land use in cities across Arizona.
“I would say that 95% of them at this point in time are welcoming the growth and removing red tape,” Rose said about municipalities. “Elected officials are filtering that message down to their staff and their management and saying, ‘Let’s figure out how to say yes, not no, and work on that with the developer as a partner.’”
She believes that’s due, in part, to municipalities wanting to make up for the economic slowdown they experienced during the COVID-19 pandemic.
Still, regulations remain that could make the homebuilding process difficult and costly for buyers.
— Griselda Zetino
Renting is the only option for some in the Valley as home prices continue to increase, and even then, rising rent prices are a daunting reality.
One benchmark examined by the Morrison Institute for Public Policy at Arizona State University in a report was the fair-market rent for a two-bedroom apartment in the Valley, which is $1,173.
That is already out of reach for many Arizonans, according to Katie Gentry, a policy analyst with the institute.
“If you’re not spending more than 30% of your income on rent, you would have to make $22.56 an hour,” she explained. “And that’s just not reality.”
— Luke Forstner
Experts offer no easy fixes, but fear not as they still offer solutions.
The real estate market will correct itself eventually, but not by much.
“When that time comes, I don’t know if it’s a year out, or six quarters out,” said Chris Camacho, president and CEO of the Greater Phoenix Economic Council.
It will be no easy feat. As of mid-May, only about 5,000 homes were listed in the metro Phoenix area with a median list price of $345,900.
— Peter Samore