After nearly 3 years at No. 1, Phoenix slips to No. 2 in home price gains
PHOENIX – Newly released data showing that the Phoenix residential real estate market is no longer the hottest in the nation for large cities doesn’t tell the whole story, a Valley real estate expert said.
For the first time in nearly three years, Phoenix fell out of the No. 1 spot in the S&P CoreLogic Case-Shiller 20-City Composite Index, which was updated for March on Tuesday.
Tampa, with a year-over-year price increase of 34.8% for March, dethroned Phoenix, which came in at 32.4%. Phoenix sat atop the index, which tracks home prices in 20 major U.S. cities, for the previous 33 months.
That doesn’t mean the Valley market is sputtering. The Valley has seen year-over-year increases of more than 30% for nine consecutive months and easily outpaced the 20-City Composite mark of 21.2% for March.
“It’s not much of a drop, and it’s really that things must be very, very tight in Tampa,” Phoenix-area real estate consultant Elliott Pollack told KTAR News 92.3 FM.
Pollack also said that the index, while accurate for the time period it covers, is already out of date because of rising interest rates. The index is based on March closings, which are generally for properties that went into escrow in January and February.
“This is excellent data, but it’s delayed, so it doesn’t reflect in a period of very rapidly rising rates that we’ve had … what’s really going on in the market today,” he said.
Pollack expects the change in interest rates to make a greater impact on the index in the coming months as sale prices slow.
“The housing market is clearly going to be weakened by the increase in interest rates, and I think that the data that comes out next month and the month after and the month after that will clearly reflect it,” he said.
“There has been an increase, although a small increase, in the number of units on the market for sale and there has been a drop-off in buyers, and that’s going to clearly end up in a very significant slowing in price increases.”
While higher interests rates mean bigger mortgage payments, they could mean relief for shoppers tired of seeing their bids rejected.
“Anecdotally, people aren’t paying $25,000-$50,000 over asking price to get into a house,” Pollack said.
KTAR News 92.3 FM’s Jim Cross contributed to this report.