Maricopa’s housing market may have been one of the hardest hit in the state, but that also means it could have one of the best recoveries.
According to a report released Thursday by the W.P. Carey School of Business at Arizona State University, the price of homes has gone up, but the number of houses available for sale under $500,000 has gone down.
The report cites median single-family home prices in the Phoenix area have increased 25 percent — from $112,000 to $140,000 — between April of last year and April this year.
However, the report also cites a shortage of available homes to buy.
“I’d say we’re definitely seeing an increase in prices and we’re definitely seeing a shortage of supply (in Maricopa),” said Dayv Morgan, a real estate agent for ByTig Real Estate Corporation.
Rita Weiss, broker and owner of Desert Canyon Properties, agreed.
“If you pull up any home under $100,000, only one will come up,” Weiss said. “Inventory is low. It’s the lowest it’s been in years.”
The shortage of homes to bid on, however, is a natural part of the recovery.
“This is the only way (a recovery) happens,” said Mike Orr, director of the Center for Real Estate Theory and Practice at the W.P. Carey School of Business. “You end up with a glut of houses and eventually the glut gets eaten up.”
In Maricopa’s case, Orr pointed out its recovery — one of the best in region — correlated with its housing market crash, which was one of the worst in the Valley.
“It’s probably an extreme recovery because it’s been an extreme collapse,” Orr said. “(Maricopa) was expanding the fastest, just at the wrong time, at the height of the bubble.”
He pointed out the crash and recovery would not be uniform throughout the city.
Retirement communities, for example, “will be affected quite differently.”
Orr said this is because in retirement communities, many of the homes were purchased with large down payments or owned outright and the majority of occupants are not in danger of losing their employment.
“So there are far fewer foreclosures, fewer bank-owned homes and less downward pressure on pricing,” Orr said.
For buyers looking to become first-time homeowners or hoping to get a bargain, however, the higher home values have translated into stiffer competition to get into a home when one is available.One contributing factor to buyer frustration is the large number of investors first-time buyers are forced to bid against.
The investors often pay cash for the houses. They can and will pay a bit more — say, $10,000 to $15,000, Weiss said — to get the home.
Then, often after installing amenities such as granite countertops or luxury appliances and flooring, the buyer will “flip” the house and resell it for $30,000 to $40,000 more than the original purchase price.
“The market’s tough right now,” Weiss said. “It’s whoever has the best offer right now, and it’s hard to beat a cash offer.”
Cash purchases do not require an appraisal, creating another hurdle for borrowing buyers to overcome in the bidding process.
However, Weiss stressed although difficult, it is not impossible to beat a cash bid. If a buyer sees a home he or she is interested in, she advises: “Come in with your highest and best (offer).”
“Unless you’re a cash buyer, you need to have something that’s desirable,” Weiss said.
Again, retirement communities see a slightly different effect.
Homes in retirement communities, Orr said, “are also not of interest to first-time home buyers or most investors, so they don’t recover quickly after prices go down.”
Morgan said many buyers turned to purchasing new homes after placing bid after bid and not getting a home.
“The shortage of supply is pushing people towards new home sales,” Morgan said.
Weiss recounted a recent event when a potential buyer from El Paso, Texas called her expressing interest in 15 homes.
“He was going to drive down,” Weiss said. “I told him not drive down yet because I had to see what was available. I looked and not one of the 15 houses was available.”
Ultimately a low housing inventory may lead to development and more new home construction.
“It’s very good news for people on the sidelines who just want to see a recovery,” Orr said. “If you’re a developer and landowner it’s good news.”
Even banks have something to be positive about.
The report cited a decrease in bank sales which, Orr said, is due to more foreclosed homes “being purchased at auction on the courthouse steps.”
And ultimately, a recovery is a recovery.
“Where else can you get a 3,500-square-foot home for $120,000, but in Maricopa?” asked Weiss. “We were at a point a year ago where we thought this might be a ghost town.”
She added, “The rental market is pretty good, too.”