Way too long ago, a regular reader here (Maricopa Mark – Check out his blog!) asked my opinion on the entry level housing market in the Phoenix area. Sorry it took so long Mark, but here you go…

With the rapid increase in home values across the Valley last year (an AVERAGE of 48%), many feel that the first time/entry level buyer has been priced out of the market. And sadly, there is some truth to that. I don’t believe any market can experience 40 – 60% appreciation rates without driving some (perhaps many) buyers out of their range of affordability.

That said, there ARE still some places in the Phoenix area where it’s possible for the first-time/entry-level buyer to purchase a decent home.

One place for the entry-level buyer to look is the condo/townhome market. While condos have appreciated significantly, there are still many very nice condos available in the 120 – 180K range. They did not accelerate at the rate single-family homes did. Condos have their advantages and disadvantages. Some feel they are no more than “glorified apartments”. However, they DO provide the advantages of ownership over renting, and they do appreciate over time. There is something to be said about not having to worry about maintaining a yard, or being responsible for exterior and roof maintenance. In the boom of last year, many developers were converting apartment complexes to condos, and with the demand slow-down, there are some stellar deals available in the condo/townhome market.

If the entry-level buyer is set on a single family home, they may need to consider looking outside of the immediate Phoenix metro area. Homes in the Casa Grande/Florence / Eloy “triangle” are still quite affordable. (for details on the area, look to our main site here). Located down I-10 about 30 miles south of Chandler, the area is undergoing a lot of development, it’s not really that far out, and a buyer can get significantly more home for the money than they can in closer in to the Phoenix area.

Apache Junction and El Mirage are also areas where there are some excellent buying opportunities. Both of these areas suffer from an “image problem” that is mostly a hold-over from several years ago. Both have recently greatly approved their infrastructure and the local governments are doing good things to increase the “quality of life” in these areas.

Closer to Phoenix (right smack in the middle of it in fact) is the “Baseline Corridor”. This area has seen explosive growth and re-development lately. And while it’s beginning to get pricey, there are still some excellent entry-level opportunities there, particularly in condos and townhomes.

Finally , there are manufactured homes. I’m not talking mobile homes (though that’s also an option) but manufactured homes that are actually built on a foundation. Many of the newer models of manufactured homes are beautiful, and it’s virtually impossible to tell the difference between them and “stick built” homes. I’ve seen 2,000 square foot manufactured homes selling for less than 180,000 – you could easily pay double that for a site built home. The biggest problem with manufactured homes is that they don’t appreciate like a site built home. In fact, unless meticulously cared for, they can easily depreciate over time. This can be off-set by appreciation in the land they sit on, but some manufactured homes are built on leased land – which negates any potential appreciation in the land. Another significant issue is that it isn’t easy to get financing on a manufactured home, and it’s virtually impossible to get a low/no down payment loan on one. But they do offer a viable alternative to site built homes.

So the bottom line is that entry-level homes ARE available. One may have to re-think exactly what it is they want or need (and there is a BIG difference between “wants” and “needs”) including WHERE they want to live. But it can be done, often without sacrificing all that much.

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Jay’s Opine: Home sales data for June was just released, and of course the media is all over it, proclaiming doom and gloom for the entire Phoenix market. Sales are definitely down, to 2000 levels, and that gets the majority of press. What doesn’t get nearly as much focus is yet another record has been set for median home value. The market can’t be imploding as the media would like you to believe if prices continue to rise (generally speaking). Yes, the RATE of rise has slowed, but as blogged here a long time ago, the appreciation rates we experienced in the past CAN’T continue .

June resale home sales fall to near 2000 levels
The Business Journal of Phoenix - 1:32 PM MST Wednesday
by The Business Journal

Another sign of the weakness in the local resale housing market, with June sales dipping to a six-year low.

The Arizona Real Estate Center reported Wednesday 5,460 recorded sales for June. This is the weakest amount since June 2000, when 5,020 sales were recorded.

June’s activity is down from the 6,870 sales recorded in May.

So far this year, there have been a total of 36,290 sales, while year-to-date sales stood at 58,030 at the same point in 2005.

However, Arizona Real Estate Center Director Jay Butler noted that the current level of activity is very comparable to year-to-date recorded sales in 2003, at 34,880 sales and 2004 year-to-date, 48,220 sales.

The primary news of last year’s housing market was the rapid rise in the median home price from $194,000 in January to $260,000 in December.

Although the median resale price in June set a new record at $267,000 compared to $249,900 for a year ago, the growth rate has been disappearing, with the median price being up slightly in May at $265,000, and $264,900 in April.

For June 2006, 14 percent of all recorded sales were for homes priced from $125,000 to $199,999, 44 percent for $200,000 to $299,999 and 39 percent for homes priced at more than $300,000.

Here is the city-by-city breakdown for June 2006 resales and prices, compared with June 2005:

* Phoenix resales dropped by 1,325 sales over the year to 1,725, as the median sales price held at $225,000 over the month, yet rose from $190,215 in June 2005.
* Scottsdale’s resale home market declined from 920 recorded sales a year ago to 465, however the median sales price jumped from $559,000 a year ago to $640,000.
* The Mesa resale housing market fell by 755 sales to 585, while the median price increased from $220,000 to $247,600.
* Glendale decreased from 880 to 430 sales, but the median sales price increased from $220,000 to $253,000.
* Peoria’s resale market fell from 560 sales to 250 sales, while the median price moved from $255,000 to $272,900.
* The Sun City resale market fell from 200 to 75 sales, as the median sales price increased to $215,000 from $186,200. Resale activity in Sun City West also fell from 90 to 45 sales, but the median sales price increased from $235,000 to $258,950.
* Gilbert’s resale count fell from 795 to 330 sales, but the median sales price increased from $291,500 to $330,000.
* Chandler’s resale market slowed from 760 recorded sales for a year ago to 380, while the median sales price increased from $275,000 to $295,000.
* The resale market in Tempe dropped from 270 to 160 sales, with the median sales price increasing to $298,500 from $245,000 a year ago.
* Avondale’s resale market fell from 265 to 120 sales with the median price moving from $238,000 to $259,050.
* El Mirage sales dropped by 100 to 85 sales, while the median home price went from $196,000 to $215,000.
* Goodyear declined from 215 to 90 sales, while the median price increased from $262,000 to $290,000.
* The Surprise resale market decreased from 535 recorded sales a year ago to 175 sales and the median sales price rose by $14,900 to $254,900 The Arizona Real Estate Center is associated with the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus. The center collects and analyzes data concerning real estate in the greater Phoenix metropolitan area.

More stories from the media. Note the negativity in the headlines…
http://kvoa.com/Global/story.asp?S=5144394&nav=HMO6
http://www.azcentral.com/arizonarepublic/news/articles/0713resale0713.html

Jay’s Opine: Says a fellow Realtor in the Republic article, “I’m not saying we are out of the woods yet,” he said. “There is so much property on the market that it is a very strong buyers market. It has done a 180 turn to what it was a year ago.” Sigh…. yes, the market is totally different than last year. But sorry folks, we are NOT in a “very strong buyers market”. There’s about six months of inventory on the market right now. By almost all experts definition, that is a NEUTRAL market. It FEELS like a “strong buyers market” because it has CHANGED so much from a insanely strong seller’s market.

I can’t decide if this one is ugly, or really cool. It’s located in one of the high dollar real estate spots in the country: Carmel, California (made famous of course by it’s more famous mayor Mr. Clint Eastwood)

Thanks to ackthud.net for the photo…

Just when I thought I’d heard of everything…. this may be the single most rediculous idea I’ve heard yet….

Extreme Home Staging
By Les Christie, CNNMoney.com staff writer

Home sellers long ago discovered that small touches could boost selling prices - fresh flowers, the smell of freshly baked cookies. Now a real estate developer, Centex of Dallas, is adding in beautiful people.

The experiment in what’s called “staging” is simple: Home buyers enter a home and see not just furniture but real people - actors - playing out the life they might lead there.

The Centex program, which its creators call HomeLife, has been used twice so far at Milestone, a 166-house development in Santa Clarita, about 25 miles north of Hollywood.

In one performance, the ‘model’ family spent about three hours pretending it was Mom’s birthday. They baked a cake, sang happy birthday and the children drew and framed a picture - of a Centex house. The original cast included a former Baywatch hunk, Jaason Simmons, in the role of Dad.

There’s more, if you can stand it…

Hat tip to Becky Troutt for finding this article. She commented on her blog:

……Ok, so picture this: You are walking through a model home and come across a “family” acting like they live there while they bake a cake, play cards or want to “show you around in their home.” How un-comfortable or weird would this be? It’s like having a seller at home during a showing. The purpose of viewing a home is in hopes that no one is there so you feel comfortable opening cabinets and looking in closets. If you have a “family” there, don’t you think more people are going to be watching what the family is doing or talking to them versus really looking at the house? GIVE ME A BREAK!

A note to builders: Spend your money on something useful like buyer incentives or paying their closing costs OR better yet how about cutting the price off the home instead of paying people to “pretend to be a family” in a model home???

I must say that I concur with Becky. Is it just us, or is this not the dumbest idea ever?

It’s that time of the year. It’s blistering hot, the kids are out of school and the water is warm.

PLEASE remember to watch your kids around water! I know you hear it ALL THE TIME. But apparently there are still people that don’t get it.

IT ONLY TAKES A SECOND! One second for a child to slip, fall, or intentionally get into a swimming pool where THEY CAN DIE. You HAVE to watch your kids around water constantly.

Don’t let your child become a horrific statistic. Kids die here every single summer because someone, “turned away just for a second”.

My kids are 12 and 14. They swim like fish. But they do not swim alone, EVER. All it takes is a slip, and a crack of the head on the edge of the pool and a person CAN DIE.

You’ll see it a thousand times this summer. And you’ll see it again right here: PLEASE, WATCH YOUR KIDS AROUND WATER!

Do a Google News search for “child drowning” – 847 news articles. There needs to be ZERO.

Here’s just a sample…

11 month old drowns after Mom falls asleep

Child drowns at backyard BBQ. *TWENTY* people were at the cookout.

Five year old drowns in grandmother’s pool

Don’t expect swim lessons to keep kids safe around the pool