Jay’s 2nd Quarter 2005 Overview of the Phoenix Area Real Estate Market
Existing Homes: Strong Sellers Market!
Demand for existing homes continues to be extremely strong. The supply of existing homes seems to have stabilized somewhat, although supply is still low (but it has increased slightly over the first quarter. Homes are still selling very quickly. It is still not uncommon for homes on the market to get multiple offers at or over the listing price. A recent trend in offers has buyers waiving the “appraisal contingency”. The standard Arizona Residential Resale Purchase Contract states that a home must appraise at the asking price or the buyer may cancel the contract. However, recently, many buyers are waiving this contingency, in effect saying they will purchase the home regardless of the appraised value. There is certainly a risk involved in waiving this contingency and is something that should be discussed in great detail with your realtor.
New Homes: Builders Market!
Demand also far outstrips supply. Many new home developers have lengthy waiting lists for home sites, and are releasing home sites via “lotteries”. We’ve seen build out times ranging from 6 to 13 months. Many builders require new home buyers to list their existing homes within days of signing a contract and are requiring substantial non-refundable down payments. A recent development was announced in Chandler, Arizona. The developer is planning to build 600 new homes. The size, price and style of these homes are yet to be determined. Despite this, over 7,000 people are on the “interest list” for this development!!
Condos/Townhomes: Sellers Market
The condo/townhome market isn’t quite as crazy as the single-family detached market, but it is rapidly approaching it. A couple of months ago, condos seemed to stay on the market longer than single family homes. That is no longer the case. Condos and townhomes are moving swiftly. A lot of buyers seem to be getting priced out of the single family home market, and are looking harder at condos and townhomes.
Investment Property: No real changes from the 1st quarter!
New homes: Many builders are not allowing investors to buy new builds. They place contract and deed restrictions on renting out homes, owner occupancy rules, and minimum time periods a home must be held before being sold (up to 2 years). There are some builders who sell to investors, but they are becoming very difficult to find.
Note: I’ve had several people ask me about the above statement. There is (rightfully) confusion about the word “investor”. For the purposes of new builds, an “investor” is considered ANYONE not planning to actually live in the new home. This DOES include second home owners. There are *some* builders that will sell to second home owners, but not many. *VERY* few will sell to someone intending to rent out the new build home.
Rentals: With the recent (last 6 months) increase in investors purchasing homes to be rented, the rental market is approaching a saturation point. There are MANY rental homes on the market right now. Renters can be found, it just takes some time.
Land: Land is smoking hot right now! Always a good investment, land values are steadily climbing. The West Valley area is especially active right now. Areas such as Tonopah and Wittman (Whittman, Wittmann ”“ I’ve seen it spelled many ways) may seem far away from the center of Phoenix right now, but the principle direction of growth for the Phoenix area is west. There are many rumors of large residential developments being planned for west of Buckeye and Surprise, and Tonopah and Wittman are right in that path.
There’s my Phoenix Market Outlook for Q2 of 2005.