Phoenix-area home prices shot up since hitting a low point in September 2011. From last August to this August, the median single-family-home price rose 28 percent — from $150,000 to $192,000. The median townhouse/condo price rose 31 percent. This dramatic rise is largely due to the relatively small supply of homes for sale. Now, an increase in homes on the market is helping stop this price boom, explains Mike Orr, director of the Center for Real Estate Theory and Practice at Arizona State University’s W. P. Carey School of Business, in a report released in early October. “Although demand still exceeds supply, they are fast moving toward each other,” says Orr. “If the current pace of change continues, they are likely to be in balance before the end of the year. The seller is no longer holding all the cards in the Greater Phoenix housing market, and if their offers are countered aggressively, some potential buyers may walk away because they now have more alternatives.”
The types of transactions happening in the market are also noticeably shifting. Luxury homes priced more than $500,000 grew their market share from 15 to 21 percent of the money being spent over the past year, while the lowest-priced homes (below $150,000) fell from 25 to 14 percent of the market. Investors continue to lose interest in the Phoenix market, with better bargains available in other parts of the country. The percentage of residential properties purchased by investors fell from the peak activity of 39.7 percent in July 2012 down to just 23.7 percent this August. The rates of all-cash buyers and out-of-state buyers are also dropping. In fact, the percentage of Maricopa County residences sold to non-Arizona owners in August was only 17 percent, the lowest percentage since January 2009.
Changes in the commercial real estate market generally lag the residential market. To help gauge the state of the commercial market, ASU’s W. P. Carey School of Business at Arizona State University brought together a group of the area’s most successful brokers for a forum and survey about progress on apartments, retail, industrial, offices and more.
“We talked with a lot of people feeling the market from their own individual perspectives, and because of that, it was hard to get consensus on many of the issues,” explains the forum organizer, Mark Stapp, director of the Master of Real Estate Development program at the W. P. Carey School of Business. “Everyone generally agreed we’re recovering in the commercial market, but we’re not there yet. At this point, lots of investor money is chasing only a few good deals in specific areas of the Valley. This is causing prices on the best property to go up, as people try to handle economic uncertainty and position themselves for a broader recovery.”
Local Brokers’ View of Commercial Real Estate Sector for Q4
Percentages show diversity of opinion among the top brokers from a variety of sectors, specializations and brokerage house across the Valley, gathered by the W. P. Carey School of Business Center for Real Estate Theory and Practice for its Commercial Real Estate Broker Forum heading into Quarter 4, 2013. Figures are based on the number of brokers per response.
headed in the next three months?
the next three months?
on the market affecting the commercial side at all?