Housing prices in Valley up 47% in year

July median cost reached $255,000

Catherine Reagor
The Arizona Republic
Aug. 16, 2005 12:00 AM

A new report confirms what Valley home buyers reeling from sticker shock have known for months: The area led the nation for housing-price increases over the past year at more than triple the national pace.

The median price of an existing Valley home has shot up 47 percent since last summer, according to a survey from the National Association of Realtors. The typical U.S. home price climbed only 13.6 percent. The figures measured changes from the second quarter last year to the same period this year.

But the frantic pace of sales and price run-ups in the Phoenix area's housing market could be winding down. In July, Valley home prices showed their smallest month-to-month increase so far this year.

That ties in with recent predictions from industry experts that the number of sales and price gains will slow but remain at fairly healthy levels.

The median price of a used home climbed $5,000 to reach $255,000 last month, according to the Arizona Real Estate Center at Arizona State University's Polytechnic campus. That's only a 2 percent increase. Earlier this year, Valley home prices were jumping 6 to 7 percent each month.

"We are in the eighth or even the ninth inning of really significant home-price increases," said P.J. Dean, a Valley real estate agent with the Dean-Maldonado Group. "But the housing market isn't poised for a bubble that will burst and take prices down."

He said metropolitan Phoenix's housing market will continue to post price increases for a while because the demand for houses is still strong and the inventory for homes still low.

Investors, trying to cash in on the Valley's rapid housing price gains, have fueled some of the home-buying frenzy. But now that the market could be close to peaking, some investors are less willing to pay premiums for homes.

Liz Stalford, a real estate agent with Russ Lyon Realty, said some Valley homes are staying on the market a little longer than they would have in the spring.

"Some houses for sale now would have had buyers stacked up in the living room in March and April," she said. "We aren't going to see the dramatic price increases we did then, but we won't see prices decline, either."

As bidding wars have started to taper off, the supply of homes for sale has climbed, and it's taking longer to sell.

Both will work to moderate home-price increases to more sustainable levels, real estate market watchers say.

Earlier this year, Las Vegas led the nation for home-price increases.

But the Nevada city's prices have likely peaked because its median home price climbed only 11 percent between the second quarters of 2004 and 2005.

Nationally, the Realtors Association is calling for U.S. home prices to increase 11 percent during 2005 and at about half that rate next year.

"There is no evidence of bubbles popping," the association's chief economist, David Lereah, said about the national housing price report.

Housing experts expect metro Phoenix's home prices to climb at least double the national rate in 2005.



Reach the reporter at catherine.reagor@arizonarepublic.com.