6 August 6 - 19, 2011 Housing from Page 1
“We’re bumping along the bottom,” notes Butler. “But now it’s not the housing market that will dictate the future, it’s the economy. Income – not jobs, but income – impacts confi dence and the desire people have to acquire property. And as far as the economy goes, we’ve never been here before, so it’s impossible to say what’s ahead.”
Investors fueling sales
One factor driving current conditions, says Ryan, is the sudden surge in individuals and families looking to rent rather than own. These include many who are wary of purchasing a home after seeing values erode over recent years as well as those who are unable to qualify for mortgage loans. “The rental market is very strong,” notes Ryan. “Rents are up 5 to 10 percent over the last six months. The market generated a lot of distressed sales, and the federal government has stipulated strict timelines before those owners can purchase another home after a short sale, bankruptcy or foreclosure, so they have to rent.”
Realtor Bill Ryan
According to Ryan, real estate is a sound option for investors, as it’s currently available at bargain prices and has both short and long term income potential.
Renting out properties brings in immediate cash and offers unique tax breaks, and when the market does eventually recover, the houses can be sold at a profi t. Real estate investors fi nd the SanTan Sun area
especially appealing due to its solid infrastructure and impressive amenities.
“Right now, about 35 to 40 percent of sales in the Metro Phoenix area are to investors buying homes to use as rentals,” Ryan reports. “The Chandler market is quite a bit stronger than others in the Valley because its schools, transportation, newer housing and job market make it more attractive. Investors can buy a home, rent it at today’s prices, and get a 6 to 8 percent cash return. Banks don’t pay that much on CD’s or savings, and the stock market doesn’t offer that stability.”
Chandler, Gilbert outperform Valley average
Location is key in the real estate game, and the SanTan Sun area is among the best regions in Metro Phoenix for residential housing market conditions. Sales have been holding steady for the past few months, with prices nudging slightly higher. Ryan notes that in May 2011, there were 560 homes sold in Chandler at an average of $161,000. The number of transactions fell slightly in June to 544, but the median price climbed to $170,000, according to his fi gures. “It’s not an indicator that the market is going to keep getting better and better, but it shows strength,” Ryan explains. “Chandler is in the top three communities in the Valley in terms of price change. Queen Creek was fi rst, and Goodyear and Chandler tied for second. Gilbert is doing well, too, with prices up about 3 percent.”
Experts attribute the superior condition of local housing markets to the fact that Chandler and Gilbert were not as hard-hit when the real estate bubble burst and thus have to climb out of a much shallower hole.
STSN photo
WELCOME SIGHT: After several years of slowed and halted housing construction, more new homes are being built, resale home prices are up slightly and the rental market is stronger.
Even when the market does offi cially turn around, experts agree the days of huge annual appreciations in residential real estate are gone forever. “Over the next 12 to 18 months, we’ll probably see prices go up a bit, come down a bit, but mostly stay fl at,” says Ryan. “Then eventually things will go back to the way they used to be, with home prices seeing 4, 5, 6 percent appreciation from year to year. There aren’t going to be the 10 and 20 percent jumps we saw a few years back. It just won’t happen like that again.”
See Housing Page 7
“The East Valley hasn’t dropped as much as the rest of Phoenix,” says Butler, “so it’s resurgence and recovery will be more evident, much sooner.”
New normal for housing
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