Industry Update: A Market On The Mend

Industry Update: A Market On The Mend

Posted 08/14/2012

Evidence continues to mount that Phoenix’s residential real estate market is on the mend, but experts are taking a wait-and-see approach before calling 2012 the year of the recovery just yet.

No doubt, the market’s performance in the first half of the year produced encouraging news. According to the S&P/Case-Shiller Home Price Indices, Phoenix topped the nation in annual average home-price growth as of May, with an 11.5 percent gain compared to a 1.0 percent decrease for the 10-City Composite and a 0.7 percent drop for the 20-City Composite versus May 2011.

Said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, “It (Phoenix) was one of the hardest hit cities in the collapse, and prices are still more than 50 percent below their June 2006 peak, but the past five months have been positive for that market.”

Long-time Phoenix housing expert R.L. Brown noted on his website in July that May also was a good month for housing permits. New-home permits soared 129 percent in May compared to the same period last year. Builders – especially those with premium locations – are experiencing a resurgence in demand, prompting the need for additional homesites and driving land prices upward in areas of highest buyer interest.

Overall, experts agree the residential real estate market isn’t out of the woods yet. Serious issues remain on both the buy and sell sides of the housing equation, and the nation’s economy remains fragile, at best.  Radar Logic, a real estate investment firm, predicts a few more months of price increases nationwide, followed by a “fairly aggressive decline” through the remainder of the year. CEO Michael Feder said he’s keeping a close eye on investor/buyer behavior, the supply of foreclosure properties in the marketplace and bank financing requirements.

Since no one knows for sure how the remainder of the year will play out, we are celebrating successes where we can and are taking a cautiously optimistic view of the future.