Will domino effect push Phoenix to right place?
Even though prices of real estate in Phoenix continued to drop in July, experts say this is a natural reaction. Home prices dropped 1 percent from June to July, but according to statistics from Arizona State University cited by The Republic, prices are still up 31 percent over last year.
In Maricopa County, the median home price was $149,000 in July, down from $150,000 in June. In July 2011, the median home price was $114,000. Not only are prices increasing, but waiting times for new homes are also on the rise, according to The Wall Street Journal.
Government employee Bill Armenta told the publication the $294,900 base price of her new home in Phoenix rose by more than $33,000 since her and her husband signed their contract in January. With additional upgrades, the purchase price was $350,000. The couple also had to wait six weeks just to get an appointment at the design center, and then another eight months for the construction to finish.
Real estate experts are staying positive about the trend. As the prices continue to rise, it is likely that more Americans will put their homes up for sale, lending to an even better market. The average price per square foot of a home went up 21.1 percent compared with July 2011.
"It's a natural reaction to prices going up so fast in the spring," Mike Orr, director of the Center for Real Estate Theory and Practice at ASU's W.P. Carey School of Business, told The Republic. "The summer is bound to slow down. The market can't keep going up at 5 percent a month; that's crazy. We sort of overdid things in the spring."
Orr believes that the current home prices are sustainable in the Phoenix market, but a year-over-year increase is unlikely. The average price per square foot is around $95.44, which is equal to figures in 2000. Prices are higher, though, because the average home size is larger and inflation accounts for a 30 percent increase.
The number of bank-owned homes fell 73 percent since July 2011, but foreclosures for single family homes and townhouses rose 13 percent from June to July. Real estate experts believe this increase is short-term because of legal settlements between states and lenders. Homeowners that received notice of foreclosures dropped 14 percent between June and July.