"It could also have something to do with the wealth gap. The middle class has kind of disappeared," Orr says. "So the number of people buying midrange homes is fewer."

Or maybe it's nothing more than a momentary breather.

Orr recalls 2010, when there was a boost in buying after the government offered tax credits for new homebuyers. When the credit disappeared, so did the buyers.

"There was a huge air pocket in demand from June to November [of that year]," he recalls. "Suddenly, in November, the whole market turned around again, and the buyers came back. Prices didn't go up for a while, but the activity was dramatically better in the spring. And it set the foundation for the recovery that happened nine to 10 months later."


The luxury-home market was one of the last to recover, and it's going strong.

Indeed, while the number of home sales decreased overall in August compared to last year, the total dollar value of overall sales was up 11 percent.

The reason is that many of the homes were priced at a half-million dollars and up.

The luxury market works on a different clock from the production-home market, responding more to the dictates of the stock market (setting record highs recently) because many potential owners of luxury homes don't live here yet.

Scottsdale and Paradise Valley have seen steady increases of 1 percent a month recently. Banks also have begun loosening the reins on jumbo loans used to finance many luxury-home purchases.

"The production-home market began its recovery before [the luxury market], and so we're definitely seeing upward pressure on prices. They're definitely inching up, but not at the same rate," says Walt Danley, who's seen a lot in his 36 years in the real estate business.

He credits a new breed of the savviest buyers ever with driving up prices for luxury homes.

"The luxury market hit bottom at the end of the summer of last year. So all those people who were sitting on the fence started seeing prices go up and said, 'I'd better pull the trigger now,'" he says. "The swing in the market wasn't that fast or that great, but it is indicative of how tuned into the market buyers have been."

Townhomes and condos also were late risers, but they've made it up.

The median sales price of a townhome or condo has increased 31 percent over the past year. Still, sales fell by 6 percent.

Prices began perking up six months to a year ago, according to Hopkins: "[This market] kind of lagged behind single-family homes because a lot of the [institutional buyers] weren't buying condos and townhomes."


Home prices are predicted to climb, at least over the next 18 months.

Between first-time homebuyers squeezed out of the market for years, underwater homeowners finally surfacing, boomerang buyers returning to the market after a foreclosure or short sale, and the regular stream of new transplants to the area, there's simply too much pent-up demand for prices to stagnate for long.

Many would be happy to see price increases moderate and settle into the 4.5 percent range, the average annual increase from 1994 to 2003. Nobody really expects the 20 percent to 30 percent metrowide gains of the past two years to persist.

This kind of appreciation only leads to a bubble.

Most of the brokers and industry veterans interviewed for this article think the current lull in demand is more a temporary thing as prices shift into a lower gear. The feeling is that home prices should rise 8 percent to 12 percent next year and start to stabilize at an increase of about 5 percent per year by 2015.

Land prices, too, must moderate if homebuilding is to return to a range of 35,000 sales annually. It will take time for new developments to take shape around the Valley because builders were so long in hibernation. As with the resale market, supply and demand will need to come into better balance.

"Areas that already have escalated in prices for land are going to slow down, and areas that have a pent-up demand that haven't been really noticed yet — like Buckeye, Maricopa, and Pinal County — are where we'll find these huge price gains in the future," Jeremy McArthur says. "Could be a year from now, two or three years. It depends on when you get through the finished lots located in those areas."

Every real estate broker interviewed thought it was a good time to buy — or sell.

And though it's their job to say this, they can point to interest rates at historically low levels and what's suddenly become a pretty good stock of homes overall. And, as mentioned, prices are predicted to go higher. Whether that's 4 percent or 20 percent, nobody's willing to play Nostradamus.

Those above the water line certainly can wait. While the price of a house a homeowner intends to buy may be cheaper now than later, the price he'll get for his home may not have reached its maximum.

Still, East Valley real estate agent Shawn Rogers says it might make sense to many to go ahead and sell.

"Say they bought their house for X and can now sell it and put $50,000 in their pocket," Rogers says. "The house they want, they can put down $20,000, and they'll realize a $30,000 gain."

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20 comments
ConcernedCitizenAZ
ConcernedCitizenAZ topcommenter

Is this the housing you mean? Private corporation prison "beds" are increasing by the thousands. $50,000,000 mortgage foreclosure money swiped for this and / or a new Super Max Prison, Arizona does not need.

Time for a reality check by the PR and marketing people promoting Arizona to naive prospects.

Cuzitsthere
Cuzitsthere

The market has actually already turned. Mr Orr was just too kind to point that out. Inventory is going up very hard and demand has dropped far below the usual seasonality (its always slowest in Q4). Sellers getting greedy hasn't helped. If I am a buyer I would be waiting a bit. I expect prices to start adjusting downwards due to lack of demand or at best going sideways. There is very little demand right now. The change has been very similar to late 2008.

TheRegular
TheRegular

I definitely take issue with Arizona State University's W.P. Carey School of Business', Michael Orr. The neighborhood I bought into in 2011 has a few houses available in the $125k range and it is far from a slum. Check out the South Mountain area of Phoenix, east of 24th Street. Their are some nice neighborhoods with conscientious, hardworking homeowners and considerate renters, that would put some Scottsdale neighborhoods to shame.

afdhm
afdhm

These bastards are back. Can't they leave the wise, older property owners alone?

royalphoenix
royalphoenix

My property taxes dropped 50% from 2006-2013. My 5/1 arm signed in Mar. of 04 @ 4.4% has been below 2.9% for the last 2 years. No complaints from me. peace

John Blevins
John Blevins

OVER RATED, And IF you watch that dumb-ass show that is more hype and crap with the Doug guy in it,Property Wars, STAY AWAY AND STEER CLEAR OF THEM, DO NO BUSINESS WITH THEM As far as I am concerned THEY RIPPED ME AND MY FAMILY OFF.

Camille Stodgell
Camille Stodgell

Hell yeah, That's because 90 Percent of the homes being sold in the past 5 years were FORECLOSURES.....Banks would not work with homeowners so they LOST their homes......Just ask WELLS FARGO. They top # 1 for that...

Brennan Johnson
Brennan Johnson

Sheeple!!! Well now that the media outlets in this town are posting positive news about the market the market has taken off. The market didn't need to tank as far as it did, but with all the negative news back in 08-09 telling the sheeple to run the market had no chance.

Nicholas Gonzalez
Nicholas Gonzalez

Housing should be affordable. And should never get back to how high homes were before the bubble burst.

Eliott Kroll
Eliott Kroll

All tied to QE. If you remember rates reacting to the word, 'taper' a few months ago, that should give you some idea of what's to come.

bluebassin
bluebassin

Up 35% in one year? Where have I heard that before? Oh yeah, right before the last big crash. 

How is this NOT a bubble again?

ConcernedCitizenAZ
ConcernedCitizenAZ topcommenter

@Camille Stodgell  While investors swiped those homes at rock bottom prices, to begin the cycle all over again.  Withholding mortgage foreclosure money to the homeowners it was intended for, has been shameful Arizona.

BrainyTreesWhipDevil
BrainyTreesWhipDevil

It is affordable, to anyone that isn't making minimum wage.  People making below average incomes should be living in rentals.

marcy
marcy

@Nicholas Gonzalez 

Planes should be affordable and the price of gas should never go back to how high it was.

If you can't afford to buy a house or a helicopter, rent.

royalphoenix
royalphoenix

@bluebassin The bubble was caused by over aggressive lenders and buyers who bought the line "real estate never goes down." I don't think the mortgage companies do liar loans anymore. peace

marcy
marcy

@bluebassin 

Why is it not a bubble?  Because prices are now back to more normal levels from deeply depressed levels and aren't anywhere near the bubbly peaks of 2005/6 and remain below the cost of new construction in most areas.

Sorry to hear you, like most people, missed one of the greatest home buying opportunities of a lifetime.


BrainyTreesWhipDevil
BrainyTreesWhipDevil

@ConcernedCitizenAZ

Tough luck for those that paid too much and wouldn't make their monthly payments.  Don't pay your loan, lose your home.


Nobody swiped anything, you and your fellow deadbeats just stopped paying and got the boot as a result.

bluebassin
bluebassin

@marcy 
 

Used house salesman like you said this same thing before the last market crash also. How many California investors do you work for?

marcy
marcy

@bluebassin @marcy 

I was singing the same tune in 2009+ when I was telling people not to listen to people like you who were saying houses were a terrible investment and prices would never go up again.

I work for myself honey and I was buying while you were hiding under the bed.   The typical rent I get is about double what the mortgage payment is on the houses I bought.  So I have been getting massively positive cash flow for 4+ years and appreciation.



 
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