Over the past 5 years we have seen a fluctuation in home prices in Arizona. 2008 & 2009 were difficult years for Arizona real estate. The good news for homeowners is that Arizona home values have reached a turning point and prices are on the rise. In 2011 & 2012, median single-family home sales rose almost 34% while home foreclosures fell 51%. With fewer foreclosures, the number of homes available for resale dropped 6% in 2012. Higher prices combined with fewer foreclosures and short sales resulted in reduced sales activity overall and less demand.
Due to low inventory in 2012, home prices have gone up quickly. As foreclosures and short sales go down, more expensive transactions like normal resales and new home sales have gone up. As bargains become tougher to find, average buyers will turn to new-home construction which has come back strong because of this.
While Phoenix was one of the hardest hit markets in the nation, off 59% from their 2006 highs, prices have been rising in since September 2011 making it one of the most improved metropolitan areas. The average home in the Phoenix metro is worth about 59% of its value at the peak of the market, up from 44% at the lowest point after the bust.
Home values around Arizona have seen great improvement. In 2012 Tucson, Yuma, and Flagstaff had negative price growth on a year-over-year basis. This year the situation has improved with all cities showing price increases from June 2012 to June 2013. Cities outside the Phoenix metro have slower price improvement, but they did not have prices fall as far during the housing crisis. Since this time last year, Phoenix median asking price has increased 13.3%. Tucson increased 10.8%. The strongest price increases continue to be in suburban areas outside of Phoenix like Mesa, Glendale, and Scottsdale.
Conditions in Arizona are improving quickly. Increasing prices are helping underwater borrowers rebuild equity in their homes. Greater job and economic growth will still be needed for a sustained recovery to allow new buyers entry into the market.