Rising Arizona Real Estate Prices Take Toll

The Arizona Republic reports that Metro Phoenix's fast rise in home prices could come at a high cost, forcing buyers and businesses to cheaper markets. Valley home prices have risen nearly 50% during the past year, pushing the typical Metro Phoenix area home to $263,000, which is $40,000 more than the national median home price.

The article looks at the housing markets of three Western cities; San Diego, Las Vegas and Denver, to show where they think the Central Arizona real estate market is headed. Significant home price run ups occurred in each of these cities in the past, causing job and population growth to slow and incomes to slip, followed by a cooling or even a dip in home appreciation. Can it happen here? "Phoenix's housing market is in transition. Reality is starting to set in," said David Lereah, economist for the National Association of Realtors.

The article goes on to profile each of the three other cities as to where they were at and where they are now with their housing prices. Analyst say that the recent slowdown in Metro Phoenix home price increases is a good sign. It means, for now, the Valley's affordability crisis won't get as severe as San Diego's. New home prices won't get slashed as they did in Las Vegas last year, and job growth won't slow as it did in Denver.

Phoenix still has the population and job growth that will make it one of the top two markets in the country. But with housing our top industry, we need to be aware that if prices climb too high, homebuyers will look elsewhere, which would cause a ripple effect throughout our entire economy! More...

The Arizona Republic had a special insert section in Sunday's newspaper (10/23/2005) called "Valley Home Values" in section AH. It is not on-line, but we recommend you get a copy of it, if you are interested, as it contains a map showing price increases Valley-wide by zip code.
-Matthew Pellerin