Phoenix housing market undeniably up
Here's a turnaround worth noting: The housing market in Phoenix is emerging from a historic slumber. Foreclosures are down, and new home sales are re-energizing the market -- up 35 percent from a year ago. Peter O'Dowd takes us to the Phoenix suburb of Gilbert, where new homes are making a comeback.
PETER O'DOWD: Let's get down to street level, shall we? How 'bout Ravenswood Drive near Gilbert's eastern edge.
KEN PETERSON: OK, so we're on a street as cement trucks are driving by.
O'DOWD: Ken Peterson is a Vice President for Shea Homes. We're in a development called Spaces. And listen to this, air compressors and nail guns all around us.
PETERSON: I absolutely love it. How could you not? The sound of generators running and people working, it warms my heart.
O'DOWD: All this noise is a big deal, because 2011 was Shea's worst year ever. Business is much better now. This development just sold out. Peterson says compared to last year, Shea Homes increased sales by almost 60 percent in the Phoenix area. And it's recently opened, or has plans to open, about a half dozen new housing developments.
PETERSON: We're a little bit taken aback by it. It kind of hit us all at once.
MIKE ORR: We've been through a huge five years of misery.
O'DOWD: Mike Orr tracks the regional housing market at Arizona State University.
ORR: And so people are reluctant to believe it's really starting to end.
O'DOWD: Orr's numbers show the city of Gilbert recorded more new home sales last March than any other type. More than existing homes. More than foreclosure sales. More than short sales. Orr says it's the first time that's happened since the market crashed.
ORR: And it's probably going to get better. That feeds on itself. If people get more confident, they say 'if it's safe to buy a house maybe I should.' And that just adds to the demand.
O'DOWD: Foreclosures are down by more than half in the region compared to a year ago, and home prices are up 20 percent. But Orr says the entire market is still unbalanced. That's because the supply of used homes has vanished. Buyers have eaten up the bargains. West Valley Realtor Marian Nelson says her customers can't find what they want.
MARIAN NELSON: They're angry because they know they've missed the market. We're standing in line outside the houses to show them.
O'DOWD: This reminds me of 2006, 2007.
NELSON: Exactly, it's almost like we're back at that same point.
O'DOWD: To be fair, the amount of home building and sales activity is nowhere near the market's peak before it crashed. But Nelson says she's still concerned these bidding wars are causing home prices to go up too fast. When people wait in line for used homes, they tend to give up and try for a new one instead. So Nelson worries home builders are going to overextend, just like they did a few years ago. Alan Jones works for the homebuilder Lennar. He says that's not about to happen.
ALAN JONES: I want to make point that I think we really had an overcorrection to our marketplace. I think that prices went lower than other states than are in close proximity to us.
O'DOWD: Jones says price appreciation is healthy, just to get the market back to normal. And developers Valley wide say they're already restricting new home sales in some cases ... partly because they don't yet have the labor in place to keep up with demand.