Priced Out: When Recovering Home Prices Leave Some Arizona Buyers Behind

By Heather van Blokland
Published: Thursday, April 26, 2018 - 2:38pm
Updated: Friday, April 27, 2018 - 3:38pm

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Vidales shows horse property with filled in pool
Heather van Blokland/KJZZ
Vidales shows a south Phoenix horse property with filled in pool.

Over half the country’s home prices are now at or above pre-recession levels. For many homeowners, that is good news as they regain equity lost during the housing crash. But, for some trying to buy a first home, rising home prices, combined with stricter lending requirements, means they are getting priced out.

Gabriel Gomez qualified for a home loan in one day — but finding a home to buy has been much harder.

“I really don’t know what to expect from the market or sellers being how I’ve never been through this before,” said Gomez.

Gomez is a first-time home buyer. He is 37 years old, no spouse, no pets and works as a welder, a structural steel fabricator and has lived in south Phoenix his entire life. He’s been looking for a home to buy for almost six weeks. He said expects his search to go into 2019, and will need to apply for new loans to keep looking that long.

“What ended up happening in one particular case was that the seller ... had received an offer that was above the listing price, so that kind of put me in a rough spot there,” said Gomez.

Vidales and Gomez
Heather van Blokland/KJZZ
Victor Vidales and Gabriel Gomez in south Phoenix at realty office on the weekend.

A townhouse in west Tempe was on the market for four days and ended up selling at about 3 percent above listing price.

“It was just something I saw that was really simple. I was attracted to it immediately. It had a lot of really nice features. And, so, that one was the one that got away,” said Gomez.

Gabriel is looking for houses priced between $100,000 and $150,000, an entry-level home. And that’s where there are very few listings. Real estate agents, like Victor Vidales, describe it as an inventory shortage. And as prices continue to rise, first-time home buyers, like Gabriel, are getting priced out.

“You have to have the credit. You have to have the job. You have to have assets. You know, unlike before, you had what they call the ninja loan: no income, no job, no assets. And they were giving people loans back then. Now, they go through a more thorough process for the approval,” said Vidales.

Daren Blomquist, with ATTOM Data Solutions in Phoenix, said even though there is frustration in the market over lack of supply, lenders are staying firm on not letting buyers get loans they can’t afford.

“In that respect, this housing boom that we’re in is a lot healthier and a lot less risky because it is based on the low supply as opposed to artificial demand, which is always a risky thing,” said Blomquist.

Over half the country has fully rebounded from the housing crash. Phoenix is still behind about 5 percent, which means prices are expected to rise more, he said.

“We’re showing a median price of $245,000 in the first quarter of 2018 in the Phoenix metro area. In Phoenix, we saw a 10 percent increase year over year from last year. If that continues into this year, we’ll see Phoenix get back to its pre-recession peak by the end of this year,” he said.

I went on a ride-along with Vidales in south Phoenix to see how high prices are.

In the Baseline Corridor, we go to a house on 7th Avenue and Baseline Road. It’s a two-story home with a tile roof.

“Right now, this house is selling for $250 to $255,000. So, it takes a family that makes more money and better educated, so as those demographics move in, it starts to shift the census information,” said Vidales.

“Getting back to pre-recession levels is not necessarily a great goal. It could actually be a red flag that home prices are getting into bubble territory in some markets,” said Blomquist.

We hop back in the car to a home just a mile away, on Seventh and Southern avenues. Built in the 1950s, it’s about to list for $172,000. It’s a horse property, meaning owners can keep horses on the one-third acre lot. A pool had been there, but it’s now filled in with dirt. The diving board and metal ladder are still attached to the ground. 

Before the recession, the house would list for $150,000 to $160,000. Now, Vidales says said house is priced above pre-recession levels because of the inventory shortage.

Vidales has already had 15 requests for showings.

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