An update to the Phoenix housing market comes from my good friend Dan Blaes (pronounced “blaze”):
- In the surrounding Phoenix-Metro area an estimated 30,000 of 49,000 properties for sale are investor-owned. As a result, the supply of rental properties has ballooned. In outer areas a 2400 square foot 3 bedroom home can be rented for $750-800 per month. A few years ago the same amount would only rent you a 1 bedroom unit.
- During the boom, speculation was particularly intense for land between Phoenix and Tuscon (117 miles apart) as it was assumed the corridor would turn into a megopolis. Farmland all but disappeared. In Eloy, a town of 4,000 residents halfway between the two cities, there are currently applications to build 50,000 units over the next 10 years. In the town of Maricopa, about 35 miles south of Phoenix, Dan recently drove around a subdivision of about 40 homes. He counted 9 “for sale” signs.
- Just as lax underwriting and appraisal standards added fuel to the bubble, a return to caution is turning the cycle vicious. For homes on the market over 120 days, appraisers routinely trim another 10% from their valuations.
- The supply of homes for sale in the $1.5 million-and-up market currently stands at 12 years. That’s right – 144 months.