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Arizona home prices jump 6.8 percent in past year

PHOENIX -- After years of disappointing performance, there are real signs of life in the Arizona real estate market.

New figures Tuesday from the Federal Housing Finance Agency show that home prices overall in the state rose 6.8 percent in the past year. And when the agency adds in home values, as measured by refinancings, that figure hits 7.0 percent.

The comparable national figures are 5.4 percent for prices and 6.2 percent for overall values.

Looking at it another way, the average price that Arizona homes are selling for is now back to where it was in 2008, though still about 17 percent below the peak in 2006. And overall prices are up nearly 35 percent in the last five years.

But the picture is hardly the same throughout the state.

The market is hot in Mohave County where the FHFA says home values are up close to 10.6 percent in the past year, including a 3.9 percent jump between the first and second quarters of this year.

Pima County, by contrast, trailed both the state and federal appreciation numbers, with prices and values up only 3.7 percent year-over-year.

And all the way at the other extreme is Cochise County which has been losing population because of cutbacks in defense spending.

There, the value of the average home slid more than 2.5 percent from the same time last year. And overall values are down nearly 16 percent in the past five years.

Michael Orr, director of the Center for Real Estate Theory and Practice at the W.P. Carey School of Business at Arizona State University, said the way he sees it, the state's overall real estate market is back to normal.

He acknowledged that homes are still selling for less than they did in 2006. But he said those sales made during the real estate boom were at prices that were "unreasonably high' and not realistic.

For the near future, Orr said prices should level off, what with inflation being "negligible.'

"Housing has no particular reason to go higher than it is,' he said.

Still, Orr said it may still be a good time to invest in real estate. The key, he said, is the imbalance between supply and demand, something he said that may push prices for existing homes up higher.

"I'd rather be invested in real estate right now, mainly because we've underbuilt so long,' he said. "That means we're not going to end up with a surplus any time soon, like we've got with oil and gas and copper and lots of other commodities.'

The FHFA isn't the only one looking at the housing market in Arizona.

In a separate report Tuesday, the financial advice firm WalletHub looked at factors it says represent a "healthy' housing market. And its list of communities ranked Gilbert the highest of any Arizona city studied.

But that may not be saying much: Gilbert still came in at No. 51 on the list.

At the bottom among Arizona communities was Yuma at No. 257.

The different ratings are the result of different ways of looking at the issue.

The FHFA, which has been gathering data for decades, looks at the prices for which homes are selling. More to the point, it looks at what the same home has sold for time after time, rather than looking at the average selling price of all homes in an area.

The agency also has access to home values as measured when owners refinance their mortgages. Here, too, FHFA has data on the same properties.

By contrast, WalletHub has its own factors.

For example, it looks at the percentage of homes where buyers are "underwater,' meaning they owe more than the property is worth.

On that list, Scottsdale scored the best at 11.3 percent; Yuma has an underwater rate of close to 27 percent, putting it at No. 262 out of the 300 communities studied.

Looking at another factor, homes were on the market the shortest in Gilbert and Tempe, at 62 days apiece, versus 118 days on average in Yuma.

But Gilbert got a boost when WalletHub compared home prices with income.

A house in Gilbert will cost 3.2 times the average annual salary in the community. At the other end, the typical Scottsdale buyer will pay 5.3 times his or her income, even with the income being higher among residents there.

WalletHub also looks at comparisons between 2008 and now.

But Wallet Hub looks at the median price of all homes sold in a community, using figures from Zillow; FHFA compares sales of the same homes. And while the FHFA suggests that home values are back to 2008 levels, WalletHub finds that, on average, homes are still selling for less now than they were then.

On Twitter: @azcapmedia

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