Categorized | Residential

Phoenix Housing Prices Remain Stagnant Despite Increasing Demand

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While the overall housing supply continues to decrease and demand increases, average home prices continue to remain stagnant in the Phoenix housing market. The lack of growth in prices has many housing experts in disbelief, as current trends buck the typical laws of supply and demand.

With foreclosures down, and homes selling faster than they have in quite some time, it would only make sense that housing prices would gradually increase. However, prices have actually declined in many areas. Only three Phoenix communities have experienced any growth in average home prices.

Analysts believe that supply and demand laws are only a small piece of the overall equation in the calculation of home prices, particularly in the current market. They attribute the current phenomena being experienced in Phoenix to the appraisal of homes, which serves as another component in determining houses prices.

The overall appraised value determines the size of the mortgage that can be secured by the homebuyer. After being accused for years of overvaluing properties during the housing boom, many appraisers have been very cautious and conservative in their appraisals. Furthermore, the current state of the housing market on a nationwide level has also contributed to low appraisals.

With demand at its highest level in years, and prices continuing to remain artificially low, many investors are flocking to Phoenix. Many investment firms see the Phoenix market as a tremendous opportunity to turn profit by purchasing rental homes. If the prices continue to decline, however, the overall demand for homes on behalf of homebuyers and investors may decline. With prices steadily dropping, demand will eventually follow suit, as many prospective buyers will opt to wait so as to get the best possible deal.

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About Ella Jourgeson

Ella was recently an intern who checked all the articles for grammatical and spelling errors. She is now an all purpose writer filling in wherever we need help.

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