Candice & Roger Boggs

Phoenix housing market is 'about where it should be'

Despite the huge number of homes for sale in the Phoenix area, real estate expert Jay Butler says prices remain above the national average.

"The market is about where it should be, and people don't like to hear that," the director of realty studies at Arizona State University said recently.

The median price of a home in the Phoenix area used to be about 90 percent of the National Association of Realtors' national median price, he said

Prices began rising during a hot housing market in early 2005 and, during the past year and a half, have settled at about $260,000. The national median is $219,000.

Although the inventory of homes for sale has climbed to about 51,000, the Phoenix area remains one of the top 20 metro areas for a median price. It used to be ranked in the 50s, Butler said.

That doesn't mean there aren't problems.

Buyers can't afford as much because of the higher prices and because skittish lenders have been tightening their guidelines. Sellers won't or can't lower prices because they owe too much. And buyers are having problems selling their own homes.

"The problem is a lot of people say this is a buyer's market, but most buyers first have to be sellers," he said.

Butler, who was addressing the Tempe Chamber of Commerce Hot Topics and Lunch, also said the economy and housing market face a number of risks, such as unexpected geopolitical events and higher interest rates.

As for the rising number of foreclosures, he said it is too early to know if they will affect the economy and housing market because it depends whether they will be sold or repossessed.

Butler said that in Tempe, where he has lived in the same home for 35 years, the big issue is that the houses are getting old and not necessarily being well-maintained. There are many rental properties and sometimes amateur landlords let them get run down, Butler said.

"I think Tempe is holding its value a lot better than other communities, but the aging of the housing stock is going to be a big issue," he said. "What concerns me more is homes not being well-maintained.

"And there's a certain amount of indifference. Everybody wants to save a neighborhood once it gets into trouble. But no one wants to save it before it gets into trouble."