Valley homes worth less than a quarter million dollars are growing in value according to the latest real estate report from the W.P. Carey School of Business at Arizona State University. The report credits increased appreciation of those homes to a lot of people wanting them and there not being a lot of them available.
Among the big buyers: millennials purchasing a first home and people who lost theirs in the housing crisis and are now back in the market.
"Anything under $250,000 flies off the shelf. That opens up the door to every buyer pool possible," said Nick McCully, co-owner of Strong Tower Real Estate Group, based in Scottsdale.
McCully said he sees a lot of buyers in that price range, also because the threshold for a Federal Housing Administration (FHA) loan in Maricopa County is $271,050. It only requires a 3.5 percent down payment, making it an attractive option for those who qualify and are looking to buy.
People selling their current homes and buying bigger ones, like growing families, make up much of the next tier, the $250,000-500,000 range. Michael Orr, Director of the Center for Real Estate Theory and Practice and author of the ASU report, said this group makes up a healthier level of supply and demand.
"The rate of appreciation in the move-up market was far greater than inflation in 2015, but this is not too difficult to achieve given the unusually low level of inflation," said Orr. "With most commodity prices still falling hard, the odds are strong that mid-range home prices will easily beat inflation once again in 2016."
McCully said an influx of transplants from states with higher costs of living also contribute to the overall growth the Phoenix market has seen.
"Any property that is clean and somewhat updated with current fixtures and finishes, as long as it’s priced right, will sell at a matter of weeks at the most," said McCully.
W. P. Carey School of Business Real Estate Report Highlights:
- Homes below $250,000 up 6 to 12 percent
- Homes from $250,000 to $500,000 up 2 to 6 percent
- Homes from $500,000 to $2 million moved up slightly