According to Street Scout, investors are moving into the hot Phoenix real estate market and buying up homes, a trend that's raising concerns. Speculators contributed to the severity of the housing crash in 2008 and make it tougher for first time buyers to get into a market that continues to tighten. Further complicating things, new-home sales were up 34% in October in the Phoenix metro. “New housing supply remains tight, while demand is as high as any period since 2006,” said Arizona housing analyst Jim Belfiore. “We anticipate rapidly rising home prices for the next 12 to 18 months.”
Bus loads of investors came to metro Phoenix from California and Nevada to buy new homes with as little as a few thousand dollars down because of the risky mortgages being made back then. Many bought more than one new home in a subdivision. When the houses were completed, speculators flipped them for $20,000 to $60,000 more than they paid. The scheme fell apart in late 2006 when home prices stopped climbing 5% to 6% a month. Then speculators walked away from new homes because they couldn’t sell them.
Metro Phoenix's home building market has yet to recover from the crash. During the boom year of 2006, more than 60,000 new-home permits were issued. Builders are more cautious this time around, and that's a very good thing for the housing market.
