Phoenix Real Estate Appraisers Having a Hard Time Keeping Up with Appreciating Home Prices

From the Cromford Report:

March 8 – As home prices rise at an accelerating rate, we today hit $125,000 for the monthly median sales price (all areas and types) for the first time since August 12, 2010. The lowest monthly median recorded was $107,000. This was measured on February 24, 2011 and again on August 17 and 18, 2011. So the monthly median sales price has risen 16.8% in less than 7 months and looks likely to rise considerably more in the coming months. Appraisers are finding it hard to keep pace with this rate of increase as comps are out of date within a couple of weeks. This is similar to 2005 except we are starting with prices a very long way below 2005 levels.

From personal experience, I can tell you that it’s really an interesting and challenging time in the Phoenix real estate market.

As an example, I listed a Scottsdale townhouse in January, which had multiple showings, and an almost full-price offer within the week.  The buyers loved the house, but not enough to pay the difference when the house appraised at $7,000 less than the purchase price. The house went back on the market, and a second buyer placed the same offer almost immediately.  When his appraisal came in several weeks later, the house appraised for OVER the purchase price.

If I put that same townhouse on the market today, I suspect that it wouldn’t last a day, it would have multiple offers, and that at least one of them would be over the listing price.

One of the really good side effects of the appreciation is that owners, with homes that are borderline short sales, are now able to see the light and start planning to sell, without the repercussions of a short sale.

It’s a crazy time to be a buyer, or a real estate agent for that matter, but in the grand scheme of things, this appreciation is very welcome and another step on the road to a more balanced market.