Help for first time-homebuyers: FHA ups loans limits to $314,827 in metro Phoenix by Catherine Reagor

Rising metro Phoenix home prices and mortgage rates are making it tougher for many buyers.

But the federal government is offering some help for first-time buyers.

The Federal Housing Administration has raised loan limits on its mortgages, meaning buyers can qualify more easily for higher-priced homes — particularly since home prices are up at least seven percent from last year.

About 800 Valley home buyers a month used an FHA loan in 2018.

Dean Wegner of Scottsdale-based Guardian Mortgage said FHA loan increases often give the housing market a boost, but due to higher home prices the limit needs to increase more in metro Phoenix.

Buying and borrowing more

The limit on FHA mortgages will climb to $314,827 in 2019. That’s up from $294,515 last year and from $279,450 in 2017.

Though FHA loans require as little as 3.5 percent down and are easier for borrowers with less-than-stellar credit to get, they can be pricier. The government-backed loans require home buyers to pay annual insurance of up to 1 percent of the loan, in case the homeowner stops making payments.

Boost for new home market

Ali Wolf of national housing firm Meyers Research said Phoenix is one of the cities that will benefit the most from higher FHA loan limits.

Metro Phoenix's median existing-home price is about $262,000. The area’s median new home price is about $318,000.

He estimates 35 Valley subdivisions are now selling new homes priced below the higher FHA loan limit.

Dallas only has about 15 developments selling homes priced in the FHA loan range.


Metro Phoenix home prices set record | by Catherine Reagor

We’re finally there. Metro Phoenix home prices are back to the record hit in 2006.

Actually, the Valley's median home price soared past the previous record to reach $268,000 in June, according to the Arizona Regional Multiple Listing Service's latest research.

The previous record median price was about $265,000, set in June 2006,  Arizona Regional Multiple Listing Service data show.

The housing crash and the Great Recession started in 2007. Phoenix-area home prices hit bottom in September 2011, when the median plummeted to about $120,000.

Low-key party

Housing analysts are still a bit subdued about the Valley's home-price recovery, partly because it took more than a decade, and the bust was so painful.

Also, higher prices mean it's tougher for first-time buyers to afford a home. That can slow the housing market and the Valley's growth.

"It's 12 years later, and the Valley's housing market is in a much better and different place that it was when prices were this high before," said Tom Ruff, housing analyst with The Information Market, owned by ARMLS.

Ruff and Cromford Report founder and housing analyst Mike Orr accurately called the peak and the bottom for metro Phoenix's housing market using pending sales, foreclosures and other key indicators.

"It's been a long and often unpleasant ride," Orr recently said about the roller-coaster ride of the Valley's housing market since 2005.

Bad memories for homeowners

If you owned a Phoenix-area home during the past 15 years, you understand why the long-awaited recovery of home prices is something to celebrate.

If you are new to the Valley and didn't live in an area when prices crashed, let me share a few bad memories.

  • Because of speculators and bad mortgages with outrageous costs backed by Wall Street, foreclosures in metro Phoenix soared from about 100 a month in 2006 to 4,500 in 2011.
  • More than half of all homeowners were underwater, meaning they owed more than their house was worth.
  • Homeowners, angry they couldn't get government-backed loan modifications while Wall Street and banks got bailouts, walked away from Valley houses in record numbers.
  • Some national housing analysts said it would be 20 to 25 years before metro Phoenix home prices recovered.

Housing rebound

A look at how the market has recovered.

  • Valley foreclosures are down to less than 150 a month.
  • Less than 5 percent of all metro-Phoenix homeowners are underwater.
  • Home prices are back to the peak, but not because they climbed 50 percent in a year like 2005-2006. Phoenix-area home values have been ticking up 5 percent to 8 percent a year for the past few years.

This isn’t a boom

In June, my column "Phoenix home prices keep climbing, but no bubble in sight," drew a tweet from a longtime Valley resident showing his disbelief.

"Heard that one before," tweeted @RobbieSherwood, a former reporter and communications director for the Phoenix mayor who is now with the Arizona House of Representatives Democratic Caucus. 

I understand his doubt. Many of us who lived through the crash get nervous when we see prices back up, and homes selling so fast they spark bidding wars.

But the differences between 2005-2006 and now are many. Mostly affordable homes priced below $400,000 in popular neighborhoods are drawing multiple bids quickly now.

Again, that's not good for metro Phoenix's housing affordability, but the forecast for prices could mean the problem won't worsen during the next year.


No housing bust in sight

None of the experts are forecasting another big drop in Valley home values anytime soon.

But Tina Tamboer, senior housing analyst with Cromford, expects home prices to appreciate much more slowly and potentially flatten out this year.

She said Phoenix-area home prices could even dip next year, but only slightly. 

Christa Lawcock of Realty Executives said some homeowners seeing rising prices are talking to her about selling now and renting to cash out at the peak to avoid a housing crash.

"That makes no sense," said Lawcock, a central Phoenix real-estate agent who navigated the boom, bust and now recovery for many buyers and sellers. "Rents are near record highs and probably more than some of their mortgages. They aren't going to find big bargains on homes, even if prices dip a bit.

"We all got beat up by the crash, and now we need to not freak out and make bad decisions when the market is back," she said. "Please, this isn't another boom/bust."

Metro Phoenix home building hits decade high by Catherine Reagor | Arizona Republic

New houses are going up in the Phoenix area at the fastest pace in 10 years, and prices are climbing faster than they have in five years.

Buyers are again heading to Valley suburbs farther out to find houses they can afford.

All are signs that metro Phoenix’s homebuilding market is recovering.

But it still has a way to go to rebound from the housing crash that left many Valley fringe neighborhoods half-built and blocks of new houses empty for years.

By the building numbers

More than 1,950 new houses sold Valleywide in May, and the pace of sales for the year is 18 percent ahead of last year, Belfiore Real Estate Consulting reports.

May was the best month for new house sales in metropolitan Phoenix since March 2008, according to RL Brown’s Phoenix Housing Market Letter.

Brown reports the median new house price in the Valley is up almost 3 percent from last year to $330,000. That's about $65,000 more than the area's median existing house sale price. 

Jim Belfiore said demand from buyers in the spring gave homebuilders the confidence to push prices upward at the most significant pace in nearly five years.

He forecast 23,500 new houses will go up in the Valley this year. About 20,550 new houses were built in metro Phoenix last year.

Boom and bust

During the housing crash of 2009-11, only about 10,000 houses a year were built in metro Phoenix.

During the boom years of 2005-06, more than 60,000 new houses went up in the Phoenix area. But that pace wasn’t real, fueled by speculators who put almost nothing down, never planned to move into the houses and wanted to flip them.

If metro Phoenix’s new-home market returned to preboom building levels of 30,000 to 35,000 new houses a year, that would be a healthy recovery, housing market experts say.

Buying farther out

Most of the new Valley subdivisions stretching from the San Tan Valley in the southeast to Buckeye in the southwest were left half-built a decade ago. But they are now full of new houses with buyers living in them.


Buyers got deals on those houses when builders returned to the subdivisions five years ago, but most of the deals are gone.

New-house sales are up about 40 percent in Buckeye, and prices are up at least five percent from last year.

Five of the top-selling new communities in metro Phoenix now are on the area’s southeastern edge in the city of Maricopa, Queen Creek along the Hunt Highway and Coolidge.

Prices start at $170,000 in Homestead Meadows in Maricopa, the second-busiest new Valley subdivision for sales. That’s almost half the Valley’s median new home price.

Forecasts call for homebuilding to steadily climb in metro Phoenix over the next few years. Belfiore expects to see more than 26,000 new Valley houses built in 2020.

But homebuilders and analysts see a few big obstacles in the way of the Phoenix’s homebuilding recovery: rising labor, land and construction material costs.

All three will add to the cost of a new Valley house.

How much buyers will pay for shiny new houses in metro Phoenix’s edge suburbs is the big question.

Metro Phoenix home prices are rising the fastest by Catherine Reagor, The Republic |

It's been a long, hard road to recovery for metro Phoenix's boom-and-bust-battered housing market.

But some Valley neighborhoods are there — back to 2006 price levels, and higher. And other neighborhoods are very close. 

As expected, millennial first-time homebuyers are propelling the recovery. 

Metro Phoenix home prices are rising the fastest in many of its most affordable, centrally located neighborhoods, from downtown Phoenix to central Mesa, where young buyers want to live and can afford houses.

2017 was a good year for the housing recovery in the Phoenix area. Almost one-third of the Valley’s ZIP codes posted double-digit-percentage increases in prices last year, according to The Arizona Republic/azcentral Street Scout Home Values report.

Street Scout is azcentral's neighborhood and housing site that provides property valuations, home sales data, real estate news and listings. 

But there is concern buyer demand for affordable homes is beginning to outpace the supply. And there's always worry in Arizona about the possibility of another housing bust when prices climb for a few years. 

Recession rebound

In nearly 30 Phoenix-area neighborhoods, prices have rebounded to 2006 levels or even higher, data from The Information Market shows.

Most of those areas still have median home prices below $300,000.

“Last year was a strong one for the Valley’s housing market, particularly the more affordable neighborhoods closer in,” said Tina Tamboer, senior housing analyst with the Cromford Report. “Only 2004, '05 and 2011 were better years for home sales, and those weren’t normal years.”

The housing boom inflated home prices and sales between 2004 and 2006, and then investors drove up sales as foreclosures climbed and prices plummeted from 2010 to 2012. 

Home prices have doubled in many Phoenix-area neighborhoods since the bottom of the market. Besides the 30 ZIP codes where home prices have bounced back from the crash, values in another 40 neighborhoods are within 10 percent of recovering.

Fastest-growing home prices

Aysia Williams and Benjamin Hughes rented in downtown Phoenix’s historic Woodland district for about a year before deciding to buy their first home.

“We fell in love with the area, but saw prices and rents climbing fast,” Williams said. “We knew we wanted to buy, but there was a lot of competition for the houses we liked.”

Woodland is part of the 85007 ZIP code,one of central Phoenix's more affordable neighborhoods. The area, which has also attracted many investors, saw its overall median home price climb 10 percent to more than $192,000 in 2017. Sales in the area jumped nearly 20 percent last year.

Home prices in their neighborhood on the western side of downtown have rebounded from the crash and are almost 2 percent higher than they were in 2006.

“Aysia and Benjamin were so lucky and bought from their wonderful neighbor, who didn’t want to sell to an investor,” said Sherry Rampy, a downtown Phoenix real estate agent with HomeSmart.

The couple’s house, for which they paid less than $250,000 a few months ago, wasn’t even listed for sale.

“People talk about the gentrification of central Phoenix pricing too many first-time buyers out," Rampy said. “But more high-end home sales in the area help other more affordable areas like Woodland and Coronado improve, too.”

'First-time homebuyer market is exploding'

Stephanie Silva and Billy Horner moved to Chandler from Chicago for the warmth last March.

“We wanted to rent first to see if we liked the area and a 'shovel-free life,' " said Silva, who works in Tempe. Horner works in downtown Chandler.

The couple recently bought a home for under $275,000 in the central Mesa ZIP 85210, almost halfway between their jobs. Prices in the still-affordable neighborhood climbed 9 percent, and sales rose 38 percent last year. 

Home values just rebounded back to 2006 levels in their neighborhood, where the median price is about $215,000. 

“We are on a quiet, cozy block in a home with a pool and a yard,” Silva said. “So far, it is everything these Midwest transplants could ask for.”

Analysis: 7.8 percent of Arizona property owners' mortgages are 'underwater' by By Arizona Business Daily | Jun 1, 2018

In Arizona, owners of 116,314 properties with mortgages owe at least 25 percent more on their loans than their property is worth, according to an analysis by ATTOM Data Solutions looking at home equity at the end of the first quarter.

In Arizona, owners of 116,314 properties with mortgages owe at least 25 percent more on their loans than their property is worth, according to an analysis by ATTOM Data Solutions looking at home equity at the end of the first quarter.

The state ranks 37th in the U.S., with 7.8 percent of all properties with a mortgage considered “seriously underwater.” The analysis is based on a home’s estimated market value.

Altogether, U.S. states, including the District of Columbia, had 5.2 million properties considered seriously underwater at the end of March. That includes 9.5 percent of all properties with a mortgage, which is two-tenths of a percentage point lower than at the end of the first quarter last year.

South Dakota was excluded from the rankings because ATTOM Data Solutions lacks sufficient information on mortgage and estimated value data in that state