Home prices are surging in metro Phoenix, climbing 8 percent in March alone and 20 percent in the past 12 months.
The median price of a house in the region climbed to $134,900, according to a new report from the W. P. Carey School of Business at Arizona State University.
The trend is projected to continue throughout the year, although at a slower pace.
Mike Orr, director of the Center for Real Estate Theory at ASU, doesn't expect home prices to continue to climb as fast as they did in March over the next few months. But he projects metro Phoenix's housing appreciation for 2012 to reach 25 percent by September.
Orr credits the turnaround to steep drops in foreclosures and in the number of homes for sale, coupled with an increase in sales.
Fewer foreclosures means fewer inexpensive homes for buyers. The number of homes taken back by lenders in metro Phoenix is down 60 percent from March 2011.
Housing inventory has dropped steadily during the past year because of a record number of investors snapping up properties out of foreclosure.
Home sales are up 35 percent from a year ago as more regular buyers have joined investors in the mix.
"Prices have begun to rise at a fast pace, and bargains are no longer plentiful," Orr said. "Most homes that are priced well are attracting multiple offers within a couple of days, and many are exceeding the asking price."
March's price increase was the sixth in a row for Phoenix's housing market. Most real-estate analysts say the streak of rising home prices, along with slower foreclosures, is proof a housing recovery is under way.
A growing number of national real-estate analysts say metro Phoenix is leading the U.S.' housing market's recovery.
Metro Phoenix's median home price is still at least $130,000 lower than it was during the boom but almost $30,000 higher than it was in August 2011.
Foreclosures are down, and so are the sales of lender-owned homes. Since March 2012, the number of foreclosures resold by lenders has plummeted 61 percent. At the same time, regular sales, new-home sales, investor purchases and short sales have climbed. All those types of transactions have higher median prices.
The number of houses on the market across the Phoenix area is down 64 percent from March 2011.
Frustrated real-estate agents have buyers ready to sign contracts but can't find houses for them.
Don Paulsen of Peoria-based West USA Realty said the number of homes on the market is even lower when the number of homes that already have contracts written on them is subtracted.
An example would be a short sale in which the owner accepted an offer and the agent is showing the status as AWC -- active with contingencies -- until they get lender approval, he said.
"The reality is most agents will not show those homes because they know there is already an accepted contract on them," Paulsen said.
Orr also expects foreclosures to continue to fall, which means even fewer inexpensive homes will be for sale.
"The very low number of inexpensive homes available for resale means more buyers are considering purchasing new homes as an option," Orr said. "This signals the start of a distinct upward trend in new-home sales."
Pinal County home prices are up 21.3 percent in price per square foot from March 2011 to March 2012, with Maricopa County prices per square foot up 12.9 percent.
The areas showing the greatest increases are those that suffered the most price damage from the foreclosure wave from 2007 to 2011, Orr said. Examples include El Mirage, up 20 percent in average price per square foot; Maricopa, up 20 percent; San Tan Valley, up 31 percent; Tolleson, up 20 percent; Glendale, up 16 percent; Phoenix, up 17 percent; and Anthem, up 17 percent.
In contrast, some areas least affected by foreclosures are still showing price decreases. Examples are Paradise Valley, down 2 percent; Tempe and Fountain Hills, down 3 percent; Sun City West, down 12 percent; and Wickenburg, down 18 percent.
Owner-occupied home sales, which have been eclipsed by foreclosures and short sales in recent years, also increased 47 percent from March 2011 to March 2012.
Prices are still below March 2011, but Orr said the trend has reversed recently, with the price per square foot rising 8.1 percent from February to March. The median normal resale price is now $166,650, still 4.8 percent below the $175,000 in March 2011.
New-home sales are concentrated in the Southeast Valley, with Gilbert and Chandler recording the most sales in March, Orr reported.
