Tribune - February 2007
When Shannon and Chad Edgerton jumped into the housing boom frenzy, they didn’t want to miss out on the giant equity gains homeowners were celebrating.
But the couple plunged in a little too late when they bought a roughly 1,280-squarefoot home in the Queen Creek area in 2005. Since then, home sales and prices have tumbled throughout Pinal County. Some 3,860 existing Pinal County homes were sold in 2006, down from 6,115 the year before, a report by Arizona State University’s Realty Studies shows.
Like the sales activity, the median price in Pinal County also slid — dropping from $220,000 in the fourth quarter 2005 to $191,500 in the same period last year. “Our timing wasn’t quite right,” Shannon Edgerton said.
Now, many homeowners in Pinal County have put their homes back on the market — hoping to at least break even.
Industry observers, real estate agents and homeown- ers say there are a number of reasons why outlying areas like Queen Creek have been hit hard by the housing slowdown.
THE COMPETITION
Edgerton’s three-bedroom home is one of thousands that have risen from the dusty Queen Creek landscape in recent years.
And the building hasn’t stopped.
Workers are still framing and roofing new houses, even as builders are trying ng to unload existing inventory.
They’ve tried to entice buyers with pools, cars, appliances, landscaping and tens of thousands of dollars in incentives.
“They keep offering all of these things that we can’t compete with,” Edgerton said.
The Edgertons, looking for a larger home for their growing family, have received 15 or so calls since putting their home on the market in September.
At one point, builders were offering $60,000 and more in incentives and giving some agents 8 percent or 10 percent commissions.
Sellers are also competing with other resale homes.
At the height of the boom, sellers got 15 offers on their homes, and now there are 15 homes just like theirs for sale in the same area.
Still, the situation seems to be improving with builder inventories shrinking and fewer incentives being offered.
Agents are also receiving more calls from interested buyers.
THE DRIVE
With so many new residents in peripheral areas, traffic on the two lane roads has become increasingly congested for commuters driving to work.
During the boom, that drive was worth it for many, said Jay Butler, director of ASU’s Realty Studies program.
“When you had that big run up in prices, nobody cared where they lived,” Butler said. “They were going to be instantaneous millionaires.”
Now, prices are continuing to drift downward, and people aren’t as willing to deal with the traffic, he said.
“You buy a home to live in and enjoy, but if you’re spending 10 hours a week driving on the freeway, you’re not enjoying it,” he said.
Queen Creek is especially bad, an agent from the east valley. One crash can back up traffic for hours, she said.
Queen Creek homeowner Justin Lane is looking to move his family from a two-story home to a one-story and hopes to find a place closer to his Chandler office.
His home has been on the market for a year.
In that time, Lane has mostly received calls from investors with low-ball offers.
It’s frustrating, but at least the family isn’t in a situation where it has to move, he said.
“We understand there’s a timing in all of this, and it’s going to come back around,” he said.
THE INVESTORS
The huge influx of investors hoping to flip or rent out properties has also taken a toll on the Pinal County market. A majority of the homes for sale in those areas are likely owned by investors trying to get out, ASU’s Butler said. Edgerton said she’s seen an increasing number of renters and for sale signs in her area.
“If it wasn’t for the investors, I don’t think we’d be having this much of a problem,” she said.
The single-family rental market is highly competitive right now, Butler said. People can get good rent prices for homes closer to urban cores in Maricopa County, he said. Nathan King, a financial officer in the Air Force, was transferred to Wichita, Kan. just months after his family moved into their Queen Creek home.
They tried to rent the place out but couldn’t find any takers. King then listed the home in August and, like many sellers in the area, has dropped his asking price several times. Meanwhile, he bought a second home in Kansas.
“It’s been pretty frustrating,” he said. “It’s never fun to have two house payments and not be able to find renters.” Still, King is optimistic. “I know that the Phoenix area is still one of the fastest growing in the U.S.,” he said. “I just feel they built too many homes too fast.”
