PHOENIX — The Phoenix housing market has changed rapidly from its peak in May. After several years of prices jumping more than 10% annually, prices are down.
“It was wonderful, it was a great time to be alive,” Steve Trang, a home flipper, said about the past years.
Trang said the last few years have been profitable, making almost every home purchase a money maker.
12News met Trang at a home in West Central Phoenix. The four-bedroom residence sits just minutes away from Grand Canyon University.
“When we closed on it in May, we were going to crush it,” Trang said. "We were thinking (of selling it for) $325,000. A bidding war, maybe $325 or $340,000."
The deal made sense in May. Prices back then were up more than 25% from the year before, and the market showed continued growth.
Trang said he knows flippers that invested even more in the May housing market.
“Hey, this party feels like it’s going to keep going, and there is no reason for it to stop." Trang said, "And then the music stopped.”
Trang said the big change happened in the middle of June after the Federal Reserve announced it would raise interest rates again. After that, mortgage rates went up, and investors pulled out.
"If we could be in the black by the end of December, that’s a win," Trang said.
Trang said he was not as heavily invested in the market because of what happened in 2007 when he was first starting in the business.
“I saw what happened when all those flippers got caught. It was in the back of my mind the entire time,” Trang said.
Trang doesn’t believe a repeat of 2007 is coming, but homes that had ready-made buyers days ago are now dropping in prices.
That includes the Phoenix home Trang believed was a slam dunk just months ago.
"We are going back on the market today," Trang said. "Right now we are going to list it for $305,000, and if we can get $300,000, we will be pretty happy."
The business changed for Trang and other flippers. Instead of a business focused on buying and quickly turning around houses, quality has become more of a focus.
Trang spent nearly $20,000 or more renovating this home than he originally planned. The goal is to make sure the house is competitive and will sell.
Since March, the number of flipped homes in the Valley is down around 60%, according to data provided by the Cromford Report.
What does this mean for sellers?
Sellers face a similar situation to Trang.
They need to be realistic about the prices they can get today. Homes are going for less than they would have a few months ago.
Trang advises finding a real estate agent with experience who has dealt with markets like this in the past to give you the best shot to sell your home.
What does this mean for buyers?
Buyers face very different choices than they had a few months ago. They have more options and can be pickier right now. However, higher interest rates mean you will be paying more on your month-to-month mortgage… and potentially over the life of the loan.
The Valley is growing but at what cost? All this week at 6 p.m. and 10 p.m on 12News.