Real Estate

Housing supply shrinking in Phoenix

Power House: Phoenix
Power House: Phoenix

Once the poster child for the housing crash, Phoenix is a hot market again. This time, however, it is not investors inhaling distressed properties, but owner-occupant buyers fueling robust sales.

Single-family home sales rose 1 percent in May over April and 7 percent over May 2014, according to Arizona State University's Center for Real Estate Theory and Practice at the W. P. Carey School of Business.

Townhouse and condominium sales dropped 5 percent in May from April, but were up 11 percent from May 2014. Active listings dropped 7 percent compared to April. On June 1 there were 21 percent fewer listings than June 2014.

Read MoreShort supply pushes Tampa home prices higher

"In the past two months the number of building permits issued in the $200,000 to $500,000 range has increased," said Michael Orr, director of the Center for Real Estate Theory and Practice and author of the monthly Greater Phoenix Housing Market. "But buyers will still face competition for homes at the affordable end of the market. At the luxury level, where supply is still adequate, the number of homes for sale is expected to fall by the end of the second quarter."

Phoenix, Arizona.
Davel5957 | iStock | Getty Images

The median sale price for single-family Phoenix homes increased 11.5 percent in May from a year ago to $223,000. Condominium prices also surged nearly 12 percent.

"The market is moving very fast, especially under $250,000. Homes are lasting one or two days on the market. It slows down quite a bit in the higher price ranges," said Erik Jensen, a real estate agent with the Caniglia Group.

Jensen said investors are still in the Phoenix market but in far fewer numbers. Large-scale institutional investors had made up the bulk of Phoenix buyers just after the housing crash, purchasing thousands of homes that they quickly turned into lucrative rentals. Many of these homes were relatively new construction, as builders had flooded the market during the height of the housing boom. Investors now are setting their sights on a different set of homes.

"We're seeing a lot of influx of investors in the mid-range market, buying older, distressed properties and renovating them. Home flipping. It's not the same type of flipping—this is more, they're ripping the roofs off and raising the ceilings, doing all new cabinets and flooring. High quality remodels," Jensen said.