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Real estate prices are still hot in Phoenix

Just as phenomenal as the growth of the Phoenix metropolitan area is the price of real estate. CNBC’s Jane Wells reports.
/ Source: CNBC

This city in central Arizona has now officially passed Philadelphia as the nation's fifth largest city — that’s a phenomenal growth story for a place that barely existed a century ago.

But just as phenomenal is the price of real estate in the Valley of the Sun, the local term for the rapidly-growing Phoenix metropolitan area, which includes the city of Phoenix, the rest of Maricopa County and Pinal County to the east.

In the upscale suburb of Scottsdale, for example, the only thing hotter than the sunshine is the price of the homes. For a cool $1 million you can buy the sort of house Remax realtor Kris Anderson is showing to clients.

Anderson calls it a house of threes — three bedrooms, 3,000 square feet and one-third of an acre. And there’s even a pool thrown in.

The house is located in the “Troon North” community at the gated Candlewood Estates, with world class golf a chip shot away. And downtown Phoenix with its professional sports facilities is just a half-hour drive away.

The home has lots of natural stone, splashes of color and a desert yard that’s pretty easy to take care of says Anderson. And in the heat of the summer the patio is cooled with misters.

Marilyn Murray and her husband built the custom home six years ago for just under $500,000. Now it’s on the market for $1 million.

Having doubled their money, Murray and her husband hope to relocate to Palm Springs, Calif., where the real estate market is starting to soften. But it’s also reaching a plateau in Phoenix.

When the Murrays first put their home on the market last year for $50,000 they had to lower their price, as more homes came on to the market and took longer to sell.

But Murray and her husband are not concerned about timing in the Phoenix real estate market. They built their home in the sun to fit their lifestyle, and so they expect it to appeal to a certain type of individual. They believe they will be able to buy a similar house in Palm Springs, but not where they first wanted to move — Newport Beach, Calif. — here real estate prices are just too high.

Two years ago you could buy a home in Scottsdale that is much larger than the Murray’s — 4,600 square feet — for $1 million. Six months ago, houses in Troon North were selling for $375 a square foot, but now that amount of land goes for $40.

But despite the decline in home prices, don’t be fooled by the latest data on phoenix — the sun is hardly setting on real estate prices in what is now the nation’s fifth-largest city, and growing.