From a meteoric rise to a drastic plunge - and everywhere in between - there hasn't been a financial rung that the Phoenix housing market has managed to avoid.
Mike Orr, director of the Center for Real Estate Theory and Practice at Arizona State University's W.P. Carey School of Business, told CNBC that Phoenix is prone to being an unpredictable trendsetter.
"We tend to be a little bit more extreme, more volatile than the rest of the country, but usually if a trend is going to occur, it occurs first in the outer suburbs of Phoenix and then in the middle of Phoenix and then in the rest of the country," Orr said.
The rise and fall
CNBC reported that homebuilders, house flippers and other residential investors flooded the Phoenix market from 2000 to 2006. The rush of activity fueled housing starts - and the median home price - to nearly double during that span, but a major problem loomed.
The population in Phoenix did not climb enough to compensate for so many additional homes, nor did the average income increase enough to keep buyers in the market as home prices escalated. Investors with accessibility to cheap credit drove up construction prices in order to make a quick buck.
Then, the market bottomed out. According to data from the S&P/Case-Shiller Home Price Index, home prices in the area dropped 56 percent from their summer of 2006 peak, reaching the gutter in 2011. Foreclosure numbers started to rise rapidly and a new set of investors came into the market to take advantage of the growing number of distressed properties, per CNBC. But instead of flipping, those investors bought homes to rent, driving prices back up 45 percent from the bottom seen during 2011.
The main problem now is that the market is different than it was a decade ago. Homebuyers are confronted with tighter credit standards and a national economy that's still in recovery mode.
"I think we have a lot of buyers on the fence right now, who are saying, 'I want to buy something, I just don't feel real compelled to do it right now, I just want to see how things play out,'" Bob Hertzog, a Phoenix real estate agent, told CNBC. "There are a ton of fence-sitters out there."
Real estate blog ZeroHedge noted that despite relatively flat home prices throughout the last few months, demand has fallen radically.
Move-up buyers and other residents looking for their second home have offset some of the void left by departing investors, but activity from first-time buyers is abnormally low.
Struggling to make a transaction
Phoenix residents Julia and Mike Lersch, two of Hertzog's clients, seemed ready to jump into the buying pool in March. The couple wanted a home in closer proximity to their daughter's school, so they listed their north Phoenix home for $300,000 on the market.
"Our real estate agent said it's like fishing," Julia Lersch told CNBC. "You throw it in, and it's like how deep do you need to get before it hits the fish?"
After 107 days on the market - along with several price cuts - Julia and Mike Lersch decided to pull the listing.
"We thought, 'Well, I don't want to sell it for a song,'" she said.
Real estate consultant John Burns told CNBC that the housing market in Phoenix hasn't come close to matching the region's forecasts. Weak demand has been fueled by buyers with poor credit. Meanwhile, others don't have enough equity in their current homes to sell in a move up the ladder.
"The Phoenix market has been cold for a long time," Burns said. "Fifty percent of builders last month dropped prices, including incentives. Demand is weak and weakening. Supply and affordability though is fine."Author: Marc Vasquez