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STEVE INSKEEP, HOST:

It's MORNING EDITION, from NPR News. Good morning. I'm Steve Inskeep.

David Greene is with us, while Renee Montagne is reporting from Afghanistan. David, good morning.

DAVID GREENE, HOST:

Good morning, Steve. It's good to be here.

We're reporting this morning on an extraordinary turnaround in some of the nation's hardest-hit real estate markets, and that includes Arizona. The median home price in the Phoenix area rose 20 percent over the last year, rose 6 percent in March alone. Tucson was recently named the best market in the country for investors - people who, say, want to buy a home, fix it up and then rent it out. In fact, it is investors who are driving the market.

But as NPR's Ted Robbins reports, the easy money has already been made.

TED ROBBINS, BYLINE: So, this is your house?

KEITH CUBBERLEY: So, this is one of them. Yeah.

ROBBINS: Keith Cubberley is a Tucson firefighter. In his spare time, he buys distressed property. When he bought this brick house in an older, middle-class neighborhood, it was trashed.

CUBBERLEY: Had stuff all over. It was dirty and, you know, people hadn't done anything to take care of the property for the last 40 years.

ROBBINS: So Cubberley gutted it, and now he has workers fixing it up. When he's done, he'll resell the house.

Keith Cubberley buys low-end real estate, and he says it's getting harder to do.

CUBBERLEY: Anything 100, you know, $100,000 and under, maybe even a little higher than that, are selling very quickly.

ROBBINS: Tucson real estate agent Steve Marshall specializes in finding homes for investors. He says a lot of homes which would have sat on the market a couple of years ago are now getting multiple offers.

STEVE MARSHALL: So they're starting to list their properties higher than what they used to. Property that would've listed for 20 to 30,000 is now listing for, you know, 50 to 60,000.

ROBBINS: About a quarter of all home sales in Phoenix and Tucson are to investors. People looking to fix and flip, fix and rent, or for a second home.

MIKE ORR: There are still a lot of people looking for bargains, but they're not as easy to find.

ROBBINS: Mike Orr is a real estate researcher at Arizona State University. He says prices are up because inventory is down. There are fewer homes on the market, fewer foreclosures, for sure: 60 percent fewer than last year in the Phoenix area.

ORR: And although we still have a flow of foreclosures taking place, it's dramatically down from the worst situation, which was kind of 2008 through 2010.

ROBBINS: Homes worth more than $250,000 are moving up in value, too, but more slowly. Rising prices are good news for Arizona homeowners who saw their property plummet in value since 2008. But Orr says the investor frenzy on the market's low end is bad news for people who just want to buy an affordable home and live in it.

ORR: When an investor is buying, they will very often offer cash and waive the appraisal contingency, and that is very attractive to a seller because they know the deal is almost certain to go through.

ROBBINS: Sellers don't have to wait to see if a buyer has good enough credit to get a mortgage. And relatively tight credit is helping to keep the rental market strong. More good news for investors looking for tenants.

(SOUNDBITE OF CONSTRUCTION WORK)

ROBBINS: Keith Cubberley wants to resell the fixer-upper he bought. So he's keeping a close eye on expenses. The market is just turning around, after all, and he wants to price the house so it sells quickly to a homebuyer or another investor who will rent it out.

CUBBERLEY: You know, ultimately, someone's going to move in here that's going to enjoy it, and, you know, so it's good for everybody.

ROBBINS: And you make money.

CUBBERLEY: Yeah. We make a little money, the neighborhood gets cleaned up, someone gets a nice house.

ROBBINS: Having an empty home occupied is good for any neighborhood, though what's happening in Arizona isn't happening everywhere. In some markets like Atlanta, Chicago and Las Vegas, prices continue to fall. Expensive markets on the coasts haven't caught up yet, either. But Arizona - especially Phoenix - experienced one of the biggest bubbles and biggest busts. So this turnaround is especially welcome.

Ted Robbins, NPR News.

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