If there is any group that is taking it on the chin in the Valley's hot housing market, it is first-time home buyers.

And those blows kept falling in April when the median price of an existing home jumped to a record $221,000, a 35 percent rise since April of last year, according to the Arizona Real Estate Center.

Compare that with the measly 2 percent rise in the Valley's median household income.

For those looking to get into a home for the first time, to get a piece of the American wealth-building dream, times are getting tough.

Housing prices are likely to keep climbing even as mortgage rates inch up, and incomes are expected to remain relatively flat.

This means more single people and young families, especially those with one income, will be shut out of the market.

Brett Wu, a construction engineer working in south Scottsdale, is among the frustrated. He has been trying to buy a house in central or east Phoenix since he moved to the Valley from Michigan last year. The recent college graduate makes more than $40,000 but has little savings and hefty student loans.

"Every time I find a decent house that costs less than $175,000, it sells before I can even make an offer," said Wu, who rents a home with two roommates. "I am about to give up."

First-time buyers are one of the key barometers of a market's affordability.

In the late 1990s, when both interest rates and prices were low, first-time buyers accounted for as much as 40 percent of Valley home sales, the National Association of Realtors said. Real estate analysts say the once-growing segment has shrunk to less than 25 percent of all metro Phoenix home sales.

Superheated markets like California are seeing the same trend. Earlier this year, the California Association of Realtors reported that 26 percent of home sales involved first-time buyers, the lowest share in at least 24 years.


"First-time home buyers are struggling to get into the Valley's housing game," said Jay Butler, director of the Arizona Real Estate Center at Arizona State University. "Many who are buying are stretching themselves, hoping that their incomes will keep up."

The soaring prices haven't stopped metro Phoenix home sales from breaking records. Low interest rates continue to entice Valley homeowners to sell for a profit and move up, or for baby boomers to downsize, and investors are jumping in to buy and flip.

Last month, 8,735 existing homes changed hands across the Phoenix area, a 20 percent jump from the resales recorded in April 2004. So far this year, existing home sales are 35 percent ahead of last year's record-breaking pace.

First-time buyers do have more financing options than ever for buying a home. Twenty years ago, buyers had to put 20 percent down and interest rates were triple what they are now.

Today, they can turn to adjustable-rate mortgages and more assistance programs that help them get into a house with as little as 5 percent down.

In the Valley, where cheap land awaits on the fringes, others buy farther out to get the lower prices.

Still others opt for smaller, less-expensive condominiums or take on more debt than they can comfortably afford.

Elementary-school teacher Rebecca Mahlerwein and her husband, Randy, feel lucky to have found a house they could afford last summer right before Valley home prices started their rapid run-up.

The young couple had wanted to buy their first home in Tempe, where Rebecca teaches, but couldn't find anything in their price range. So they ended up buying in Laveen, southwest of Phoenix.

"Houses we liked either sold before we could make an offer or were too expensive for us to consider," said Rebecca, who commutes 40 minutes each way to work.

But the recent surge in prices is proving hard for some to overcome.

"Home prices have to really drop or incomes have to jump for first-time buyers to have a real chance in the Valley again," Butler said. "Neither is expected to happen any time soon."

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