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All is calm in Phoenix market

The Phoenix real estate market, known in recent years for its volatility, is ending the year on a quiet note. According to Mike Orr, author of the W. P. Carey School’s monthly housing report, a trend that started in July continued through October, as supply increased primarily because of a drop in demand.

2013-12-23

The Phoenix real estate market, known in recent years for its volatility, is ending the year on a quiet note. According to Mike Orr, author of the W. P. Carey School’s monthly housing report, a trend that started in July continued through October, as supply increased primarily because of a drop in demand. October 2013 Housing Report   Listen: [podcast] Read: KnowWPC: The Phoenix real estate market, known in recent years for its volatility, is ending the year on a quiet note. According to Mike Orr, author of the W. P. Carey School’s monthly housing report, a trend that started in July continued through October, as supply increased primarily because of a drop in demand. Michael Orr: When you measure them year on year it’s a significant rise but month to month we’re not seeing as much pressure as before. So, next year could be relatively tame. KnowWPC: Activity is strongest at the high end of the market, another ongoing trend. Orr: The high end’s doing relatively better because demand is still strong there because of the jumbo mortgages being easily available, and the stock market’s still hitting new heights from time to time; is always good news for the luxury market. KnowWPC: Across the balance of the market, properties are selling, but the environment is not as frenetic as it was. Multiple bids are getting rare, and sellers are finding that it’s not uncommon for a week to go by without anyone looking at their house. Orr: So it’s really back to normal — in fact it’s probably a little quieter than normal, you know, the actual quantity of sales per month is down from normal. And I don’t see things changing quickly; I think we’re going to see this continue probably until the end of January. KnowWPC: With demand down, land sales have cooled, and with the reduction of foreclosure starts, the sale of distressed properties is down, too. In fact, you could say the market has reached a steady state. Orr said the wild card is the 20 to 35-year-old generation. Orr: They’re not so interested in the suburbs, they like the moment to be downtown where the action is and they don’t necessarily need a lot of space. But they like to be close to public transport, and the bars, and restaurants, and the clubs and things where they can have a good time. KnowWPC: Orr says that means building up rather than building single-family subdivisions. This group doesn’t want as much space as the baby boomers either. Builders haven’t adjusted yet to this shift — most of this segment is still rental, they’re just not quite ready to buy. Orr: Many of them still are worried about paying off their student debt first before they start taking on another loan. KnowWPC: Although we were speaking in December, the data is not yet in for the last two months of the year. Still, Orr has seen enough to make some general statements about 2013. Orr: Well, I expect the total number of sales to be down in 2013 compared to 2012. That’s partly because the number of distressed homes is down. The sales of non-distressed are probably up slightly because distressed sales are down dramatically, the total will be a little lower. Prices will have gone up a large amount, but not quite as much as in 2012. KnowWPC: As for next year, Orr said to expect a much slower rate of appreciation than the furious pace of the last two years. We’ve been through enormous turbulence since 2002, he said, and it will be a relief for many to be operating in a normal, non-distressed and more balanced market.  

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