Long term trends in Phoenix real estate market

The high volatility that electrified the Phoenix real estate market over the past few years has been replaced by something more like normality. Change is more gradual. The real news is tied to long term trends, which have been shifting, according to Mike Orr, who is director of the center housed at the W. P. Carey School of Business.

The number of buyers shopping for homes in the Phoenix real estate market in April continued to increase. But, the supply of houses for sale was still falling, especially those costing $200,000 and less, according to the monthly real estate report from the W. P. Carey School of Business. Michael Orr, director of the Center for Real Estate Theory and Practice and author of the report, says significant increases prices will likely follow — at least for entry- and mid-level homes.

“Demand was weak throughout 2014 and until the end of January this year,” Orr said, “however, it suddenly recovered in February, and April’s numbers confirm this was no anomaly.” Demand is up across all price ranges, he added, but supply is “very weak” below $200,000, where sellers are seeing multiple offers and buyers are getting frustrated.

Orr said “boomerang” buyers — those who have repaired their credit after foreclosure or short sale several years ago — are fueling the recovery in demand. The foreclosure wave spanned the years 2008 through 2013, peaking in 2010, which means those buyers will be impacting the market “for quite a while,” Orr said, with a significant bump in 2017 and 2018. If millennials enter the market as expected, the demand pressure will be exacerbated.

This week, Orr sat down with Research and Ideas to discuss some of the long term trends against which the monthly market activity plays out.

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