Arizona Real Estate Market

Each year Urban Land Institute Arizona presents “Trends Day” -- a major event designed for professionals in the real estate and development industries -- to inform and to spark discussion about current conditions and the latest thinking in planning, design and development. This year’s theme, apropos of the economic recovery, was “The Way Forward: Emerging Trends in 2013.” The Master of Real Estate Development program maintains close ties with ULI and other industry organizations. At Trends Day, KnowRE sought out leaders of ULI Arizona to explain what the organization does throughout the community.

In a market with chronic supply shortages, normal demand can drive prices up. That continues to be the case in the Phoenix market, according to Mike Orr, director of the W. P. Carey School’s Center for Real Estate Theory and Practice and author of the monthly Phoenix housing report. After a mid-winter lull, housing prices are climbing again, further dampening what was already waning investor interest. And that upward pricing trend may be one reason homebuilders are in no hurry to increase production, despite buyer interest: waiting should mean getting more for new homes.

Supply in the Phoenix real estate market rose during January, but only slightly, according to Mike Orr, author of the monthly housing report from the W. P. Carey School of Business. The long-term shortage continues, with only about 50 percent of the active listings that we would expect to see in a normal market. Home building is beginning to pick up, but for now, the first time buyer continues to face fierce competition for a small number of homes. The trend is for prices to continue to rise at a brisk pace across most sectors, despite the brief hiatus reported for January.

Mike Orr, author of the monthly housing report issued through the W. P. Carey School of Business, said that developers were busy shopping for land in December. The 2,000 lots purchased were more than the number of new homes sold that month, and with only 300 active subdivisions in the market right now, the high interest in lots is understandable. Orr said the number of building permits issued was low, however, indicating that developers may be acquiring the lots to build on later, when housing prices are higher.

Criticism of the Phoenix metro area clusters around a few main themes: The city is not sustainable, it’s not walkable and it’s just a giant bedroom community with too much sprawl and too few well-paying jobs. So where does metro Phoenix go from here, on its way to 2035? Perhaps, two experts say, it’s time for the real estate sector to move from a purely transaction-focused economy to a transformative economy — and start making places.