Valley Housing Shortage By Spring?

housingBy Katherine KoenigWhile many real estate industry experts forecast continued recovery in the 2013 housing market, the dwindling supply of Valley homes for sale continues to make news.

In 2012, Phoenix median home prices increased more than any other U.S. market on a year-over-year basis. Trulia housing data highlighted Phoenix as one of the top “turnaround housing markets.” According to a recent report from the W. P. Carey School of Business at Arizona State University, lower end homes are getting picked up in a hurry by both investors and now regular buyers, as all-cash offers are finally on a downward trend.

“We anticipate strong demand for new homes in the peak spring season and expect new home prices will rise substantially over the next year,” says Mike Orr, director of the Real Estate Center at the W. P. Carey School of Business at Arizona State University.

“Construction labor costs are also rising…the increase in new home costs will tend to pull resale prices higher while the inventory shortage prevails.”

As prices go up, more people are hanging on to their homes. Short sales were down over 70% in the last year. This could also add to the shortage.

“Unless new-home builders can start keeping up with rising demand, we may have a chronic supply problem,” adds Orr.

It may just be a matter of time before new construction catches up with rising demand.

“As the local economy strengthens and newly built homes come to market easing relatively low levels of resale homes, more people should have the ability to purchase a home in Phoenix, in spite of still-tight underwriting standards being implemented by the lending community,” adds Daniel Leboffe, director of agent development at ZipRealty. |CST

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