Phoenix Real Estate – Outlook
“The market conditions suggest prices will struggle to make any further upward progress in 2014”
Mike Orr, Director, Center for Real Estate Theory and Practice, W P Carey School of Business, Arizona State University
I agree with Mike’s assessment and many of the points he brings up in his full report aren’t news to readers of Arizona Real Estate Notebook.
I think, however, the median home price in Phoenix will go up a little bit in 2014 – I’ve been saying up 3% to 6% – but the odds that it won’t go up are increasing with each weak month. For me, March sales and prices will be the key to how the year will play out.
Phoenix Real Estate – Current Situation
The Greater Phoenix market is very different today from a year ago. Last January’s strong market with buyers outnumbering sellers has turned into a stagnant market with weak demand. Supply has grown sharply, though it remains slightly below normal. However we have far more supply than necessary to meet the second lowest level of demand we have seen in 14 years. Only 2008’s demand was weaker.
The Good (for Home Sellers)
• The median sales price was up 21% from $163,000 (January 2013) to $196,900 (January 2014).
• Average price per square foot gained 19% from $106.20 to $126.12.
The Bad (for Home Sellers)
• The median sales price for single family homes slipped 4% between December and January.
• Phoenix had 47% more active listings on February 1 than a year earlier.
• New home prices were up 25% but the number of new homes sold fell 21% (I going to go out on a limb and say we may have cause and effect here).
“If the current cooling trend continues for much longer, 2014 could easily see average and median home prices move lower than they were at the end of 2013.”
I hadn’t really considered the possibility that Phoenix home prices could actually end the year down… but I am now.
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