Growth or “Bubble”?
The Phoenix/Scottsdale appears to be steadily emerging from the real estate crash in 2008, but is the city headed toward a re-bubbling of the market and repetition of all the sordid problems of that historical time?
While some critics believe history is destined to repeat itself, key players in the metropolitan Phoenix real estate industry believe such gloom-and-doom soothsaying is bogus and completely without merit.
Michael Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business at Arizona State University, believes the Metro Phoenix real estate market is healing and stabilizing. “The idea that there is another bubble in the real estate market is absurd. We are just seeing a normal reaction to lack of supply. Prices are still below the long-term trend line and none of the conditions that define a bubble are currently in existence.”
Based on historic average (past 20 years) we are increasing at a healthy increase of 5-6%. Our supply of 16,753 homes for sale when we should have 40,000 homes for sale. This translates to a 2 month supply when we should have a 4 to 5 month supply of homes. This has created a seller’s market. Low supply high demand and the increase in the population will continue to sustain a healthy market