TEMPE, AZ-Though the metro area is moving up from the bottom of the financial meltdown's ground zero, the housing market continues somewhat sluggish. Recent figures released from the Center for Real Estate Theory and Practice at Arizona State University's WP Carey School of Business noted that single family home sales during June 2013 were 7% lower than in June 2012. Furthermore, townhouse/condo sales were down by 6%.
Still, everything from investor flips to short sales dropped, even as prices are inching upward.
In a recent podcast, Michael Orr, director of the Center for Real Estate Theory and Practice said he believes the reason for the decline is due, in part, to lack of housing supply. "At the beginning of the year, w all thought builders would build more, but they haven't," he said.
Furthermore, he went on to say, the builders are supplying more mover homes rather than starter homes, partly because profitability in starter homes isn't a guarantee.
Interestingly enough, Orr doesn't believe that interest rates are keeping prospective home buyers out of the market. "Wall Street is making a big deal about that," he said. "They're reacting short-term. A year form now, we won't even remember this increase." Furthermore, he explained, if interest rates are going up, homeowners or potential homeowners will seek out a different loan.
Orr allowed that summertime tends to be slow when it comes to housing sales and things should shake out in the fall, when, as he put it, "the snowbirds come back at the end of September."
Longer term, however, he predicted only a slight increase in supply. "That supply will be temporary," he commented. "When we get to next spring again, we'll have low inventory." Furthermore, while Phoenix is seeing significant population growth, the housing growth isn't keeping pace. As such, "it means housing growth will stay low for some time," Orr observed.
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