A dramatic housing turnaround is taking hold, with the glut of homes for sale in the Valley plummeting 42 percent in the last year.
This has put housing in short supply and helped to boost homes prices by nearly 16 percent since values bottomed out in September 2011, according to an Arizona State University report.
The findings are probably a shock to Valley residents used to gloomy housing news, said Mike Orr, director of the Center for Real Estate Theory and Practice at the W.P. Carey School of Business at ASU.
“They think we have a glut but we have a shortage, and it’s almost as stressful as having a glut as to have a shortage,” Orr said.
Many buyers have become dispirited after making multiple offers and not getting a home. That problem will likely get worse in the next few months because spring is the most active time for home buying, Orr said.
The shortage is made worse because new home construction had fallen so dramatically.
Builders completed about 4,000 homes a month at the peak of the housing boom, but that’s fallen to about 400 a month now. Orr expects builders can double production but he said they face limits because so many construction workers left the state when the housing market crashed.
“I can’t see them building enough to change a shortage into an adequate supply, at least not in the short term,” he said.
The February housing report includes Maricopa and Pinal counties. Its findings include:
• Median sale prices rose 8.3 percent from February, from $115,000 to $124,500. That includes new homes.
• The average price per square foot rose 4.1 percent, from $81.07 to $84.36.
• Monthly foreclosures are up from February but down 9 percent from February 2011.
• Foreclosure completions were down 52 percent in the last year.
• Bank-owned sales dropped 40 percent.
Low-end and moderately priced homes are in the highest demand, Orr said.
Housing wasn’t hurt by gas prices of nearly $4 a gallon, Orr said. But it has affected where people want to buy and made central locations more desirable.
Orr said the improving housing news doesn’t indicate the market is healthy or normal yet. Prices need to rise about 33 percent based on trends of long-term average pricing, Orr said. That would place values at $120 per square foot. Prices had fallen to $78 but are now at $90.
“I don’t know when we’ll get back to normal,” Orr said. “Arizona, housing prices in particular, seems to be a very volatile market.”
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