Housing market in the Valley approaches pre-recession levels
March 20, 2018
Arizona’s housing market is on the rise and still below pre-recession levels, while the nation’s average housing prices are one percent above those levels.
The state appears to be in a positive economic position as indicated by increased diversity, population growth and employment growth. Mark Stapp, a professor in ASU’s W.P. Carey Center for Real Estate Theory & Practice, says those are the key traits of a strong economy which drives the housing market.
“It has been really hard to climb out of the recession,” Stapp says. “Some of it has to do with wage growth. We’ve had population and employment growth, but wage growth lagged… We just got back to where we were for per capita income pre-recession and that’s in real dollars, in terms of present value.”
The housing market continues to face some of the same pressures as in years past. Stapp says there has been a lack of available developable plotted lots to build on, pushing affordable homes to the edges of city. Correspondingly, Buckeye, northwest Peoria and Pinal County are showing signs of growth. Stapp says he still sees a labor problem and an inflation in material costs which pushes housing prices up.
Post-recession saw an increase in townhouses and condos because they were more efficient to build. Stapp expects that to continue in the urban area, but it won’t be a tool to accommodate growth.
“I think our economy’s in really good shape, but we’ve adjusted to a new normal,” Stapp says. “We’re building to about equilibrium.”
Stapp doesn’t see the housing market slowing down on its path to reach equilibrium. He says that unless there’s a national economic issue or a systemic problem that will affect everybody, then Arizona should continue seeing positive signs from the market.
“Our economy’s in really good shape, and I think that translates itself into a really healthy real estate market,” Stapp says. “You see it through all the sectors.”