By Belfiore Real Estate Consulting
Yesterday, Belfiore Real Estate Consulting published its KnowledgeBase Current & Future Market Insights Publication for the month of January, 2015.
This edition of the monthly publication reflects on the lackluster performance of the new housing market over the past year, dialing in on a number of key challenges that are expected to persist through the first half of 2015.
The resulting air of pessimism was felt clearly at Belfiore Real Estate Consulting’s quarterly Market Update and Roundtable Session held last week, where 2015 permit projections offered by 60 attending industry experts were strikingly low. Despite the specter of unease that has come to rest on the minds of many involved in the industry, the January 2015 KnowledgeBase report presents an overall optimistic outlook for 2015.
As the report concedes, “…challenges that have been present through the early months of 2014 are likely to persist in early 2015.” The January 2015 KnowledgeBase report discusses these challenges in-depth, offering insight on how they have come to be and how they factor into expectations for 2015. Significant emphasis is given to the necessity of higher buyer demand and the moderation of builder supply if home prices are to keep from falling this year.
A slump in demand experienced over the prior 12 months has been met by a simultaneous oversupply of new home inventory, which has increased by 30% over the prior year per the report. Belfiore Real Estate Consulting reports a decline of 2.6% to 4.1% in inventory home pricing, depending on the particular Metro Phoenix region under examination.
Analysis by President Jim Belfiore explains how the discounting of unsold inventory homes which occurred in attempt to spur demand and alleviate burdens of oversupply will create substantial roadblocks for increasing new build prices.
Yet, the January 2015 KnowledgeBase publication highlights several reasons to maintain an optimistic expectation for the 2015 new home market. On a positive note, new build prices have held up rather well given the market’s troubling performance; the publication reports only a 0.5% decline in net new build pricing over the course of the year.
And, as indicated by traffic levels, potential buyers are still eager to engage in the market. The report articulates, “Traffic levels continue to suggest better times are ahead… levels remain near highs not experienced since late 2007.” Moreover, these potential buyers are expected to have more power to actually purchase; as the report asserts, “…the issues that have challenged buyers are slowly resolving themselves…” The anticipation of a considerable increase in population growth which has recently remained low and the comparative affordability of the Phoenix area are also discussed as factors which will spur the new home market to overall growth and appreciation by the end of the year.
Those seeking a copy of the latest KnowledgeBase Current and Future Market Insights or comments on recent, current, or future Metro Phoenix housing market conditions may contact Jim Belfiore at Belfiore Real Estate Consulting, 480-706-1002, jimbelfiore@belfioreconsulting.com.
Belfiore Real Estate Consulting is Arizona’s only full-service, independent, fee-based residential real estate consulting firm. The firm services all Arizona housing markets, supporting investors, developers, homebuilders, and lenders with off-the-shelf data and advisory products, as well as custom feasibility analysis. Belfiore Real Estate Consulting celebrates its 10 years of providing quality and timely real estate information in 2016.
