By Kristena Hansen | Phoenix Business Journal
The housing-bust days when foreclosures and short sales were the primary driver of the metro Phoenix market are long gone. Today, the supply of homes for sale — or lack thereof — is now the driving force.
The Valley housing market has faced a severe listings shortage for almost a year, prompting fierce bidding wars and some of the largest price gains in the nation. Michael Orr, a real estate expert at Arizona State University’s W.P. Carey School of Business, came out with a report last week showing that short supply ignited a 35 percent year-over-year price gain in January. Here’s his take on what’s driving the inventory problem and what to expect in the coming months:
What is the primary cause of the inventory shortage? Distressed properties are no longer flooding the market mostly because the bulk of those bad loans were resolved during the downturn. Banks are also more willing to negotiate alternatives to foreclosure with struggling homeowners. Also, many homeowners are still underwater, and those who aren’t are taking notice how quickly prices are increasing and are thus staying put, even if for a few months, to maximize their return. It’s definitely a seller’s market right now.
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