Supply-and-Demand

Supply and Demand problem in Phoenix future?  What if?  The questions are flying right now.  Could there be a supply and demand problem in Phoenix future?  Maybe….maybe not.  There are a lot of what if’s involved.  Right now a buyer can get a loan for record low rates.  That same buyer can purchase a home for 3% down with a conventional loan.  This COULD get more buyers off the fence.  With the current supply of homes we COULD get into a bidding war situation again.  According to Michael Orr– Phoenix is not ready for a big increase in demand.  That would be a supply problem.

Valley real estate experts believe the housing market in Phoenix could have a supply and demand issue in the near future.

With down payments and interest rates dropping on certain Fannie Mae and Freddie Mac conventional loans, the housing market is set to see more homebuyers in the near future.

Michael Orr, director of the Center for Real Estate Theory and Practice at Arizona State University’s W. P. Carey School of Business, said he believes the metro Phoenix area isn’t ready for an increase in demand.

“If we had a huge rush of new demand, then we would probably find ourselves pretty short of supply quickly and we’d get into bidding wars again, which is very stressful, particularly for the buyer,” Orr said. “I’m not thinking we are going to see investors drive the next wave, so it will be ordinary people who are perhaps less skilled at coping with the stress.”

New home listings in the Valley have dropped since last April, and according to Orr, if demand increases, so will home prices.

“What is likely to happen is we are going to end up with more than one person wanting to buy each house, which means competitive offers with people outbidding each other and sellers getting much more impatient, wanting to get the final and best offer on the table as quickly as possible,” he said.

Orr said the Valley needs an increase in the amount of homes on the market before homebuyers flock to Phoenix.