The large gains the Phoenix housing market has made over the last two years will stop at the end of 2014, according to a new report released by the W.P. Carey School of Business at Arizona State University.
“We are seeing a big drop in demand compared with the last two years, and there are ominous indications of a softening market when we dig deep into the numbers,” says the report’s author, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. “Sales of single-family homes were down 17 percent from December 2012 to this December and Townhome/condo sales were down 11 percent.”
According to the report, sales activity for homes priced under $150,000 decreased 47 percent and the percentage of residential properties purchased by investors decreased to 19.3 percent in December, down from a peak 39.7 percent in the summer of 2012.
“Overall, buyers are enjoying less competition in bids for homes, but sellers should be prepared for possible cuts in asking price,” Orr said. “A larger portion of the population is simply choosing to rent, instead of buy.
The reports says that new homes sales increased their market share to 16 percent this December from 13 percent in December 2012, but that was a normal seasonal bump.
“We’re seeing growing evidence the housing slowdown is also being experienced in other parts of the country, including Southern California, Orr said."If current conditions persist in the Phoenix area for several months, downward pressure on pricing will become hard to resist.”