Arizona a very volatile market

Last Friday, I wrote a print edition story about Arizona home builders seeing signs of a long hoped-for recovery in the midst of shrinking housing inventory and an uptick in buyer demand. I talked to Phoenix real estate expert Michael Orr, director of the Real Estate Center at the W.P. Carey School of Business at Arizona State University, about his latest March 2012 report on the Phoenix housing market. Orr said the upward pricing trend that began in late September 2011 continued to gain strength in March 2012. Overall supply fell 64 percent compared with 12 months ago, and distressed supply fell by 82 percent. Orr said the recovery could even be “too good, too soon” in terms of the balance between supply and demand. “Arizona is a very volatile market,” he said, explaining that the violent swings make it difficult for home builders, buyers and banks to react quickly when the market shifts. Homes on the lower end of the pricing spectrum have the least amount of inventory available -- and buyers targeting homes above $700,000 have a broad range of choices, Orr said. But he said it’s getting to be “a nightmare” for buyers who want to purchase existing homes in the midprice range. They often are caught off-guard when they get stuck in bidding wars. In Arizona, I’ve talked to buyers who say they are often one of dozens of bidders on a single home. Most of these bidding wars are the result of tightening supply. Because housing prices have fallen so much since 2006, most of the competitive bidding still hasn’t produced huge price increases or left sellers with hefty profits, but it’s yet another sign that the housing recovery has begun to take root.

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