PHOENIX -- Good news for Valley homeowners. Prices are climbing big time. But could that mean we’re heading toward another housing bubble bust?
“Prices are still moving up,” said Michael Orr, director of the Center for Real Estate Theory and Practice at the W.P. Carey School of Business at Arizona State University. “They aren’t climbing as fast as last year but still at a ridiculously fast pace.”
According to Orr, the median home price is up 29 percent in the last year and up 40 percent from when we hit rock bottom.
“It tells us we were ridiculously cheap two years ago," he said. "We were all depressed and had over corrected from the bubble and gone way below prices from 10 years earlier. “Now we are bouncing back to the long-term trend line.”
In fact, Orr said it will be another two years before we are back on track.
“The last time the market was balanced was around 2001 and, if we project from there to where we are now, we should be 10 percent above where we are now so we are still underpriced today,” Orr said.
But some find this the perfect time to sell.
“We want to downsize and the market is climbing back up so might as well get rid of it,” Bob Redger said.
Redger and his wife thought about moving a couple years ago but decided to wait.
“A lot of people don't have the affordability to wait,” Redger said. “They have to sell or whatever and we don't have to sell so we're lucky.”
Lucky because they are in no hurry so they can wait for the right offer.
And with so little inventory on the market, experts say prices are only going to climb higher.
“If I was trying to buy a home I'd rather move now if I could because prices are only going up and the likelihood is interest rates are going up, too,” Orr said.
Orr’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Full-Report-201305.pdf. A podcast with more analysis from Orr is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com/index.cfm?cid=13.