With local home prices increasing over 20 percent in the past year, and bidding wars and lotteries for new builds, many people are asking if we are approaching a housing bubble. The demand is fueling the question both nationally and locally.
We are confident that today’s market is the product of real limited supply and enormous demand — not just empty speculation. But, don’t take our word for it, here is what the experts have to say!
Goldman Sachs’ Research Note on Housing
“Strong demand for housing looks sustainable. Even before the pandemic, demographic tailwinds and historically-low mortgage rates had pushed demand to high levels… consumer surveys indicate that household buying intentions are now the highest in 20 years… As a result, the model projects double-digit price gains both this year and next.”
Joe Seydl, Senior Markets Economist, J.P. Morgan
“Homebuyers — interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six to nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”
Morgan Stanley, Thoughts on the Market Podcast
“Unlike 15 years ago, the euphoria in today’s home prices comes down to the simple logic of supply and demand. And we at Morgan Stanley conclude that this time the sector is on a sustainably, sturdy foundation . . . This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course.”
Merrill Lynch’s Capital Market Outlook
“There are reasons to believe that this is likely to be an unusually long and strong housing expansion. Demand is very strong because the biggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle. Coronavirus-related preference changes have also sharply boosted home buying demand. At the same time, supply is unusually tight, with available homes for sale at record-low levels. Double-digit price gains are rationing the supply.”
Elliot Pollack, Elliot D. Pollack and Company
Local economist Elliot Pollack recently forecasted about the Arizona economy and noted that the Phoenix area was the best performing major employment market in the U.S. for 2020.
“Virtually everything suggests the economy is going to do extremely well,” Pollack said. “Our economy is going to be explosive… and last through 2022 and maybe 2023. We’re in for quite a run… Phoenix is structured to do better than anybody else… You have a housing boom and a shortage of housing, and manufacturing companies are opening here.”
This last analysis from Elliot Pollack resonates with what we have been seeing in Arizona. Our growth is exploding and the influx of new residents and corporations will continue to fuel our market for years to come. We are quickly reaching new value baselines with an extended period of appreciation still to come.
John and Natascha Karadsheh are co-owners of KOR Properties, a boutique real estate brokerage serving the Valley of the Sun, and the creators and founding sponsors of Mesa Food Truck Fridays. John has been a Multi-Million Dollar producing agent for over 17 years and is an Accredited Buyers Representative (ABR) and Certified Residential Specialist (CRS), and is the Chairman on the Arizona Regional MLS Rules & Policies Committee.
Natascha is an Associate Broker of KOR Properties, a Multi-Million Dollar Producer, Past-Chair of the City of Mesa Economic Development Advisory Board and the founder of the Falcon Business Alliance.
You can reach John at (602) 615-0843 and Natascha at (602) 909-4995, or visit their website: KORProperties.com.