At the 2018 National Association of REALTORS® Conference & Expo in Boston, NAR Chief Economist Lawrence Yun projected a flattening of home sales during the Residential Economic Issues & Trends Forum. “All indications are that we have a housing shortage,” said Yun. “If you look at population growth and job growth, it is clear that we are not producing enough houses.”

Arizona ranked the fifth most popular state that people are moving to, but where are they going to live? Last year, Phoenix ranked ninth among the largest U.S. Cities with high-end apartment buildings, but that number dipped a bit in 2018. Is that a good sign for single-family home construction? Not necessarily.

“In the years after the Great Recession, millions of people lost homes to foreclosure and had to move, often into apartments. The extra demand for units was not expected to last more than a few years. However, today…the percentage of American households that own their own home is still near its low point. New households are still much more likely to choose to live in rental housing than in the years before the crash.” – Bendix Anderson, NREI

Yun continued, “The current market conditions are fundamentally different than what we were experiencing before the recession 10 years ago. Most states are reporting stable or strong market conditions, housing starts are under-producing instead of over-producing and we are seeing historically low foreclosure levels.”

According to the Home Builders Association of Central Arizona, single-family home permits were up 19 percent year-to-year in October, but when will permits translate into homes? Arizona needs more housing now and any preference for rentals is fueling a multi-family housing boon (see Related Articles below).

Typically, reduced inventory signals a sellers’ market, but reports of rising mortgage rates has spooked some potential buyers — although 30-year fixed rates have risen less than a point in Arizona since January.

“Rising mortgage rates and continued home price growth are hurting affordability and fast becoming a toxic cocktail for the nation’s homebuilders.” – Diana Olick, CNBC

What can you do?

Raise awareness about local housing production
“NAR has created a website where local associations and REALTORS® can go for information on how to advocate for increased supply in their communities,” added Yun.

Metro-specific web tools include:

Invest in yourself
Earn designations like a Certified Property Manager (CPM) and manage rental property, or Seniors Real Estate Specialist® (SRES) and become an expert in multigenerational housing. Get certified as a Military Relocation Professional (MRP) and help veterans take advantage of zero downpayments with VA home loans.

Related Articles:
How the Financial Crisis Changed Housing – Marketplace (Dec. 17, 2018)
Housing Stock Falling Short of Population NeedsBuilder Magazine (Dec. 10, 2018)
Toll Brothers to Invest in Scottsdale Single-Family Rental CompanyBuilder Magazine (Dec. 6, 2018)
These Cities Have the Smallest & Largest Average Apartment Sizes in the U.S. – (Nov. 28, 2018)
Research Shows Continued Confidence in the Multifamily Sector – NREI (Nov. 26, 2018)
[Phoenix Business Journal subscription required; discount available for Arizona REALTOR® members]
Investor plops down $239M for Phoenix apartmentsPhoenix Business Journal (Dec. 11, 2018)
Strong apartment demand continues in Valley, latest data showsPhoenix Business Journal (Nov. 15, 2018)
Scottsdale developer sets sights on hybrid single-family rentalsPhoenix Business Journal (Oct. 19, 2018)
Metro Phoenix market has hundreds of condos on the wayPhoenix Business Journal (Oct. 18, 2018)
5,700 more apartment units planned for downtown PhoenixPhoenix Business Journal (Oct. 17, 2018)

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