It’s no mystery to anyone in the Phoenix real estate market that we are experiencing a housing inventory crisis. Simply put, there are not enough homes on the market to meet the increasing demand. However, what is not clear to many are the contributing factors resulting in our current low inventory levels.
Our current conditions can be traced back to the housing crash between the years of 2007 and 2009. During that time, home construction came to a near standstill as the supply of qualifying buyers dwindled. Builders simply stopped building new homes. Since then, builders have been playing catch up to meet the demand.
Then, as soon as we saw light at the end of the tunnel, COVID 19 ravished the world, impacting new construction in epic proportions. Manufacturing of supplies to build news homes came to a sudden halt. Though manufacturing of supplies has picked up, builders are experiencing tremendous difficulties acquiring those necessary supplies to build homes, such as concrete, wood, HVAC systems, roofing tile and much more. This has resulted in a slowdown of construction and long build times.
The third major contributing factor to our low inventory levels is the battle for homes between Millennials, Baby Boomers and Gen Xers. They are all vying for the same homes.
Baby Boomers and Gen Xers are looking to downsize into homes that Millennials qualify for as first-time homes. Not only has this created a shortage in what is considered the first-time home buyer category, it is driving up prices beyond what that which many Millennials can qualify, therefore driving them back into rentals.
The last major factor is investors. It is estimated that investors are buying approximately 20 percent of all homes in Maricopa County, resulting in difficulties for those buyers looking for a place to live.
Though no one is able to pinpoint when inventory levels will meet the demands of buyers, many experts agree that the low inventory levels could last for another two to three years. It is imperative that if you are looking to buy a home in the near future, that you remain patient and have the right strategy in place.
By Mike Weinstein & Ryan Gerdes. Mike & Ryan are hosts of the Real Estate 401K show heard every Saturday evening from 5 to 6 PM & It’s Business Time w/ Mike Weinstein heard on Sunday afternoons from 2 to 3 PM on KTAR News 92.3. You can contact us at ReconWealth@azrecongroup.com.