Is Arizona’s housing market in a bubble?

A professor of real estate at ASU said the market is seeing a shift in demand and a few more homes available.

PHOENIX – It’s no secret that the Valley is in the middle of a competitive real estate market.

But, a real estate expert says there’s a little bit of a shift happening.

Real estate market adjusting

Mark Stapp, the Fred E. Taylor Professor of Real Estate at ASU’s WP Carey School, said he believes the market is making some adjustments.

Stapp said there’s a little bit less and a shift in demand, and a little bit more inventory with a few more homes on the market.

“I do not think that indicates that there’s a big change in this market,” Stapp said.

However, Stapp said there are not that many more homes are available, with only about 1.2 or 1.3 months of inventory.

“Which is ridiculously low for this market,” Stapp said.

Stapp believes buyers are shifting their demand in the Valley’s real estate market.

“We have to look at the market as a whole. And when we look at the market as a whole, and you look at what the demand drivers are, we’re stronger than we were at the same time last year, ”Stapp said. “So I just see shifts and geography shifts and where people are living in, you know, how they’re finding housing.”

As for shifts in where people are moving, Stapp believes it’s the edges of the Valley, places like Queen Creek, Buckeye and Maricopa that have seen population growth where prices will likely increase and become competitive.

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‘No way a bubble’

Stapp believes the reason this is happening now is two-fold:

“Interest rate changes that occurred very quickly,” Stapp said. “And I think the effect of a rapid rise in home prices [is] those two things start to push people out of the market at certain levels.

Stapp said it’s unclear exactly how the rise in interest rates will affect inflation in the next few months.

He believes it’s employment growth: More people coming to Arizona and needing a place to live that’ll affect the market.

“Will we see a slight lessening in a percentage of whole price increases? Yeah, probably a little bit. But this is in no way a bubble, ”Stapp said.

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Rental market affected

Stapp anticipates homes might be on the market a little bit longer and maybe there’ll be fewer offers for sellers to choose from.

Believing those who are pushed out of the buyer market will have to turn to the rental market or stay renting.

“That puts pressure on apartments, that puts pressure on rental rates,” Stapp said. “And we’re gonna continue to see those increase at the same time, and that makes it harder for people to save money.”

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