Dec. 2, 2005: The sky won't fall in the Phoenix real estate market, but you can expect change
Here's the deal: Even though the single-family home is and always will be the Holy Grail of Valley real estate, the run-up we've seen in values over the last 15 months or so has left a lot of would-be buyers in a grail-less state. They're prequalified to buy at $150,000 or $180,000 or $200,000, but that dream home in Glendale or Peoria is just out of reach at $225,000.
Prospects are bleak. So say all the prominent pontificators. Even though we came to this point by a process of constant market change, from now on nothing will ever change again. Except interest rates will go up. And prices will go down. And bubbles will burst - even if the bursting takes 40 years.
Nonsense. If there are suddenly a great number of qualified home buyers with no homes to buy, it's not difficult to figure out what will happen over the coming months. Here's the prognosis:
We will see more apartment-to-condominium conversions, especially at the low end of the price scale. There are qualified buyers with zero available inventory at the same time that older apartment communities suffer huge vacancies. This is an entrepreneurial opportunity.
There will be a surge in refurbishings for the same reasons. In established West Valley neighborhoods, there are huge numbers of distressed single-family houses. These can easily be fixed up and re-marketed as starter homes at well under $200,000.
We'll also see an increase in new multifamily construction at all price points. We're apt to marvel at the luxury condo towers, but the real numbers will come from housing priced to more modest budgets.
The Valley has never done well with shared resources - not shared walls, not even shared driveways - but this will have to change as housing costs rise.
Finally, expect the unforeseen. Where there is increased unmet demand, there will be increasingly creative solutions to meeting that demand.
This is the dynamism of the free market, and this is why the sky so rarely falls, despite persistent predictions to the contrary.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
Spread the word: Click here for a printer-ready version of this column.
Or: Steal this book: I've written over 200 of these real estate columns. They are consistently one of the most popular features on our blogs. Many of them are dated and/or entirely Phoenixocentric. But many others are timeless and generic. If you want to use any of my columns on your weblog or web site, feel free. Three rules: Don't change my text, credit me as the author and give me a link back to http://www.bloodhoundrealty.com/ with appropriate anchor text. Something like this, perhaps:
Am I link-baiting? You bet. The quid pro quo is free content for your site that pulls eyeballs and excites interest.<a href="http://www.bloodhoundrealty.com/" target="_blank"> Phoenix Realtor Greg Swann</a> suggested I share this with you:
