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Housing expert: Census figures often ‘mismatch’ with real-estate market

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Thursday, March 26, 2015
By Ginger Poulson
Cronkite News

Arizona real-estate experts said the recent U.S. Census figures showing strong population growth in some areas of the state gives them hope the housing market will follow.

But the state hasn’t quite fully recovered yet. And it might take a while for that to happen.

The U.S. Census on Thursday released updated population figures, which showed Maricopa County grew by 74,000 people – the second-largest increase among counties nationally. The county has about 4.1 million residents.

Tucson also surpassed a population of one million people.

Mike Orr, director of the Center for Real Estate Theory and Practice at Arizona State University, said that for the past four years, Arizona has seen a mismatch between population growth and the creation of new housing.

“I’ve been saying … that eventually this is going to have to show up in a shortage of homes,” Orr said. “We haven’t really seen it yet because people have been finding other ways of coping with the additional population.”

Experts put a lot of the blame for a weak housing market on overbuilding prior to the Great Recession.

Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business at Arizona State University, told Cronkite News in February that at the peak of the housing bubble, officials issued about 80,000 single-family housing permits per year. In 2014, that number dropped to about 20,000.
However, Orr said he’s seen some positive signs.
For the past six to seven weeks, the market has warmed up, and buyers have started to come out.

Jim Belfiore, owner and president of Belfiore Real Estate Consulting, labeled one group of those buyers as “recovering buyers.”

“They went through a foreclosure or short sale, and they’re shell shocked,” Belfiore said. “They’ve had a difficult time economically for a number of years, but they’re eligible again to purchase and they’re coming back to the marketplace.”

Another group of buyers coming out is entry-level buyers. Belfiore said many have waited a considerable amount of time to buy.

“There hasn’t been a great deal of growth yet in the new home market,” Orr said. “But the first thing that shows up when the housing market changes, you start to see a lot more homes under contract at title companies.”

Since the beginning of February, Orr said a lot of new home subdivisions have been getting a large number of contracts – something that didn’t happen much last year.

“I think the whole thing smells of resurgence in enthusiasm for home buying,” Orr said.

“The speed at which people are placing contracts on homes was quite surprising,” Orr said. “These numbers suggest one reason for it: People have been living a little bit more crowded than they’d like.”

The recent trends have both Orr and Belfiore optimistic that the population growth will eventually lead to market changes.

“I think we’re on the cusp now, of the housing market getting to experience some significant shortages,” Orr said.