An Afternoon of Phoenix Real Estate Analysis
Dr. Jay Butler, director of Arizona State University’s Realty Studies department at the Polytechnic campus, was the guest of the Arizona Real Estate Educators Association this afternoon.
It’s somewhat difficult to condense the 90-minute presentation and Q&A session (and no, Mr. Smith, I didn’t bring a camera), but here are the highlights:
- The biggest factor impacting the Phoenix real estate market is the loss of affordability. The nationwide median real estate price is around $222,000. In Phoenix, the number’s closer to $260,000 and change.
- Phoenix ranks 31st in affordability. Of the other cities above, only three are not on the coast - Las Vegas, Reno and Boulder.
- Maricopa County currently has an approximate 5% vacancy rate versus a 2% historical norm.
- Basic economics are hastening the decline of property values in Pinal County. Butler said there are 1.9 million jobs in the Greater Phoenix metropolitan area, including both Maricopa and Pinal counties. Only 50,000 of those jobs are in Pinal - home of current bust-towns Queen Creek and Maricopa.
- Speaking of Queen Creek, the median price has dropped from $235,000 two years ago to $198,000 now. In Maricopa, the drop is from $256,000 to $219,000. These are in contrast to the Phoenix metro area’s relatively unchanged median of $264,900, down all of $1,000 over that same time period.
- On talk of urban sprawl creating an unbroken corridor between Phoenix and Tucson: “When I moved here in 1972 they were discussing the exact same thing.”
- On affordability, “the real issue with affordability is the income but nobody wants to focus on income.” Income, Butler said, has remained relatively flat through the real estate boom.
And finally, Butler said a large percentage of current foreclosures are investors - often those who became over-leveraged purchasing multiple properties.
“People would like to help that family who might lose their home,” he said. “But that’s not where the reality lies.”
What was most interesting is Dr. Butler usually is proclaimed to be a cheerleader for the real estate market and the real estate industry. But he appeared to have a fairly distinct, clinical view of the current market as one would expect from a statistician.
Asked what he thought of future real estate agent pool, he said “three would be too many.” And I’m not quite sure he was joking.
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