Pollack is the CEO of Elliott D. Pollack & Co. and said the market is being driven by very little supply and tremendous demand. According to Pollack, "we have about a week’s supply of housing when we usually need about a six-month supply to keep the market fluid."
Given the demographics, Pollack said we can expect this current real estate market to last a while.
“This thing has legs, it's gonna last as long as affordability is still good,” he added. “Now, the housing prices have gone up a lot over the last several years. But interest rates have come down a lot. So payments really aren't that bad.”
According to Pollack, the supply-demand situation is going to be tight for the next several years. He said the area would need around 25,000 excess houses built in Phoenix alone, just to get supply and demand in balance.
“I think until people are priced out of the market, there's going to be demand for at least the next five to 10 years,” he explained. “There's, you know, the millennials are the biggest age cohort around and they are entering peak homebuying years.”
Mark Stapp is the Director of Real Estate Programs at the W.P. Carey School of Business at ASU. He said the home inventory is incredibly low. In March 2021, he said the inventory of homes on the market today is less than one month, but ended up selling more than 9,800.
“It is demand that we've not seen before. And it is really rapid demand,” Stapp said. “It is an environment where demand is outpacing supply. And I think in a significant way.”
This demand is something we have never seen before, according to experts. But the Valley did see similar demand in the early 2000s. During that time, the price per square foot peaked in 2006 at $184.56 before falling to $86.79 in 2009, according to the Cromford Report.
“That's completely different than the circumstances of the last bubble, where you way overbuilt, and then the economy crashed, Pollack said. Now you can't possibly keep up, and the economy is going to be strong. So I don't see this as a bubble.
Stapp agreed and added that this situation is due to a number of factors.
“This is being driven by real demand. The problem is a lack of supply in many ways, and that lack of supply is the result of a whole bunch of factors,” Stapp said. “It's complicated to deal with this. But this is not an economic bubble. This is being driven by real actual economic demand.”
As far as when we’ll see an end to this current rush on housing, Pollack said it’s years away.
“Shortages lead to gluts and gluts lead to shortages,” Pollack proclaimed. “So at some point, this shortage will lead to a glut of housing, but it's a decade away.”
In the meantime, buyers and sellers will continue to navigate this hectic housing market. And after selling her old home, Wesley became a home buyer herself and saw how life on the other side of the coin was like.
Wesley and her family eventually moved into a new home in the Anthem area. She said her family needed more space and the house they found was an ideal fit.
“We had a lot of boxes to check. And wouldn't you know that when we found this house, it has an amazing view,” Wesley said. “It has a fun, flexible floor plan, and it's going to be a great home for us for a lot of years to come.”