Glut May Become a Shortage Sooner Than Expected

For several months, we've been reporting (here, here and here)  that at some point the current housing glut is going to turn into a housing shortage, given the incredibly low levels of new-home production around Southern California.

That hasn't happened yet, but it may be happening in a market hit even harder by foreclosures than So Cal - Phoenix, Arizona. The East Valley Tribune is reporting that a turnaround that will shock prospective homebuyers could take place as early as this spring:

The prediction may seem outlandish given how gloomy real estate news has been for years, said Mike Orr, director of the Arizona State University Center for Real Estate Theory and Practice.

But a growing demand and shrinking supply has driven home prices up in recent months, he said. Orr thinks that’s gone unnoticed to people who will enter the market this spring, in what is typically the peak time for sales activity.

“They’re going to be surprised that it’s so hard to buy a house. They’ve been hearing for so long that there’s a glut of homes,” Orr said. “They’ll go out and find there’s not a lot to choose from and every time they bid, there’ll be three or four other offers.”

Orr cautioned that the Phoenix-area market was going to take time to return to normal, but he said buyers should take note of the changing trends.

I don’t think there will be the same speculation there was, but there might be a lot of people who do want to buy a house in the next two years, thinking, ‘If I don’t buy now, I might miss out.’