[Source: Catherine Reagor, Arizona Republic] — There’s no doubt that too many new homes went up across metropolitan Phoenix during the 2004-06 boom. What has been in dispute is just how “overbuilt” the housing market is now. New research from the firm of Arizona economist and real-estate investor Elliott Pollack shows the housing market built up to 75,000 more homes than there were buyers for in the Valley. That figure is based on “demand” for 35,000 homes a year in metro Phoenix.
In 2005, almost 64,000 new homes went up, according to RL Brown’s Housing Market Report. Home building has slowed considerably since then. Last month, only 970 single-family permits were issued Valley-wide, making it the slowest month since the real-estate crash of 1991. And though home builders are on track to build only about 15,000 homes this year, there’s still overhang from the boom. Pollack estimates there are still 30,000 to 50,000 new homes that need to be “absorbed” or bought and lived in Valley-wide. But he said these factors are slowing the absorption of new homes: a decline in population growth, too many homes for sale, rising foreclosures, and the continued construction of homes. The surplus of new homes will put off the housing market’s recovery, but by how long depends on all those other economic factors.
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