Arizona State University’s experts say that there is no housing “bubble” that could burst, leading to an economic freefall like the one in the previous decade, according to information that shared at the annual Economic Outlook that was presented by the Economic Club of Phoenix.
Lee McPheters, research professor of economics at ASU and director of the JPMorgan Chase Economic Outlook Center, said that economic development depends on the supply and affordability of housing.
“Home prices are up about 24% over a year ago,” he said.
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But compared with California and other places that people are leaving to move to Arizona, the local housing is affordable.
“Even though home prices are up, incomes also are up and mortgage rates are down, so mortgage payments are not in the ‘bubble’ territory yet,” McPheters said.
Mark Stapp, Fred E. Taylor Professor in Real Estate and executive director of the Master of Real Estate Development program at ASU, said that there are simply not enough houses because the market was underbuilt over the previous decade, while the population was growing.
“We have a supply problem, and that’s not easy to fix,” he said.
“From 2011 onward, it was consuming overbuilt inventory. By 2015, we had consumed most of that and continued to build at very low rates,” Stapp said.
“It’s not a problem as long as we have better wage-earning jobs moving here and as long as interest rates stay low.”
But income inequality could be a risk factor.
“The social concern is that there are winners and losers, and we have to focus on the losers just as much as the winners,” he said.
“It will create a drag on the economy if we don’t pay close attention to it.”
