Michael OrrDirector

Center for Real Estate Theory and PracticeApril 28, 2015

Greater Phoenix Housing Market

Euphoria

Denial

Despair

HopeSkepticism

Optimism

EnthusiasmExhilaration

Unease

Pessimism

Panic

Capitulation

Relief

Optimism

Enthusiasm

The Market Cycle

Euphoria

Denial

Despair

HopeSkepticism

Optimism

EnthusiasmExhilaration

Unease

Pessimism

Panic

Capitulation

Relief

Optimism

Enthusiasm

The Market Cycle

2005

20082010

2015

2007

2012

2003

normal inflation (CPI)

$134

Dec 2004 Apr 2008

Another +39% to reach the peak!

+73%

Most Home Prices Have Been Flatfor More than One Year

But Outlook for 2Q-4Q 2015 – Positive

Already See 5% Increase During 2Q

range bound Dec 2013 – Feb 2015$115-$116 throughout

single family non-distressed under $500K

2014 vs. 2013

2015 vs. 20141Q YTD

In 2014 Demand for Homes to Buy Was Weak While

Demand for Homes to Rent Was Very Strong

In 2014 Demand for Homes to Buy Was Weak While

Demand for Homes to Rent Was Very Strong

In 2015 Demand for Homes to Buy Is Back to Normal

Demand for Homes to Rent Remains Strong

Prediction Is Very Difficult, Especially About the Future

- Neils Bohr (1885-1962)

Balanced Market

Seller’s Market

Buyer’s Market

Long term average

Next data released July 28

+18%

-1%

+25%

+40%

+25%

+17%

+0%

Priced Under $200,000

5,824

25,153

Priced Over $500,000

5,051

3,623

Priced $200,000 to $500,0009,717

7,716

Situation Summary – April 2015

• Supply is well below normal (79% of normal) • Demand is normal & growing (102% of normal)• AZ loan delinquency below normal at 4.4%• Foreclosures well below long term average• Lending rules starting to loosen a bit• Mid range market heating up• Very high end market also strong• Economy and jobs continue to improve• Time to change from relief to optimism

Michael OrrDirector

Center for Real EstateTheory and Practice