The Phoenix housing market has a special place in the heart of housing bubble watchers: together with Las Vegas and various California MSAs, this is the place where the last housing bubble was born and subsequently died a gruesome death which nearly brought down the entire financial system.
Which is why the monthly WP Carey report on the Greater Phoenix Housing Market is of peculiar interest for those who want to catch a leading glimpse into the overall state of the bubble US housing market. As hoped, this month's letter does not disappoint. What we find is that while equilibrium prices have been largely flat month over month, and are up 6% on an average square foot basis from a year ago, something very bad is happening with a key component of the pricing calculation: demand has fallen off a cliff.
Some of the disturbing findings from the report:
Demand has been much weaker since July 2013. The slight recovery in demand that had been developing over the last two months dissipated again in May. While move-up owner occupiers and second home buyers are starting to compensate for the departure of investors, activity by first time home buyers is unusually low.