The Real Reason House Prices Are Skyrocketing: What The Real Estate Industry Won’t Tell You
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For more than two years house prices have been increasing faster in metro Phoenix than in any other city in the S&P/CoreLogic Case-Shiller Home Price Index. The median single-family house price in metro Phoenix increased $100,000 in 2021 and is continuing to increase crazy fast in 2022, according to Phoenix MLS data.
Almost everyone agrees the main culprit for our skyrocketing house prices in Phoenix and the United States is the extremely low number of houses for sale. What we don’t agree on is what’s causing the low supply of houses for sale.
The real estate industry loves to say the only solution is to build more houses in the future. Their unspoken point is we can’t stop house prices from soaring today.
The industry conveniently ignores the other part of the supply equation: the number of houses sold. The number of houses for sale is equal to the number of houses put up for sale, minus the number of houses sold. (Very few houses have been pulled off the market unsold.)
The supply of houses for sale is so low today because investors bought up so many houses that they pulled down the supply of houses for sale. Mathematically, when investors buy more houses, fewer houses are for sale.
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