If you’re familiar with the Phoenix housing market, you know that it’s one of the hottest real estate communities in the U.S. that has remained relatively stable during the pandemic. For snowbirds looking for warmer weather, the Phoenix real estate market has always been an ideal place to plant more roots. Now that restrictions have been lifted around the country; we anticipate more good news surrounding the Arizona housing market in general. We’ll discuss why now is an excellent time to start looking at a first or secondary home in the area.
A Look at the Phoenix Real Estate Market
Phoenix real estate trends are looking up! As the fifth-largest city in the country, Phoenix is poised for continued growth far past this year. The city attracts new residents worldwide with its strong economy, affordable and high-quality lifestyle, economic opportunity and stability, and cultural attractions. The city’s population has grown by 20% since 2008 to 1.6 million people.
With such favorable living conditions, buyers and investors have consistently been interested in this region. During the Great Recession, the Phoenix housing market took a hit, causing housing prices to fall dramatically. This was a common occurrence throughout the country, and it took Phoenix over a decade to recover. The population has outpaced housing availability due to the explosion of job growth. Now, you can expect a shortage of housing with prices up 7% from last year. Even with this increase in the Phoenix housing market prices, it remains one of the most affordable cities in the country. Some other significant Phoenix real estate trends to be aware of include:
- Single-family homes – You can expect single-family homes to dominate the Phoenix housing market, which grew by 4% in 2019. Most of the homes currently on the market are previously owned, of the annually consistent Phoenix real estate trends. It is one of the top real estate performing areas in the country, with a mixture of owner-occupied and renter-occupied real estate. The most common units are three and four-bedroom homes.
- Home values – Before the pandemic, the Phoenix housing market had a strong start but slowed with quarantine restrictions. It remained relatively stable, creating an extreme housing shortage, pushing sales way above the asking price. Since last year, home values have risen by over 20%. A typical home value in this area is $355,822, with 50% of all real estate worth more than this price.
- Forecast – In the past ten years, Phoenix real estate trends indicate that home values have appreciated by 156%. This shows an annual appreciation of almost 9%, placing the Phoenix housing market in the top 10% nationally for appreciating communities. According to Zillow, home prices are anticipated to grow towards double digits this year. Generation Z is expected to enter the market as major players in this growth as first-time home buyers.
Next year is looking up as well! Positive profit is expected to continue year after year, especially if you’re looking to flip homes for profit. Long-term investments also expect to yield more generous returns.
What This Means for Homebuyers
Simply put, the Phoenix housing market is hot! If you’re wondering if you should buy now, we’d recommend digging deeper into Phoenix real estate trends to see for yourself. We’d suggest not buying costly properties to rent out for those home buyers looking to make a profit. They may not yield the profits you’re expecting. Instead, a better strategy would be to fully understand your profit potential and purpose for buying. Some popular ideas include home purchases for investment properties to move into or sell when you retire eventually.
Reasons to Invest in the Phoenix Real Estate Market
There are numerous reasons to invest in the Phoenix real estate market. As mentioned before, the appreciation of the housing market is virtually guaranteed year after year. Currently, job growth is driving a lot of the housing market frenzy and is expected to continue. It is fast becoming the preferred destination before Los Angeles and Seattle. Here’s why:
- Affordability – Although California and Florida have been considered hot real estate markets, they are not nearly as affordable as the Phoenix housing market. Between 2018 and 2019, Arizona was one of the top states for population growth in the nation. The population growth rate was higher than the national average between 2010 and 2019. This increases the demand for housing while driving prices up. Regardless of rising housing prices in the Phoenix housing market, homes in this area are still less expensive than starter homes in California.
- Growing rental market – If you’re considering an investment property, the presence of large universities is highly influential on housing and rent prices. Phoenix features Arizona State University and its secondary campuses throughout the city. Each campus has over 70,000 students. There is potential to purchase large family units or multifamily units to rent to college students for profit. According to Phoenix real estate trends, the average one-bedroom apartment price is $1100, and a two-bedroom starts at $1300.
- Growing short-term rentals – Arizona is known for its luxurious resorts, and Phoenix is no exception. Many major sports teams attract tourists year-round while players make the most of short-term rentals while in town. The Arizona housing market is unique due to its open relationship with major rental sites like Airbnb. Due to a law that went into effect in 2016, Arizona has become a leader for Airbnb. Since then, the state has seen explosive short-term rental growth, making Phoenix a desirable option for investment property.
- Landlord friendly – Phoenix is landlord-friendly, so challenges like evictions are not an issue. Other problems like lying on an application or issuing unconditional quit notices are resolved quickly.
- Retiree preferred – One and two-bedroom condos are in high demand in this area due to the large retirement population. Many snowbirds come to Arizona for retirement and to escape the snow permanently. Others come as seasonal tourists. Either way, the Phoenix real estate market has become a mecca to accommodate the aging population with affordable housing options and easy permitting for granny flats and other additions.
- Low taxes – The Arizona housing market is considered one of the eight most tax-friendly states in the U.S., with a state income tax at 2.59% for lower earners and a little over 4% for higher earners. The capital gains tax continues to decrease as transfer taxes on deeds and contracts remain small.
- Downtown renovation – Big things are happening downtown, including commercial redevelopment, high rises, and mixed-use projects. The area was known for its suburban neighborhoods. Not any more. These new investments create density with an urban and walkable ambiance. With significant improvements to public transportation, the Phoenix housing market and surrounding areas have become the preferred places to invest.
We Follow Phoenix Real Estate Trends
Are you ready to buy a home in the Phoenix area? For over 20 years, The Barchi Team has kept up with Phoenix housing trends. As part of the top 1% of agents in the country, Barchi keeps his finger on the pulse of the real estate market and is twice as fast as the competition.
Give us a call today for assistance with buying or selling your home in the Phoenix area!