Phoenix’s real estate market has been one of the most active in the country. This year’s Arizona housing market in the Greater Phoenix area has been particularly robust. Phoenix is a metropolitan region that encompasses most of central Arizona. The city’s real estate market has not only recovered from the effects of COVID-19, but demand has risen to unprecedented heights.
Forecast for the Phoenix Housing Market in 2022 (Latest Predictions)
What are the real estate market forecasts for Phoenix in 2022? Phoenix is the country’s fifth-biggest city, and it is still growing. Phoenix’s robust economy, cheaper cost of living, good quality of life, economic opportunities, and cultural attractions all attract new residents. Phoenix’s population has increased by 20% from the year 2000 to 555,013 houses and 1.6 million people.
Phoenix is the state capital as well as Arizona’s largest city. It is not the most walkable city in Maricopa County so having access to a car or using public transportation is necessary to get around. The city is enormous. It is the only state capital that has a population of over a million people.
Not to mention, the Arizona housing market is significantly bigger than the city of Phoenix itself; it includes the whole Valley of the Sun, Phoenix’s enormous suburbs, and another five million inhabitants.
Additionally, the good living circumstances have encouraged real estate investors and purchasers to participate in the Arizona real estate market. When the property crisis of 2007 and 2008 caused house prices in Phoenix to collapse by up to half, their housing market made headlines. It has taken a decade for the national housing market to revive. Now many people wonder when will housing prices drop again?
Population Growth Causing Market Scarcity
Population growth has outpaced housing growth since 2006. This job-driven expansion has finally devoured the oversupply of resale houses built during the boom years. There are now fewer properties for sale on the market. Over the previous year, Phoenix property prices have increased by around 7%. Despite rising home values, the Phoenix real estate market is far more affordable than in other areas.
The Arizona real estate market is still dominated by single-family residences. When compared to 2018, single-family house sales increased by around 4%. Pre-owned single-family homes, in particular, account for the vast bulk of residential transactions in the Arizona real estate market, accounting for around 80% of total sales. Annually, the number of previously owned single-family houses outnumbers new single-family home sales by three to four times.
Why the Arizona Market Stands Out
The Phoenix real estate market is among the best in the country, not just in Arizona. Owner-occupied and renter-occupied housing units are available for purchase in Phoenix.
Three and four-bedroom single-family detached houses are the most popular housing types in Phoenix, according to NeighborhoodScout.com, a national real estate data source. About 60% of Phoenix’s housing units are single-family dwellings.
For those wondering when will housing prices drop, it is not deemed likely anytime soon. In the Phoenix metro area, property prices have risen by over 200 percent since December 2011. The year 2020 began with a severe lack of available homes for sale and an increasing frequency of transactions that exceeded the asking price of property owners.
The average house value in the Phoenix-Mesa-Scottsdale metro area is $422,463. To compare, the average house in Phoenix was worth roughly $318,000 in November 2020. Over the last year, home prices have increased by 32.4 percent. Phoenix is a scorching hot seller’s market, with prices expected to jump 20.3 percent over the next year. So, for those wondering when will housing prices drop, you should invest sooner than later.
NeighborhoodScout.com data reveals that Phoenix real estate has increased by 238.38 percent over the last 10 years. This equates to a yearly real estate gain of roughly 12.96 percent, putting Phoenix in the top 10% of real estate appreciation cities in the US.
Phoenix’s appreciation rate in the last twelve months was 17.05 percent, which is greater than the appreciation rate in 98.27 percent of the country’s cities and municipalities. The most recent quarter’s appreciation rate was 5.48 percent, which works out to a rate of 23.81 percent on an annualized basis. This predicts that housing prices in this area will continue to rise by double digits. First-time buyers will continue to be a powerful force in the Arizona housing market, while younger Gen-Z purchasers are projected to play a rising role.
Here’s a Breakdown
- Phoenix-Mesa-Scottsdale Metro property prices have increased by 32.4 percent in the last year, and experts project that they could increase by 20.3 percent in the next year.
- Home prices in Phoenix have risen 31.9 percent (current value = $386,883) in the last year and are expected to climb further in the next year.
- Home prices in Maricopa County have increased by 32% (current value = $431,070) in the last year and will continue to climb in the next year.
- Mesa property prices have increased 31.2 percent in the last year (current value = $397,100) and will continue to climb in the next year.
- Scottsdale property prices have increased by 31.8 percent in the last year (current value = $753,798) and will continue to climb in the next year.
What does this imply for Phoenix homebuyers?
The most common error that purchasers make is waiting for selling prices to fall while their prospective mortgage payment falls. Mortgage rates have been rising this year and are now hovering around 3%. In September, the 30-year fixed-rate mortgage had an average interest rate of 2.9%. Buyers should act quickly before prices rise again. Over the following 12 months, properties acquired now are likely to gain by more than 20%.
The Phoenix metro housing market is enjoying relatively strong demand, but the supply of resale properties is so limited that prices are falling below record lows practically every week.
In a balanced real estate market, the supply would be depleted in five to six months. If the supply exceeds five months of inventory, Phoenix may become a buyer’s market. That will not happen. We may infer that demand has not only rebounded from the COVID-19 but has reached record highs. As a result of a continuing supply-demand mismatch, the Phoenix real estate market remains robust and tilted toward sellers.
Investing in Phoenix Real Estate: Is It a Good Idea?
Do you want to invest in Phoenix real estate? Many real estate investors wonder whether purchasing a house in Phoenix is a sound investment.
You don’t want to purchase the most costly home on the Phoenix real estate market and expect to earn a big return on rentals if you’re wanting to make a profit. Perhaps you’re searching for a little different hold-over, an investment property in Phoenix that you might live in or sell when you retire. The first thing to evaluate, in any case, is your profit potential and purpose.
Top Reasons to Invest in Phoenix Real Estate
Other reasons to consider investing in Phoenix real estate include the following.
- Phoenix’s housing market has been one of the fastest-growing in the state, if not the country.
- Its reduced cost of living, more affordable housing, accessible labor, and stable environment predict a rising economy and higher housing expansion.
- Prices have risen 17.8 percent in the last two years and 145 percent from their low in May 2011.
- Phoenix house prices, on the other hand, have just recently returned to where they were 12 years ago, at the peak of the real estate boom.
- When inflation is factored in, Phoenix house values are still 20% lower than their inflation-adjusted high in 2005.
- Current patterns suggest that Phoenix property prices and real estate appreciation rates will be around the same in 2020 as they were the previous year.
- Phoenix’s real estate appreciation rate in the most recent quarter was 5.48 percent, equating to a 23.8 percent annual growth rate.
- The national economy is booming, and the number of individuals migrating to Phoenix has recovered after plummeting during the Great Recession.
- For the previous three years, job growth has been robust, although single-family construction permit activity has been moderate.
- People who live in high-cost regions such as Los Angeles and Seattle are flocking to Phoenix.
- Following 18 months of intense seller market circumstances, the Greater Phoenix region is predicted to be a seller’s market in 2022, although with lower demand.
- Prices do not fall in seller markets, but properties may linger on the market for a few more days before accepting a deal.
- A full-price offer could be enough to get a house.
- Buyers may feel less pressured to forgo evaluation and repair expenses.
If you are looking to invest in the Arizona real estate market, Jeff Barchi and his team of experts are here to help. Give us a call today.