- Arizona's Housing Market at a Glance
- Low Inventory Levels and Arizona’s Housing Crisis
- Rising Interest Rates Hit Arizona Hard
- The Future of the Arizona Housing Market
- The Arizona Housing Market is Normalizing
- Is it a Good Time to Sell a Home in Arizona?
- Is it a Good Time to Buy a Home in Arizona?
- Why is everyone moving to Arizona?
- Arizona Housing Market Predictions
- Find an Expert Real Estate Agent In Arizona
Arizona Housing Market-Trends and Predictions
Over the past two years, the Arizona housing market has been one of the hottest in the country as both interstate migration and investment ramped up. On average, Arizona has had one of the most affordable markets in the country, making it attractive to an extensive range of buyers. The attractive market led to a spike in demand that created two consecutive years of growth.
Just how much has the Arizona real estate market grown? According to Zillow, the state saw the median sale price rise by 54.2% over the past two years and an incredible 93.2% over the past five years.
If you’re thinking of buying or selling a house in warm and sunny Arizona, you may have a lot of questions about the housing market. We at FastExpert understand. That’s why we’ve analyzed the latest news and spoken with local real estate experts to give you a picture of what’s happening in the Arizona real estate market.
For local details, it’s best to talk to a real estate agent that knows every aspect of their market. At FastExpert, we know that your agent makes or breaks your experience, so we’ve gathered the best real estate agents so that you can have the best experience!
Now, let’s dive into what’s happening in the Grand Canyon State’s housing market.
Arizona’s Housing Market at a Glance
The housing market in Arizona continues to do well when compared to the national average. While many other states are seeing their home prices decrease, Arizona home prices have held strong.
This doesn’t mean Arizona had a great September. The number of homes sold dropped in July of 2022 and was down around 30% in September compared to 2021.
Arizona is the 7th most populated state, with new residents moving in almost daily. With this population growth, there’s been a robust demand for homes and a limited supply, creating a shortage of homes. This may be changing as the state saw a year-over-year increase in homes for sale of more than 25%, according to the real estate website Redfin.
Low Inventory Levels and Arizona’s Housing Crisis
Lack of supply has been a significant contributor to the state’s affordable housing crisis. Investors from across the country have been targeting this state, and not enough new housing is being built to keep up with market demand.
With so much of the workforce having access to remote work, many are no longer tied to the cities where their employers are based. Instead, they have the ability to relocate to less expensive regions and benefit from a higher quality of life and lower cost of living. As a result, interstate migration has pushed rents in Arizona higher with each passing month, and investors want to get in on the returns.
Rising Interest Rates Hit Arizona Hard
While many markets are holding strong against the Federal Reserve’s relentless interest rate hikes, one city that’s certainly feeling the impact is Arizona’s capital, Phoenix.
Phoenix was a golden goose of a market throughout the pandemic, which arguably saw prices become significantly overvalued.
Phoenix’s home buying and selling markets can be competitive. Homes in Phoenix receive three typical bids, which sell in about 40 days. The median home sales price climbed 8.9% to $435K a month, up from the same period a year earlier. The average sales price per square foot in Phoenix rose 7% in the past 12 months.
However, Phoenix is now one of the major US markets experiencing a more rapid cool-down in response to rising interest rates. As a result, investors no longer find the loan terms and yields attractive, and homebuyers struggle to qualify for the loan amounts they previously qualified for.
While the Phoenix housing market is actively calming down, the lack of housing supply remains, and it will take time for inventory levels to return to previous levels. With a limited number of available properties, even the rising costs are likely to keep house prices elevated. Phoenix may be Arizona’s largest market, but that doesn’t mean the entire state will be hit as hard. Others, like Tucson, are still healthy real estate markets, although not the heated seller’s market they were earlier in the year. Demand continues to be strong, and new construction homes are booming.
The Future of the Arizona Housing Market
Elevated inflation and high-interest rates will impact the Arizona housing market as the year comes to a close. September already saw a drop in the state’s median sale prices. Arizona will likely continue to be impacted while mortgage rates as inflation remain high. However, some markets, like Phoenix, will feel the effect more than others.
Rental rates are expected to have little to no change as interest rates rise. In fact, with the housing shortage still being an issue, rental rates could likely continue to climb. Therefore, Arizona will likely remain an attractive market for investors targeting rental returns over short-term appreciation.
The housing market prediction for Arizona is that while home prices may decline, they won’t plummet. There’s too much equity and demand in the market, which will help support Arizona property prices through the following year. Anticipate higher inventory levels and slightly lower home prices throughout the rest of 2022 and 2023.
The Arizona Housing Market is Normalizing
Looking at the last 20 years, the average number of active houses on the market in October is about 25,000. There are currently approximately 21,000 listings on the market in Phoenix metro today. Purely based on where the inventory numbers are at today, we are in a historically normal market.
Is it a Good Time to Sell a Home in Arizona?
There are benefits to selling now. Home prices have significantly appreciated, and there are more housing units to choose from if you are looking to purchase locally after a sale. There are more options to sell your home either quickly or for the most money.
Is it a Good Time to Buy a Home in Arizona?
That depends. The pros are that there are more homes to choose from; therefore, less competitive sellers are often willing to offer concessions and do more repairs. The risk of buying now is the uncertainty of where the market is heading. If you aren’t sure you will own the home for at least a few years, then it might not be the right time to buy.
Why is everyone moving to Arizona?
The most common answers we hear about people moving to AZ are the affordability compared to their home state. In addition, people are drawn to the job opportunities here, the weather, the proximity to activities, and relatively lower taxes. We see a lot of migration from California, Oregon, and Washington. Wages and spending are factors that cause significant concern in these states, along with many people not being able to afford a lifestyle there. The trend in Arizona is a growing population and a healthy market.
Arizona Housing Market Predictions
Arizona is in a good place to weather a pending recession. With the amount of new industry including technology and manufacturing, statewide tax surplus, high amount of home equity, and large amounts of tourists, Arizona has many reasons to see a better than national average for home values.
That said, I anticipate a fall in overall sales and a continued decrease in our home values and median price for the short term. Most Arizona homeowners have over $150k of equity and a really low-interest rate. If there isn’t a better option for them in terms of a new home, they will just stay put. They won’t want to trade their historically low-interest rate for the current rate. So expect less move-up, move-down buyers in the market, causing less inventory. That will keep our market balanced despite what might happen in the economy.
A wise and successful real estate investor said, “buy real estate and wait. Don’t wait to buy real estate.”
Find an Expert Real Estate Agent In Arizona
If you’re looking to buy or sell real estate in Arizona’s increasingly buyer-attractive market, you’ll need a top real estate agent by your side. Find a trusted real estate agent with FastExpert today.