As we progress through 2024, the real estate market in Phoenix, AZ continues to showcase resilience and dynamism. A recent uptick in the investor market share indicates that nearly 22% of the total home sales in the last quarter of 2023 were purchased by investors, a significant involvement that shapes the market trends and pricing.
Population and Demographic Factors
Maricopa County remains a hub for new residents, with a 1.3% population increase since 2021. This surge is primarily driven by domestic migration, attributable to Phoenix's affordable living costs, pleasant year-round weather, thriving job opportunities, and its status as a retirement haven. The influx of people puts pressure on housing supply, nudging prices northward, with predictions indicating a continuation of this trend into early 2025.
Price Trends and Predictions
The Phoenix-Mesa-Chandler metro area has witnessed substantial growth over the past five years, with the median home price soaring from about $280,000 in March 2019 to $459,000 in March 2024. While the double-digit price surges of the pandemic era are not expected, a gradual rise is the forecast for the remainder of 2024, with a 2.8% increase by the end of the year and an additional 1.5% in 2024. This trend signals a healthy market, albeit with continued affordability challenges for prospective buyers.
Home Sales Dynamics
Recent data exemplifies a market that has balanced slightly towards buyers, with homes spending a median of 54 days on the market before sale — a slowdown in pace compared to pandemic-driven frenzy. Moreover, not all homes are fetching over the asking price, with only about 15% selling above list, down from over half during the pandemic peak.
Inventory and Construction
The Phoenix area has experienced a relief in inventory shortages since the pandemic lows. However, it's still considered a seller's market due to low inventory relative to demand. New home construction sales are projected to increase by 3.5% in Arizona, outpacing the national average and underscoring the state's growth.
Interest Rates and Market Entry
Mortgage rates, having peaked in October 2023 at 7.79%, are expected to stabilize in the latter half of 2024. This stabilization may coax more buyers into the market. For sellers, it's a ripe time to list, as sidelined sellers from 2023 are expected to return to the market, adding to the inventory and fostering a competitive environment.
The iBuyer Phenomenon
A noted trend in the investor space is the iBuyer presence, with companies like and Offerpad losing momentum and market share in the past year. As these iBuyers struggle, their offers on homes have decreased from over market value in 2021 to around 70% in 2023.
A Steady Horizon, Not a Crash
Expert analyses quell fears of a housing market crash in Arizona. The state's robust economy, job growth in technology, healthcare, and tourism, and the overall affordability contribute to a stable real estate market landscape. Predictions for job additions and a steady unemployment rate further bolster confidence in the market's future.
Concluding Thoughts
As Phoenix strides through 2024, it presents a well-rounded market for both buyers and sellers. The equilibrium between the seller’s market dynamics and the slightly eased buying conditions due to stabilized interest rates provides a fertile ground for real estate transactions. While affordability remains a concern, the region's economic vigor and demographic allure continue to fuel the real estate sector's vitality.
Sources:
Home Buying Institute: Phoenix, Arizona Housing Market Forecast for 2024 - 2025
Redfin: Phoenix Housing Market: House Prices & Trends
This Scottsdale Life: 2024 Housing Market Forecast In Phoenix & Scottsdale Arizona
Houzeo: Arizona Real Estate Market: Will Sellers Dominate the Market in 2024?
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