If asking prices are an indicator of seller confidence, home sellers in Phoenix, Arizona are pretty confident right about now.
According to the real estate listings website Realtor.com, the median list price within the Phoenix-Mesa metro area rose by nearly 25% over the last year or so. In February 2013, the median list price for this housing market was $218,000, an increase of 4.06% from the previous month, and 24.64% from the same time last year.
List Prices Soaring in Phoenix
Phoenix recently ranked #6 in our list of ten U.S. housing markets where list prices are soaring.
An interesting note from that ranking: In most cities where list prices are rising sharply, there is a corresponding sharp decline in housing inventory. In Sacramento, for example, where the median list price rose by 40% (more than any other metro area in the U.S.), the total number of homes listed for sale fell by a staggering 67% over a one-year period.
Phoenix is the exception to this ‘rule.’ While housing inventory in Phoenix did fall sharply over the last couple of years, it is now beginning to level off. Housing inventory in this metro area only fell by 13% during the same period as the Sacramento example. This could be a major factor for this market, over the coming months.
If the rate of inventory reduction continues to slow, there will eventually be a better balance of supply and demand within Phoenix’s real estate market. This would put a damper on the rapid price growth we’ve seen over the last couple of years.
Of course, there’s plenty of housing demand to go around at the moment. According to recent estimates, the population of this metro area has nearly doubled since 1990, and is now close to 4.3 million. That’s a lot of homeowners and renters.
Job growth is also in Phoenix’s favor. The rate of job growth in this area was 3% last year, nearly twice the national rate. Don’t get me wrong. Unemployment in this area is still historically high, as in much of the country. But it has improved greatly since the worst of times, and will likely improve further by the end of this year. In January 2013, the unemployment rate for this metro area was 7.2%, down from a recession high of 10.6% in January 2010.
With all of this taken into account, home prices in the Phoenix metro housing market will almost certainly continue rising through the end of 2013 — and probably well into 2014. Beyond that is anyone’s guess.
From Housing Bust to Mini-Boom
Phoenix was one of the cities hit hardest by the housing crisis. Home prices in the area began to plummet in the fall of 2006, suffered a double dip in 2010, and finally hit ‘bottom’ in 2011. Since then, home values have rebounded significantly, though they are nowhere near their 2006 peak — and probably never will be.
The latest release of the S&P/Case-Shiller Home Price Index was published on March 26, 2013. It contained pricing-related data through the end of January 2013. According to that report, house prices in the Phoenix real estate market rose 23.2% during the 12-month reporting period (Jan ’12 – Jan ’13). That was by far the largest gain of any city in the Case-Shiller 20-city index, and the largest 12-month gain in the entire country.
Disclaimer: This report contains forward-looking statements about home prices in the Phoenix metro area. These statements are the equivalent of an educated guess. No one can predict the future of real estate values with any level of certainty. We make no claims or guarantees about the future of this or any other housing market.