For many months now, the Phoenix estate market has suffered from a chronic shortage of housing supply. There have been plenty of buyers seeking properties to purchase, but not enough homes to go around.
The same has been true for most major cities and metro areas across the country.
But now, it seems that the Phoenix metro area real estate market is gaining some much-needed inventory. A recent report showed a significant increase in the number of active property listings across the Phoenix-Mesa-Scottsdale metro area.
Phoenix Housing Market Getting More Inventory
This week, researchers from Realtor.com published a housing market update with data for the nation’s 50 largest metro areas. Among other things, this report showed the Phoenix-area real estate market has experienced a significant increase in the number of homes for sale.
In fact, the Phoenix-Mesa-Scottsdale metropolitan area had the second-biggest increase in inventory, among the nation’s 50 largest metro areas.
From May 2021 to May 2022, the total number of active property listings in the area rose by a whopping 67%. That was the second largest year-over-year increase among the nation’s largest metros. Only Austin, Texas had a larger increase in active property listings, with a gain of roughly 86%.
To quote the June 2022 Realtor.com report:
“On average in the 50 largest U.S. markets, active inventory grew by double-digits (+14.9%) over May 2021 levels, with the biggest increases in the West (+33.6%) and South (+18.3%), led by Austin, Texas (+85.8%), Phoenix (+67.1%) and Sacramento, Calif. (+54.6%).”
The Phoenix housing market also saw a measurable uptick in the number of new listings, with a year-over-year increase of 13.7%. In this context, “new listings” refers to homes that have come onto the market in recent days.
This is good news for those who are planning to buy a home in the Phoenix area later in 2022. If these trends continue, which appears likely, buyers who make a purchase later this year could have more properties to choose from.
Still a Highly Competitive Real Estate Market
This inventory growth within the Phoenix housing market bodes well for home buyers. But don’t let that fool you — it’s still a highly competitive real estate scene. Despite the recent increase in property listings, the Phoenix-Mesa-Scottsdale metro area still has a very low inventory level by historical standards.
According to the latest housing data, this market had just over a one-month supply of homes for sale as of May 2022. That’s well below historical norms.
In short, real estate conditions in the Phoenix area are getting better for buyers. But sellers will continue to have the upper hand for the foreseeable future. It would take a major shift in the supply-and-demand situation to turn the Phoenix area into a buyer’s market. And that kind of shift remains beyond the horizon.
Home-Price Growth Could Slow Down Into 2023
It’s a fairly safe prediction to say the Phoenix real estate market will see slower home-price growth in the months ahead. The high double-digit gains of the past 12 months are sustainable over the long term.
According to Zillow, the median home value within the Phoenix-Mesa-Scottsdale metropolitan area rose by nearly 31% over the past 12 months alone. The median price was around $466,000 when this article was published, in early June 2022.
Three years ago, the median price was closer to $270,000. So we are talking about some major price growth in a fairly short period of time.
Eventually, as more and more buyers get priced out of the market, we’ll see a reduction in demand and a general cooling of the real estate scene. The earliest indication will likely come in the form of slower home-price growth.
In fact, we are already seeing signs that house values are cooling down. According to the Realtor.com report mentioned above, the Phoenix metro area real estate market had more price reductions last month than a year earlier.
In May of 2022, 17.5% of homes sold in the area had a price reduction. That was an increase of nearly 12% from a year ago. This offers further evidence that the Phoenix real estate market is gradually becoming more buyer-friendly.
If more and more homes come onto the market later this year, price reductions could become even more common. That could mark the beginning of a broader cooling trend.
Disclaimer: Housing predictions and forecasts are the equivalent of an informed opinion and should be treated as such. The Home Buying Institute makes no claims about future real estate or economic conditions.