A recent forecast for the Phoenix, Arizona real estate market predicted that home prices in the area would continue rising into 2022. But the Phoenix housing market might become a bit more buyer-friendly next year, at least where inventory is concerned. New listings rose by more than 25% over the past year, according to Realtor.com.
A Highly Competitive Housing Market In Phoenix
In July, Realtor.com published a report that showed which housing markets across the U.S. are attracting investors. Specifically, it showed where real estate inventory has declined the most as a result of investors buying houses.
According to that report, Phoenix, Arizona was one of the top housing markets where home buyers face competition from investors. It seems there are a lot of investors snatching up properties across the Phoenix metro area. This makes things more challenging for “regular” buyers who are seeking a place to call home.
To quote the July 2021 Realtor.com report:
“Investors took away inventory in 31 of the largest U.S. markets [in April 2021], led by Phoenix (-429 homes), Charlotte, N.C. (-287 homes), Miami (-256 homes),Tampa (-224 homes) and Chicago (-221 homes).”
In July of 2021, more than half of all homes sold within the Phoenix metro area sold for more than the original list price. This indicates a highly competitive market where buyers and investors often have to outbid one another, mainly due to low inventory.
But there’s also a ray of hope for home buyers within the Phoenix area real estate market. A separate report published in August showed that there are quite a few new listings coming onto the market in the area.
Good News for Buyers: More ‘New Listings’
In August, Realtor.com published a separate report that revealed an increase in new real estate listings nationwide. In this context, “new listings” are homes that have been listed for sale in recent weeks.
According to that report, new listings within the Phoenix metro area real estate market rose by 26.3% from July 2020 to July 2021. This is good news for home buyers, particularly those who have struggled to find a house in recent months.
Realtor.com’s chief economist Danielle Hale said that this trend is “shifting the housing market balance in a more buyer-friendly direction.”
But at the same time, we have to view this trend in a broader lens. Despite the recent increase in new property listings, total housing market inventory in Phoenix remains very tight in 2021. The August Realtor.com report cited above also showed that total active listings declined by -24.4% during the same 12-month timeframe.
Translation: The Phoenix housing market is still suffering from an ongoing inventory shortage, but things appear to be getting better for buyers.
If the local real estate scene continues to gain inventory through the rest of 2021, it could create a more buyer-friendly housing market in 2022. Home buyers seeking to make a purchase in Phoenix next year might have more properties to choose from, compared to now.
Forecast Calls for Continued Price Growth in 2022
A recent forecast for the Phoenix-Mesa-Scottsdale metro area housing market predicted that home prices would continue to climb into 2022. This forecast was issued by the real estate data company Zillow.
According to Zillow, the median home value for this metro area rose by nearly 30% over the past 12 months or so. Looking forward, the company expects prices to rise by around 15% between now and August 2022.
The chart above shows the median home value for this metro area, over the past ten years. The green shaded are on the right show’s Zillow’s 12-month forecast, extending into the summer of 2022.
The Phoenix real estate market is still relatively affordable, compared to a lot of other major cities. Currently, the median home value across the metro area is around $390,000. That makes it appealing to home buyers who are migrating away from more expensive real estate markets, like many in California.
The rise of remote working has given many people the flexibility to choose their city. And quite a few have left more expensive markets in favor of places like Phoenix, Arizona. This trend has increased buyer competition within the local real estate scene, at a time when inventory was already tight.
Given the current supply-and-demand imbalance within the Phoenix housing market, a forecast for continued price growth seems logical. When demand for a certain product exceeds the available supply, prices tend to rise. And that’s exactly what we are seeing within the Phoenix real estate market in 2021. Predictions for 2022 suggest a continuation of this trend.
Disclaimer: This article includes housing-related forecasts issued by third parties not associated with the publisher. The Home Buying Institute makes no assertions about future real estate or economic trends.