The Phoenix real estate market continued to show strong year over year price growth in the most recent month. According to the Case-Shiller U.S. National Home Price NSA index that was released on Tuesday, Phoenix led the nation in year over year home price growth at a mind-boggling 33%. The price growth in Phoenix continues to lead the nation and is projected to remain strong going forward. There are many factors contributing to the strong price growth in the Phoenix real estate market so lets look at some of those factors below.
The City of Phoenix continues to attract companies and jobs from out of state that are moving here for the affordable cost of living and stable weather. But as that in-migration to Phoenix continues at a high-rate we are starting to see concerns from local real estate market experts about home affordability and how many of the individuals and families moving here can actually afford the rising rents and higher home prices.
According to statistics released by ARMLS for September, the median sales price for a home in Phoenix is now $410,000 which is up 24.6% from a year ago when the number was $329,000. Homes are staying on the market for an average of 30 days which is down from last years number when on average homes were staying on the market over 40+ days. Total inventory is at 11,701 at the moment which is down 15.2% year-over-year.
In regards to housing inventory for sale, this continues to be one of our main problems in the local Phoenix real estate market. We currently have 1.31 months of inventory which is at or near our historical lows. And the trend is going the wrong way according to ARMLS as this 1.31 figure is down from the 1.34 level recorded in August.
Phoenix Real Estate Market Outlook
This is the 27th consecutive month that Phoenix leads the nation in home price growth according to Steven Hensley, advisory manager for Zonda Housing Market Research firm. The rise in prices in the Phoenix real estate market is great if you are a seller, but the rise in prices continues to place pressure on buyers who are struggling to keep up with the strong appreciation and rising prices.
Those most affected by the rise in prices will most likely be first time homebuyers, single income buyers, and low income households many of which moved to the Phoenix area for lower housing costs.
With the average home price in Phoenix now over $400,000, and interest rates scheduled to rise in the coming months, some hopeful homebuyers will get priced out of the market due to the rise in home values. Families hoping to buy a home will need to clean up their finances and credit even more now in order to be able to qualify to buy a home.
For the foreseeable future, the Phoenix real estate market will remain a sellers market and this will continue to present challenges for buyers. We do not forecast any decrease in the average home price in Phoenix so for those waiting for a price break to materialize, in our opinion it doesn’t look like that will happen.
We also follow a growing community located about a 20 – 30 minute drive from the East Valley in Phoenix called Casa Grande. This community is attracting a lot of new jobs and there are several new home and affordable resale home opportunities in this area. I wrote a summary of the Casa Grande real estate market for the past month and you can read more about that summary here.
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