Phoenix and Arizona Real Estate Trends Entering Spring

For some states, winter is a time to hunker down and avoid the frigid temperatures and snow-covered streets. The real estate market cools, businesses sales slow, and the economy generally undergoes a slight freeze. But in Arizona and Phoenix, this has never been the case. Arizona winters are warm and economic activity is high. This is currently true in the Phoenix area and across the state.

Phoenix and its surrounding areas are in the midst of a major real estate surge and have been for multiple years in a row. Housing values are reaching new highs, the population is increasing, and the economy is growing. As we enter the spring of 2022, let’s look at some of the major trends and changes that appear poised to impact the market moving forward.

Phoenix is one of the hottest housing markets in the entire United States. Prices have been rapidly rising for years but remain more affordable than many other western metropolitan areas. The permanent sun and picturesque outdoor settings have spurred massive buyer interest, and it has corresponded with massive sales numbers and home values skyrocketing.

According to a report by Norada, the Phoenix Metro Area’s home values grew 32.4% from November 2020 to November 2021. This is unprecedented growth for the area. In 2020, that number was 14%, and in 2019, it was 6%, so growth of that magnitude shows just how pronounced Phoenix’s surge has been. It is the second hottest housing market in America.

In January 2022, the median listing price of a home in Phoenix was $442,900, according to Realtor.com. This was a 26.7% increase year-over-year. One of the causes for Phoenix’s real estate price growing so significantly is the decline in inventory. The Norada report shows that housing inventory in Phoenix is at 1.28 months supply. A healthy housing inventory supply is considered six months, so this falls much shorter of an ideal level.

With the decrease in supply comes an increase in competition. There are fewer homes available but more buyers, and prices rise accordingly. The Norada report showed that 46% of homes sold in Phoenix were sold above their original asking price, showing that buyers are willing to take big swings to secure their opportunity at a home.

Not all markets in the Phoenix area are created the same. According to Redfin, if you want a home in Paradise Valley, a wealthy suburb of Phoenix, the median sale price is $2,845,000. This makes it one of the most expensive real estate markets in the country, and it has skyrocketed in 2021 and 2022, with the January sales price marking a 37.1% increase from January 2021. However, it isn’t just cities in the Phoenix area seeing their home values grow.

Tucson is another market in Arizona that is seeing its reputation, economy, and home values grow. Tucson is Arizona’s second-biggest city, and the prices are rising in this emerging market. According to Realtor.com, in January 2022, the median listing price for a house was $329,900, which marked a massive 20% increase year-over-year. This is the continuation of a trend of growth the city has been experiencing, as real estate prices have appreciated 82% over the last ten years.

Sedona is yet another frenzied market in Arizona and one of the most expensive. Their local economy is heavily lifted by the impact of an exodus of Californians, and the gorgeous natural scenery makes it a unique opportunity for buyers. According to Realtor.com, the median listing price of a home in Sedona was $950,000 in January, which was a 19% increase from January 2021.

Homes in Arizona are nowhere near as cheap as they used to be. Across the state, prices are skyrocketing. Buyer interest in Arizona has rapidly risen, as the warm weather, lower taxes, and growing economy stand out. Markets from Phoenix and Paradise Valley to Tucson and Sedona are seeing consistent price surges, yet competition remains high.

This has quickly led to many parts of Arizona becoming some of the hottest real estate markets in the country. Looking ahead to the rest of 2022, this will likely continue. Inventory is low, buyer interest is high, and the real estate market will likely maintain the course it has been on for the last year.