Arizona Housing Market: Home Values Report

arizona housing market

The Phoenix housing market is one of the hottest in the country right now and continues to break records. Prices are still rising because the supply of available homes is so low in Arizona that it’s creating a dire situation. Healthy markets have a six-month supply of homes, but the Phoenix area market only has enough housing to last a few weeks, or .8 months.

Buyers are competing for homes as much as their budget allows, but the average hourly wage in Arizona is $18 per hour or just over $38,000 annually. The median sales price of homes in the Phoenix metro area is $569,752, which is up 32.5% since this time last year. Median prices are $460,000. The Federal interest rate on prime mortgages is currently 4%, though bank interest rates on a 30-year fixed mortgage are currently 5.25% and 4.75% for a 15-year fixed mortgage.

Looking at those figures, it’s easy to see that the average home buyer can’t afford a $3,000 per month mortgage payment on a 15-year fixed mortgage when they’re only bringing in $3166 gross income monthly. Even with two incomes, the average home in the Arizona market is far too expensive for the average buyer. Luckily for the Arizona market, the large number of wealthy buyers in Scottsdale and other suburbs are propping up the market.

The number of qualified buyers still exceeds the supply of homes and will continue to do so for the next 12 months. The Phoenix metro’s active listing supply is down 12% since last year. However, experts expect more inventory to hit the market for the summer season soon. Meanwhile, rental growth is up 24.8% this year.

Buyers Continue to Feel The Sizzle

Economists and real estate experts think the Arizona market, in particular the Phoenix metro area, will continue to be in the #8 position on the nation’s list of top 10 hottest housing markets for 2022. Prices are expected to continue to climb another 14.3% across the board this year, which is slightly cooler than the 2021 rate. Phoenix’s housing market is expected to experience a year of year gain of more than 25%.

The Case-Shiller Phoenix, AZ Home Price Index YoY is at 32.88%, compared to 32.60% in April and 17.43% in 2021. The long-term average is 5.42%, and the national average so far this year across the country is 19.8%. There’s an obvious bubble growing in the hottest markets.

In the seller’s market of today, prices will continue to increase, but the homes might sit on the market a little longer. We are reaching the upper limits of most buyers’ budgets with these prices. Within the next few months, a full-price offer should suffice to buy a home. Buyers should be less inclined to waive repair costs and fees for appraisers.

Where to Find a Property

If you’re a qualified buyer in today’s market, the most affordable neighborhoods in the Valley of the Sun are Central City South and Sun City. The most expensive homes are in Paradise Valley and Arcadia. In April, 61.5% of homes were selling at 102.6% of the asking price while about 22.5% sold after a price drop. The average home is selling in 22 days, though the hottest listings are selling in 6 days at 6% above the asking price.

Buyers will continue to look to the horizon for relief for the remainder of 2022. The only things that will change these numbers are an economic downturn or an increase in available home supply. The opportunity for buyers priced out of the market is bleak, as price drops are unlikely for the next year. If you’re considering buying a home in 2022, let one of our Potempa Team members help you get pre-qualified today.

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