The Phoenix metro housing market has seen a bit of a chill to kick off 2024 as prices dipped from their December 2023 highs, but experts maintain that the market remains more vibrant than these initial figures might suggest. According to the Business Journal, the latest data from the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index indicate that in January, home prices in Phoenix were up 4.6% year-over-year, registering a median price of $326,960—a slight decrease of 0.5% from December.
While the January drop reflects a previous slump in buyer demand, following mortgage interest rates that topped out at 8% in October, the dynamic has shifted, as told by Greg Hague, CEO of 72Sold, in an interview with the Business Journal. After waiting on the sidelines, buyers are back in the market, now faced with interest rates below 7%, leading to a surge in demand and multiple offers for the choicest properties. Hague's comments underscore a cautiously optimistic sentiment, despite the initial downturn this year.
March pending sales seem to align with Hague's upbeat perspective, projecting that Valley home prices could see a 6% to 8% lift in 2024, potentially outpacing interest rates. "Buyers are now recognizing that 6.75%-7% rates aren't so bad when home prices are rising by the same amount, or more," Hague told ABC15. He emphasizes the long-term view over the short-term fluctuations, suggesting the potential for future refinancing at lower rates for buyers.
Despite a national uptick in home prices by 6%, with the Case-Shiller index's 10-city composite jumping 7.4%, the Phoenix market is seeing its inventory grow at a slower pace, now hovering between 16,000-17,000 homes. Describing the market as "good (not great)", Hague highlighted in the Business Journal that there is still a ways to go until a 'normal' inventory of 20,000-25,000 homes is reached. With approximately 8,600 homes under contract, the Phoenix market is experiencing a seller's edge resulting in values escalating.
Arizona's affordability continues to be stretched thin as a recent study by BestBrokers places the state among the top ten least affordable for home buyers. The state's housing challenge is exacerbated with home prices at 6.9 times the income per capita. Yet, developers and homebuilders are on the move, creating new build-to-rent and master-planned communities, and snatching up land in the East Valley to keep up with demand, according to the reports from Business Journal.
