Phoenix Housing Market Forecast: A Look into 2024

The Phoenix housing market has been a hot topic of discussion for homebuyers, sellers, and investors. With a dynamic landscape of opportunities and challenges, this market has seen its fair share of ups and downs...

The Phoenix housing market has been a hot topic of discussion for homebuyers, sellers, and investors. With a dynamic landscape of opportunities and challenges, this market has seen its fair share of ups and downs in recent years. However, despite the roller coaster ride, the overall trajectory of the Phoenix MSA (Metropolitan Statistical Area) seems to lean towards a seller's market, offering both competitiveness and potential for optimal outcomes.

The Current State of the Phoenix Housing Market

Phoenix has established itself as a competitive housing market, with homes spending an average of 41 days on the market. The brisk pace of real estate transactions is evident, as some properties receive multiple offers. In December 2023, the median sale price for homes in Phoenix surged by 8.5%, reaching an impressive $445K. This substantial growth showcases the robust demand and economic vitality of the region.

Compared to nearby cities, Phoenix outperforms in terms of days on the market and sale-to-list price ratios. This competitive edge makes it essential for buyers and sellers to understand the local market dynamics to achieve favorable outcomes in their real estate endeavors.

Insights into the Phoenix MSA Housing Market

The Phoenix MSA has experienced a noteworthy increase of 6.8% in sales month-over-month, indicating a vibrant real estate market. Although there is a slight dip of -3.3% compared to the previous year, the overall trend remains positive. When examining inventory dynamics, there is a decline of -4.9% month-over-month and -10.2% year-over-year, signaling potential challenges for homebuyers in finding suitable properties.

The months supply of inventory for November was 3.97, and December saw a further reduction to 3.54. This indicates a limited supply of homes available in the market, which can influence buyer choices and property prices in the coming months.

Price trends in the Phoenix housing market continue to impress, with an average sales price increase of 8.7% year-over-year. The median sales price has also seen positive growth, with an uptick of 4.4%. Forecasts for January predict a further increase in average sales prices, highlighting sustained demand.

Days on market decreased by 9 days year-over-year, showcasing the efficiency of the Phoenix MSA housing market. However, month-over-month data reveals a slight increase of 4 days, indicating a potential shift in buyer behavior or market dynamics that deserves attention.

What to Expect in 2024?

Looking ahead to 2024, the Phoenix housing market is poised to maintain its strong position. According to Zillow, as of December 31, 2023, the average home value in the Phoenix-Mesa-Scottsdale area stands at $444,802, reflecting a 1.0% decrease over the past year. With homes typically going pending in approximately 31 days, the market remains dynamic and relatively fast-paced.

Key metrics as of December 31, 2023, include a for-sale inventory of 16,842, new listings of 4,820, and a median list price of $506,630. These figures provide valuable insights into the current supply and demand dynamics in the Phoenix housing market.

Is Phoenix a Good Place to Invest in Real Estate?

Investing in real estate requires careful consideration of various factors, and the Phoenix Metropolitan Statistical Area (MSA) ticks many boxes. Here are some reasons why:

  1. Strong Population Growth: Phoenix has consistently experienced robust population growth, creating a steady demand for housing and making it an attractive market for real estate investment.

  2. Thriving Job Market: The city boasts a diverse and thriving job market, attracting various industries and stimulating demand for housing.

  3. Favorable Economic Environment: Phoenix offers a business-friendly environment, supporting real estate development and investment.

  4. Affordable Housing Market: Compared to other major cities in the United States, the Phoenix MSA offers relatively affordable housing options, making it appealing to buyers and renters.

  5. Tourism and Lifestyle Appeal: Phoenix's popularity as a tourist destination creates demand for short-term rental properties, making it a lucrative venture for real estate investors. Additionally, the city's favorable climate and lifestyle amenities make it appealing for both residents and investors.

  6. Infrastructure and Development: The Phoenix MSA has witnessed substantial infrastructure development to accommodate its growing population and economy, enhancing the overall quality of life.

Considering these factors, the Phoenix Metropolitan Statistical Area presents a compelling opportunity for real estate investment. However, thorough market research, consultation with real estate professionals, and a clear assessment of investment goals are essential before making any investment decisions.

Tips for Buying and Renting in the Phoenix Housing Market

Whether you're considering buying or renting a home in Phoenix, here are some tips to navigate the market effectively:

Buying a Home:

  • Get Pre-Approved for a Mortgage: Obtain pre-approval to understand your budget and enhance your appeal to sellers.
  • Act Quickly: Be prepared to make an offer swiftly, as homes sell fast in this competitive market.
  • Be Willing to Compromise: Recognize that concessions may be necessary to enter the market.
  • Work with a Qualified Real Estate Agent: Collaborate with an experienced agent to find the right home and negotiate the best price.

Renting a Home:

  • Start Your Search Early: Initiate your search well in advance due to the high demand for rental properties.
  • Act Quickly on Desired Homes: Be prepared to act swiftly to secure the rental property you love.
  • Be Prepared for a Deposit: Expect to pay a deposit equivalent to one month's rent.
  • Be Ready to Sign a Lease: Leases in Phoenix typically run for one year, with short-term options available.
  • Engage a Skilled Real Estate Agent: Partner with an experienced agent to find the right rental home and negotiate an optimal rental agreement.

It's important to stay informed about the Phoenix housing market trends and seek guidance from professionals during your real estate journey.

Phoenix Housing Market Forecast Source: Zillow

References:

1