The Phoenix real estate market has been on a roll in recent years, from its steady population growth and job growth. Maricopa County has been one of the fastest-growing counties in the country, with a population increase of nearly 3 million residents in the past three decades. This growth has created a demand for housing, both for new residents and for those looking to upgrade their homes. During the pandemic we saw migration patterns escalate throughout the United Staes. Community and family ties were broken, causing people to re-evaluate their living situations speeding up the migration patterns throughout the US. People moved for political reasons, such as how their city/states covid restrictions were handled, some people moved to warmer climates, job changes, as covid created remote work opportunities that allowed for relocation. Whatever the reasons, Maricopa was the beneficiary of these growth patterns. Governor Doug Ducey, kept the great state of Arizona open, allowing businesses to prosper, while also maintaining some normalcy for its residents.
Another factor driving the growth of the Phoenix real estate market is the state’s strong economy. Arizona is known for its strong job growth and its ability to attract corporations large and small. In recent years, the state has experienced a significant increase in job opportunities across a variety of industries, including technology, finance, manufacturing and healthcare. This has been due to the state’s pro-business environment, favorable tax policies, and high-quality talent pool. As a result, many companies have relocated to Arizona to take advantage of these opportunities. The number of jobs in the Phoenix metropolitan area increased by over 3% in 2021. Some of the companies that have recently relocated to Arizona include: Lucid, Apple, TSMC, Amazon, Geico, Texas Instruments, PayPal, Google, Oracle, and Uber. These companies are drawn to the state’s favorable business climate, access to talent, and low cost of living. Additionally, Arizona offers a high quality of life, with its beautiful natural scenery, warm climate, and numerous recreational opportunities. These factors, leave Arizona well positioned to continue its economic success in the coming years.
While Arizona has had strong demand for Housing; demand seemed to dissipate throughout 2022 as mortgage rates rose. When interest rates spiked over 7% the market seemed to halt. As inflation was rising and households disposable income was shrinking, home sales (# of homes sold) dropped by nearly 40%. We suddenly had a demand problem. As a result in the second half of 2022, some sellers dropped prices until they could attract a buyer. But it seems we have finally found support after home prices dropped 10% from their peak in June 2022 and interest rates have continued to decline.
According to a recent article by Catherine Reagor the Senior Real Estate Reporter of The Arizona Republic, the Phoenix metropolitan area has seen a significant surge in home sales, as well as a shortage of available homes for sale. This has led us out of a buyers market back to a more balanced market, where homes are selling quicker and at slightly higher prices.
The shortage of available homes for sale has also been a major factor in the stabilizing the Phoenix real estate market. With more people looking to buy homes, and fewer homes available, prices seemed to have plateaued from their deflationary period and are even selling quicker. Despite the challenges of higher interest rates, the Phoenix real estate market remains a strong and attractive option for those looking to buy or invest in real estate in 2023. The Phoenix real estate market is returning to a normal market. If you are thinking of buying or investing in real estate in 2023, now may be the perfect time to do so.