The Housing Market in Phoenix, Arizona, Exceeding Everybody’s Expectations
By Space Coast Daily // April 18, 2019
In 2019, the prices on the housing market in Phoenix, Arizona, are expected to grow sensitively. While at the end of 2018, forecasts were showing that the sector will slow down a little and the prices will continue to decrease, the registered trends over the past 3 months show a price increase of 2.4%.
The real estate property buyer is still keen on purchasing a property in the area, however. The city made a top-ten list of best markets for buyers in the US, last year.
Slowly rising prices
As of January 2019, the median home price was approximated at $240,000. As compared to the same interval in 2018, the prices have increased by 8.7%. By the end of the year, the house prices in the city are expected to grow by another 2.4%, according to Zillow.
However, realtor.com has bolder predictions. According to them, the housing prices in Phoenix, Arizona are expected to grow by a staggering 5.6% in 2019. But still, the city remains in the top-ten list of best cities in the US to purchase a house.
The growth is generated by two simple factors: the demand and supply. These two have a determinant role in price growth and buyer’s affinity for the city.
The evolution of the housing prices seems to be favorable for both sellers and buyers, after the sharp drop in value during the 2008 financial crisis. The years that followed brought a slow, but steady price rise, the positive change being generated by the high housing demand in the area.
More properties to meet the high demand
In 2018, the real estate market in Phoenix had a property supply for only two months. The theoretical inventory is used by specialists in the field to keep track of the housing numbers over time.
Experts say that balanced markets have inventory for approximately 5 or 6 months. This means that the Phoenix, Arizona housing market was dangerously under-stocked.
During the first months of 2019, the inventory rate has improved. It has reached a 3.5 month supply of properties. While the numbers show improvements, Phoenix is still one of the few US markets where the supply falls behind meeting the demand.
The inventory of homes in Scottsdale, Phoenix, for instance, is a tight one. The percentage of homes sold vs. homes listed is 6.9%, as of March 2019. The rate shows a tight supply-demand trend, locally.
A growing housing inventory is a positive trend in the local market. With a bigger housing supply, a proper market balance would be achieved. In return, the prices will increase but at lower levels than the ones experienced in the past.
Population growth generated more property sales
The population density in the areas has been slowly rising since 2010. This generates a higher demand for housing solutions for both buyers and renters.
When population density in the area was last measured in 2017, there were 1.6 million inhabitants, as compared to 2010, when it only cumulated 1.4 people. The extended metropolitan area cumulates 4.7 million people, being one of the largest metropolitan areas in the country, by population.
One of the reasons that lead to the sheer number of inhabitants in the city is the fact that Phoenix has one of the best performing job markets in the US.
The unemployment rates in the Phoenix-Mesa-Scottsdale area are as low as 3.9%. At the peak of the financial crisis, the same area struggled with unemployment rates of 10%.
Also, the city is the preferred location where people migrate after retirement. The favorable weather tends to bring flocks of retirees. Young people from different corners of the US also come in large numbers in the area because of more employment opportunities. The prices are slowly rising, as a result.
The general consensus among specialists in the field is that, although the housing prices will grow in the following months of 2019, they won’t exceed the rates registered in 2018.
The housing inventory seems to grow better than expected. This means the market will relax more than over the following months, creating a balanced environment for both sellers and buyers.
When to buy a property in Phoenix, Arizona?
More specifically, is this year the year when prospects should finally settle for a property in the city? Well, this is a hard-to-answer question. But the relaxation signs will most likely lead to lower prices than the ones registered in 2018.
In spite of the forecasts published at the beginning of the year, the market is more affordable today than it was 12 months ago. A similar investment should be determined by a personal analysis of each buyer’s financial situation.
However, from a market point of view, the time for a similar investment in Phoenix is just perfect!
- Incredibly low mortgage rates. The average rate of a 30-year fixed mortgage is registered at 4.45%. While the rates are expected to rise a little by the end of the year, this is still a great opportunity for all buyers.
- Higher housing supply over the following years. This will offer prospects more properties to choose from and make an informed and researched decision.
- Federal housing limits for VA and FHA loans have been increased at the beginning of 2019, allowing applicants to choose properties evaluated at higher prices, without crossing into the “jumbo” mortgage sphere.
- A strong economy and historic low unemployment rates in the area show that the housing market in and around Phoenix has also improved significantly.
- Buyer’s confidence levels in the housing market and their finances have also increased in this context.
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