With the Arizona real estate market exceptionally hot and Phoenix the nation’s strongest, some fear those soaring home prices could take a tragic nosedive in a wave akin to the boom 15 years ago—which led up to the ’07 and ’08 housing market crash. So we wanted to know what experts are predicting for 2022. But first, let’s take a look at where we stand currently.
According to Zillow’s Home Value Index, which provides seasonally adjusted data on typical home value along with market changes spanning regions and housing type, Arizona housing values have gone up by approximately 189 percent since December of 2011 alone. As a result, more than half of the state’s housing inventory is now worth more than $396,235. Compare this to November of 2020, when a typical Arizona home was valued at around $301,000.
And valuation hasn’t gone up gradually over time, with data showing a notable spike just this past year by around 31.5 percent. Some experts are even predicting double-digit appreciation during the next twelve months, as well.
When you zoom in to Phoenix-Mesa-Scottsdale Metro, where demand has soared to new heights, you’ll find property valuations growing at more than 32.4 percent year over year leading into November 2021 whereas the year prior saw just a 14 percent increase and the year before that, 6.1 percent.
Predictions for Phoenix, where 60 percent of all housing units are single-family, favor real estate investors looking to flip property or long-term property investors. At least Zillow is predicting another 20 percent rise in valuation throughout the Phoenix-Mesa-Scottsdale Metro along with similar growth in Maricopa County, Mesa, and Scottsdale.
While they’re merely estimated guesses to consider, predictions are now likewise statewide, with perhaps a 15 to 25 percent increase during the next ten months, states Jeremy Fierstein, who appeared in a recent interview on KPNX-TV. Jeremy, a realtor with West USA Realty, points to the area’s high demand and low inventory as a major driver of this growth. In the same segment, reporters spoke with Trevor Halpern of Halpern Residential at North&Co who cites the supply/demand discrepancy as well. But Trevor went further to say that there were 5.9 percent fewer homes available this past February than during the same time last year.
So what does this mean for buyers? The tight market means homeowners are choosing from a smaller selection of homes. And while some might opt to wait it out, others are acting quickly under the assumption that there will be even higher home prices in the future.
As you make your decision, it’s important to consider all factors along with your own unique situation. Consider, too, that real estate is a deeply cyclical market with much dependent on factors outside of our control. Other variables that could affect the market standing include economic and political issues, rising interest and mortgage rates, and changes to new construction, distressed, or luxury home segments, among others.