Phoenix is a beautiful, sunny city situated in central Arizona. As such, it has attracted the attention of prospective home buyers and real estate investors nationwide. In terms of total population, the city of Phoenix is the fifth largest city in the United States. The only cities larger are New York, Los Angeles, Chicago, and Houston. Total population does not always indicate a growing real estate market. However, all the indications show that the city of Phoenix has a thriving, expanding housing market.
For example, Realtor.com’s Top Housing Markets of 2022 ranked the Phoenix real estate market number 19. The factors in this annual ranking include evaluating local economic trends and the relative affordability of houses. Additionally, Realtor.com considers any other relevant trends affecting nationwide real estate markets. Realtor.com’s findings concluded that the 2022 real estate market forecast in Phoenix shows:
- Median home price increase of 7.5%
- Increase of home sales by 14.3%
- Combined increase of median home price and overall home sales of 6.8%
Based on these statistics, we suggest that those interested in buying or selling real estate pay close attention to the developments in Phoenix real estate. In the following guide, we will examine a few factors affecting the housing market in the Phoenix area. We’ll also cover what this means for real estate professionals looking ahead to the rest of 2022.
Phoenix is a “Magnet Market”
Firstly, it is important to recognize just how significant this market is in terms of national real estate market trends. Phoenix is officially considered a “magnet market.” This means that, in comparison to other cities throughout the nation, the city is attracting home buyers and businesses at a high rate. Phoenix’s status as a “magnet market” means that real estate investors should consider the following information. That way, they can take advantage of the city’s growing opportunities for selling and renting homes.
Housing Prices in Phoenix Metro Area
How do housing prices in PHoenix stack up to similar real estate markets? Zillow’s home value index reported that the median home price in the Phoenix metro area rose approximately 31% from February 2021 to February 2022. While the median price of Phoenix homes will likely continue to increase, statistics do not show a corresponding decrease in demand for housing. This is for both for-sale and rental units).
Demand for Single-Family Homes
Like other “super sun belt” regions, many families are moving to the Phoenix metro area. It’s smart to take advantage of the city’s real estate development and employment opportunities. This increase in demand for single-family homes will likely result in a highly competitive market; real estate investors interested in the Phoenix metro area would be wise to look at single-family properties for sale in trending neighborhoods.
Affect on Phoenix’s Cost of Living
RentCafe.com estimates that the overall cost of living in Phoenix is 3% higher than the national average. However, the cost of housing is 13% higher than the national average. This is a substantial increase from the national average. But, the growth of multiple industries and employment opportunities throughout the Phoenix metro area is still attracting thousands of new renters and first-time homebuyers every year.
Will There Be Similar Growth in Phoenix’s Rental Market?
The rising cost of purchasing a home and the increase of competitive bidding wars may leave Phoenix residents looking for rental units as a short or long-term housing option. Currently, Phoenix is considered a landlord’s market. As a result, there is a low vacancy rate, high demand, and substantial potential profits for landlords investing in rental homes. Additionally, many workers who are relocating to the Phoenix area may be interested in rental units located near their place of employment.
Statistics suggest that, owing to a limited supply of single-family homes and an increased demand, the median price of homes in the Phoenix area will continue to steadily increase throughout 2022. The cost of living will likely continue to increase as median housing prices go up. However, the amount of demand and influx of new jobs should maintain the thriving housing market. In order to get in on one of the hottest markets nationwide, real estate agents and professionals should consider investing in properties in high-demand areas in the city (particularly in the suburbs).
