A recent forecast for the Phoenix, Arizona real estate market suggests that home prices will rise more slowly over the coming months than they have over the last couple of years.
This mirrors similar forecasts that have been issued recently for housing markets across the country. But despite a potential slowdown in home-price appreciation, the Phoenix real estate market is still highly competitive due to a lack of inventory.
Phoenix Housing Market Forecast: Slower Growth Ahead?
In March 2018, the real estate information company Zillow updated its home-price forecast for the Phoenix, Arizona real estate market extending through 2019.
- By their measurement, the median home value in Phoenix rose 9.4% over the last year or so.
- Looking forward, they project the median will rise by another 3.5% over the next 12 months.
Again, these trends and predictions were published in March 2018.
Their forecast for the next 12 months was much lower than the actual gains recorded over the last year. And this could be a return to normalcy, in terms of annual home-price appreciation. If you look back over the last few decades, home prices in the U.S. tend to rise somewhere around 3% to 5% annually.
The much bigger gains we’ve seen in some cities over the last couple of years are abnormal, and are largely the result of an imbalance between supply and demand.
Real Estate Inventory Crunch Continues
Such is the case within the Phoenix real estate market. As of February 2018, Phoenix had about a 2.6-month supply of homes for sale. According to economists, a “balanced” real estate market has closer to six months worth of supply.
(Note: This is a somewhat theoretical measurement. A six-month supply of homes means that it would take six months to sell off all properties currently listed for sale, as long as no new homes came onto the market in the interim.)
Phoenix’s meager 2.6-month supply of homes indicates a supply shortage. It also gives sellers more leverage when it comes to negotiating the price.
Perhaps that’s why most homes in the area are selling for the full list price. According to a recent report from the Arizona Regional Multiple Listing Service, 98.2% of homes sold during the fourth quarter of 2017 received their full list price. This is evidence of strong demand, and it’s no doubt influencing forecasts for the Phoenix housing market through 2018 and into 2019.
Buying a Home in 2018 vs. 2019
The latest round of predictions for the Phoenix real estate market suggest that house values in the area will continue to rise through 2018 and into 2019. They might slow down a bit, according to several projections, but they will probably continue to trend north over the coming months.
As a result, home buyers who postpone their purchases until later this year or next could encounter higher housing costs.
And if that weren’t enough to create a sense of urgency among buyers, we’ve also seen an uptick in mortgage rates over the last couple of months.
At the beginning of 2018, the average rate for a 30-year fixed mortgage was 3.95%. That’s based on the weekly industry survey conducted by Freddie Mac. By March 29, the average had risen to 4.44%. Additionally, forecasts from both Freddie Mac and the Mortgage Bankers Association predict that rates could continue to inch upward through the end of 2018.
The bottom line is that recent trends within the Phoenix housing market, along with forecasts and predictions from analysts, seem to make a strong case for buying a home sooner rather than later — for those considering a purchase, at least. Delaying it might cost you.
Disclaimers: This article includes various predictions, projections and forecasts for the Phoenix, Arizona real estate market in 2018 and extending into 2019. These forward-looking statements were provided by third parties not associated with our company. We have compiled and presented them here as an educational service to our readers. As a general rule, the publishers of MetroDepth make no claims or assertions regarding future economic or housing conditions.