The Phoenix Real Estate Market is the Most Competitive it has been in Years. What’s happened? Where are we headed?

Phoenix skyline at night

The Phoenix Real Estate Market is the Most Competitive it has been in Years. What’s happened? Where are we headed?

Sticky
Apr 18, 2018
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The Phoenix real estate market is in a period of tight inventory of homes for sale right now. There are not enough listings for buyers looking for a home. Home sellers are once again receiving multiple offers on their homes, and this includes homes valued over $300,000. We expect home prices to continue to rise at conservative, healthy rates. It’s also a great time to buy. What is behind these trends? Where are we headed and why?

The Trends and Outlook in Phoenix Real Estate

The Southwest Realty Pros Team @ Farnsworth Realty & Management expects these real estate trends — tight inventory and steady prices — to extend out for a year or so. However, we don’t expect this unbalanced supply and demand curve to greatly affect home values. Our group’s focus and advice to home buyers is to find your dream home rather than trying to find a killer investment. More on that below.

fire pit

Here is what is behind our assessment:

  • A more mature market of buyers and sellers
  • More discerning investment and speculation
  • Increasing interest rates and tougher loan qualifications
  • Planned development in the area, such as SkyBridge

The reason we don’t predict a huge increase in value coming — or the associated ‘bubble’ like we saw in 2006 — is that investors and speculators are not grabbing up inventory at the same pace we saw back then. Additionally, loans are tougher to get. Qualifying for a loan in 2006 basically meant showing up at the bank and promising that you have income. Now, banks have gone back to truly vetting applicants.That is why we’re seeing a normal, healthy trend in home values.

Specific to the Phoenix real estate market, we also need to point out some significant shifts in the makeup of the market. For example, the residents in Phoenix are maturing. We don’t mean they’re getting older. We mean they’re getting smarter, wiser, in professional careers. Here’s what we’re noticing in the Phoenix area:

  • A more tech-savvy group of workers, as the ‘Silicon Desert’ continues to grow, along with ASU’s SkySong startup organization
  • Insurance pros are moving in with the large insurance companies building and expanding in the area (see the State Farm building next to ASU)
  • More medical professionals with new heart centers in the area
  • Overall, we’re seeing an increase in industry and solid jobs in those industries (SUMCO Southwest, ON Semiconductor, Microchip Technology and Intel are all here in Phoenix metro)

Current Phoenix Real Estate Market Data

Credit: Denise Krebs

Here are some key data points for the Phoenix Real Estate Market:

  • Median home value: $340k (Realtor.com)
  • Current days on market average is 44 days (Realtor.com)
  • Sales are up 7.4% over 2017 (ARMLS)
  • New inventory (9594 for February) is down 1.2% over 2016 (ARMLS)
  • There is a 3.15 month supply of homes for sale (ARMLS)

Our Advice: What to do in this Market

People have to see homes as a place to live, rather than a five-year cash-out investment plan. We regularly hear buyers asking where we think home values will be in just a few years. Our advice? Stop looking for the big cash-out! Find a home that you really love and stop worrying about reselling it. When you find a home like that, consider yourself lucky. That’s not to say that a home can’t end up being a good investment, but our advice is to find a home you can make yours in a neighborhood that matches your lifestyle.

‘When others zig, I zag.” We’ve all heard that expression. So, what’s the zag right now? We believe it’s a huge mistake to overpay for things like granite countertops and grey/industrial floors. While it’s not quite the same as putting lipstick on a pig, it can feel that way when we see people paying for those dressings. Be careful not to overpay for a home with these features. Remember, you’re amortizing these over 15-30 years! That could be $10-15,000 over thirty years. Instead, focus on the location and the structure of the home. The inside stuff can be fixed. In fact, as you fix it yourself, this new house starts to become your home and takes on your taste and lifestyle. Things like an unfinished backyard can be finished to your taste, while not overpaying for your house. New and shiny doesn’t mean better, especially in five years.

Location: East Valley

The Southwest Realty Pros Team @ Farnsworth Realty & Management represents clients all over the Valley, and our primary focus is in East Valley. We’re very excited for the future of the East Valley cities of Mesa, Gilbert, Chandler, and Tempe.

In addition to the SkyBridge project we mentioned above, we also see other economic development initiatives really supporting the east valley real estate market:

  • A new aviation incubator with ASU, NAU and Boeing
  • Light rail expansion to Power Road in Mesa and into Chandler
  • Check out some of these numbers from the East Valley Partnership, including:
    • 1 million new residents and 400,000+ new jobs in the next 30 years
    • New developments such as Rivulon, Mesa Elliot Tech Park, and Uptown Chandler

Conclusion

We see the Phoenix Real Estate market, and more specifically the East Valley area, as a great place to find a home to live in for years. Home prices are steady and will likely continue to rise while inventory struggles to keep up with demand.

Find your dream home, don’t pay for bright shiny dressings, and make the home your own. That, along with working with the right Realtor, is the formula for making a great home purchase today. Working with a dedicated professional realtor to help you along the way will make this process a successful one, while also saving you money. Contact our award-winning team today to find your dream home or to sell your existing home. If you’ve got 5 minutes, give us a call at (602) 689-1805.

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