What words can you use to describe the 2023 Phoenix Housing Market? Consider that the three most important words in real estate are often said to be location, location, location. Therefore, 2023 in Phoenix might present opportunity, opportunity, opportunity! But wait, is the market up or down? As with virtually everything in real estate, you can say it depends on each situation.
Pricing in the 2023 Phoenix Housing Market
Where is pricing in Phoenix as we enter 2023? According to Redfin, the December 2022 median sale price is less year-over-year compared to 2021. But that difference is only 1.4%. Some homes may be priced higher, some may be priced lower. Thinking of the market, the most desirable areas and homes are likely to see price gains and higher demand. In fact, 12% of Phoenix home sales in December sold above their list price.
More importantly, the three month period of October through December 2022 saw a decline in the number of homes with price drops.
Three Months of Declining Price Drops
This trend may reflect a market moving closer to a state of balance. For example, it may reflect a number of homes being sold or removed from the market, so there is less inventory for buyers. However, it might also portend a strengthening of the sellers side of the market. Demand for homes in Arizona continues to increase with economic growth. As a result, buyers should be aware of the opportunity cost to them if they continue to delay purchasing a home.
2023 Phoenix Housing Market Price Appreciation Trends
According to Norada Real Estate Investments, the Phoenix real estate market continues to be one of the top-performing markets in the nation. Notably, home values in the Phoenix metropolitan area have risen by 9.5% over the past year.
How can this be the case? Here’s why: the population of the area has grown faster than the housing market ever since 2006. Economic growth has led to a shortage of homes in the market, placing higher pressure on home prices. In fact, home price appreciation in Arizona since 2000 is a stunning 253.22%, higher than over 90% of the rest of the nation. As a result, even during the twelve month time period from 2021 Q3 to 2022 Q3, the average annual rate of home price appreciation was 20.77%.
Underproduction and the 2023 Phoenix Housing Market
The city of Phoenix recognizes the challenge of having a growing population while construction lags behind. As noted in the city’s Housing Plan, “An Up for Growth study found that between 2000 and 2015 Arizona underproduced 505,134 housing units.” However, it is not just Phoenix that is experiencing underproduction. 169 metropolitan areas are experiencing significant underproduction in housing units.
Up for Growth notes three specific reasons driving underproduction of housing units:
- Households not forming–people choosing to share residences due to high costs
- Limited housing stock leading to imbalances in market supply and demand
- Uninhabitable housing units where plumbing is not set up well or there is no functional kitchen
These three reasons vary by market. Some markets have a larger number of uninhabitable housing units (notably Detroit, Michigan). However, other markets have severe cost pressures preventing household formation (notably Washington, DC).
So what are the opportunities in the 2023 Phoenix Housing Market, you ask?
1. For Sellers: By working with a knowledgeable real estate professional, sellers can expect to get the best price for their home. Even in a slower market, some areas remain highly desirable and demand remains at elevated levels. For example the luxury second home market remains an extremely active part of the local real estate market.
2. For Buyers: Within a market that continues to grow, price appreciation is very likely to continue its rapid rise. Staying out of the 2023 Phoenix housing market may pose an even bigger risk than jumping into the market and buying a home.
3. For New Housing Market Entrants: The city of Phoenix has Policy Initiatives to create or preserve 50,000 housing units by 2030. These initiatives include adjusting zoning ordinances to promote affordable housing development. As a result, many new developments are in process or planned as the city promotes redeveloping city-owned land and supports mixed-income housing.
Prepare for the 2023 Phoenix Housing Market
One of the best ways you can prepare for the 2023 Phoenix Housing Market is by working now to understand what the market shift is, and how you can prepare for success. The KWAZ Coaching Program is a great place to start learning how to develop your real estate business. You can work on identifying your career goals and work with a coach who will help you achieve them.
Keller Williams Arizona Realty is known as the best Scottsdale real estate brokerage, and for good reason. Our coaching program leads the industry in performance and agent success.
Contact us today to learn more about the many ways you can grow your real estate career. Our Leadership Team members are always glad to share all of the benefits KWAZ offers to our agents.
Call us today: 480-767-3000