Arizona Housing Market Forecasts

Arizona Housing Market Forecasts

Arizona Housing Market Forecasts

Arizona Housing Market Forecasts


Both the Phoenix and Tucson metro areas have a higher affordability index than the national average. Arizona Home prices are near historic lows and mortgage rates remain attractive, helping to increase the purchasing power of buyers.

LUXURY MARKETS:  The luxury housing market, homes priced at $800,000 and above, saw a considerable uptick. Arizona Luxury homes sales and the number of luxury properties under contract rose significantly over mid-year levels, while at the same time MOI (Months of Inventory) dropped in Phoenix.

WHERE OUR FUTURE BUYERS ARE COMING FROM:  Based on viewers, Arizona leads the way in terms of home shoppers looking in Arizona. Other leading areas include California, the Pacific Northwest, Texas and Colorado, the upper Mid West, New York and Florida. Outside the US, other leading countries include China, Canada, Mexico and parts of Europe.

IN GENERAL:  We expect the trends outlined in this report to continue through the end of the year, however there are some important economic factors that should be watched and taken into consideration.

MORTGAGE RATES:  30 year fixed mortgage rates have increased slightly in the past few months to over 4%, however they are still very attractive and not far off historic lows. Industry experts are mixed in their projections of rates for the balance, with some projecting rates dipping down to 3.9% (National Association of REALTORS®), while others are forecasting rates to end closer to 4.7% (Fannie Mae). Almost all agree that in the long term rates will rise. If rates rise faster than predicted, it could serve to dampen the purchasing power of borrowers, however a window of opportunity still exists for buyers to capitalize on current rates.

HOUSING INVENTORY:  Many parts of Arizona are currently facing a shortage of housing inventory, with buyer demand exceeding supply. Contributing factors include a diminishing supply of distressed properties and a lack of new construction. For a number of reasons, Arizona home builders can have a longer lag time to react to shifting market conditions. Downward Arizona pricing pressures and reduced buyer demand held builders at bay during the housing bust. With housing now rebounding in Arizona, we are seeing signs of life in new construction however those levels are still well below their peak. A severe housing shortage may drive higher prices, however it may also leave buyers struggling to find a home to purchase. Increases in supply may come from further production of new construction homes and/or more existing homeowners considering selling as prices rise.

JOB GROWTH:  The Brookings Institute Mountain Monitor reported “The unemployment rate averaged 7.7 percent across the nation’s 100 largest metropolitan areas in the first quarter. Unemployment ran 7.0 percent or below in Phoenix and Tucson.” The report also went on to say “ Phoenix had a 0.6 percent growth in employment over the prior quarter, beating the national average of 0.4 percent. Tucson’s employment recovery advanced by only 0.2 percent, by contrast. “ The health of the housing market has a direct tie to employment. When people have jobs they have the income, stability and ability to purchase homes. Employment gains have been only nominal in this economic recovery so any stalls in positive momentum may have a negative impact on housing. If job growth continues that will help fuel further housing recovery.

CONSUMER CONFIDENCE:  The Conference Board Consumer Confidence Index®, which had improved. Confidence remains well above the levels of a year ago. Consumers’ assessment of current conditions continues to gain ground and expectations remain. Overall, indications are that the economy is strengthening and may even gain some momentum in the months ahead.” Consumer confidence is cautiously optimistic and should be watched closely. People buy Arizona houses when they are confident about the economy and tend to exhibit nervousness when they are not. Rising Arizona home prices and a strong stock market may have the effect of boosting the equity positions of consumers, thus increasing consumer confidence.

For more information on the Arizona Market, call us. Please feel free to contact us and we can provide you with additional Arizona information to guide you through the relocation process in AZ. We look forward to hearing from you and working with you soon!

Our best,
Carl Pepper, Realtors®
Tucson: (520) 822-6575
Phoenix: (480) 382-9191

Featured potential 1031 Tax Exchange Listing: 5536 Ventana Vista Road Tucson, AZ 85750


You can skip to the end and leave a response. Pinging is currently not allowed.

Leave a Reply