{"id":226565,"date":"2022-11-08T10:15:47","date_gmt":"2022-11-08T15:15:47","guid":{"rendered":"https:\/\/www.livabl.com\/articles\/?p=226565"},"modified":"2022-12-12T18:45:16","modified_gmt":"2022-12-12T23:45:16","slug":"arizona-housing-predictions-2022-2023","status":"publish","type":"post","link":"https:\/\/www.livabl.com\/articles\/news\/arizona-housing-predictions-2022-2023","title":{"rendered":"Arizona housing market predictions for 2022 – 2023"},"content":{"rendered":"

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What’s in store for the Arizona housing market? Let’s look at the data. (Photo credit: Ra2 Studio<\/a>\/Adobe Stock)<\/p><\/div>\n

Do you like wild rides? How about intrigue and drama? For this storyline, you don\u2019t need to stream the latest series on Netflix. Just seek out the latest Arizona predictions for 2022 and into 2023 and hold on tight.<\/div>\n
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We may be verging on the year\u2019s close, but the predictions indicate more surprises are in store before we hit December 31. Skyrocketing prices have been the norm in Arizona for a while now.\u00a0In Phoenix last year, median sale prices rose from $325,000 in January to $404,300 by October. That\u2019s an increase of nearly 25 percent.<\/a><\/div>\n
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By March, housing prices in the city were up 21 percent year-over-year,\u00a0<\/a>and the median sales price had reached $460,000. In August, the price had reached $465,000.<\/div>\n
Zonda Home\u00a0<\/a>has released its November market report for Phoenix-Mesa-Chandler. For the city\u2019s strengths, Zonda said, \u201cIt has a diversified and growing workforce. Job growth has been strong across all sectors and there are more people employed now than before the pandemic started. This could mitigate the risk of significant job losses locally in the event of a recession.\u201d<\/div>\n
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On the flip side, it added, \u201cAffordability remains the key metric to follow. Rising mortgage interest rates are directly impacting affordability. This coupled with other inflationary concerns are decreasing disposable income and weakening consumer confidence.\u201d<\/div>\n
\"See\r\n SEE ALSO:<\/span>Phoenix house prices jump in August, but September looks soft<\/a><\/strong>\r\n <\/div>\n

Checking the temperature<\/h2>\n
There\u2019s an obvious pattern here; we know the AZ housing market has been as maddeningly hot as its weather and the market experienced a historic price jump.<\/div>\n
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But is that heat going to keep burning through the end of the year? It depends on whom you ask. Housing shortages throughout the state remain a central sticking point, and the lack of materials available also hampered these efforts. Steven Hensley, senior manager at Zonda Home, noted that this was a significant factor in driving the prices.<\/div>\n
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\u201cIn terms of annual home appreciation, 30 percent is an outrageous number. Imagine the price of anything going up by 30 percent in one year,\u201d Hensley told\u00a0AZBigMedia.<\/em><\/a><\/div>\n
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Trevor Halpern, founder of Halpern Residential at North&Co, told\u00a0AZBigMedia<\/em>\u00a0that the number of available houses remains shockingly low.<\/div>\n
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\u201cIf we look at homes that are not under contract or pending, we have about 7,700 properties available today,\u201d Halpern said. \u201cTwo years ago, we had 14,000, and this time last year, we had 8,700. Inventory continues to trend down.\u201d<\/div>\n

Is seasonal real estate a thing?<\/h2>\n
Keep in mind that we are heading into a period of the year when priorities shift to the upcoming holiday season.\u00a0Many people don\u2019t like to move during this time due to weather changes or other seasonal demands.\u00a0<\/a>There\u2019s also the factor of moving kids during the school year for those with families. Now, you may assume that the weather may play into Arizona\u2019s favor in this case, and you\u2019d be right \u2014 snowbirds want to flock to the balmier states when the snow is flying in the northeast.<\/div>\n
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However, Fit Small Business reports that median sales prices are more affordable between October and February compared to other months of the year.<\/a>\u00a0The website states that in January 2021, the average American sales price for a home was $329,242. It then peaked at $385,546 in June. This year, prices rose from $376,559 in January 2022 to $424,146 in April 2022.<\/div>\n
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The Cromford Report<\/a>\u00a0is an excellent barometer to check the area market. The report rates the industry based on current conditions. Here\u2019s how it works: When supply and demand are in perfect balance, the Cromford Report assigns a score of 100. If the number is above 100, it\u2019s a seller\u2019s market. If it\u2019s below 100, it\u2019s a buyer\u2019s market.<\/div>\n
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In April, the market index for the state’s biggest city was 500, indicating a massive number of buyers compared to the available homes. By November of the same year, it had dropped to 345.<\/div>\n
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We can expect the temperature for housing costs to cool further based on these statistics. As of November 1, the market index sat at 93.9. That\u2019s quite a difference from 18 months ago.<\/div>\n
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Need more proof? The Knock Buyer-Seller Index recently reported that\u00a098 percent of the largest markets experienced a decline in prices during the month of September when compared to their peaks.<\/a><\/div>\n
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So, what does this mean? If you want to buy a home in the southwest, the Arizona predictions for 2022 are in your favor.<\/div>\n
\"See\r\n SEE ALSO:<\/span>9 of the 10 top markets to watch are in the Sun Belt<\/a><\/strong>\r\n <\/div>\n

Arizona housing market predictions for 2023 housing<\/h2>\n
Just like all things involving some guesswork, we don\u2019t know how long these favorable conditions will last.<\/div>\n
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In August 2022, Knock predicted that the\u00a0Phoenix-Mesa-Chandler metro market would favor buyers in July 2023, shifting from its July 2022 \u2018neutral\u2019 position on the index.<\/a>\u00a0This was a noticeable change in direction from a year earlier when Phoenix\u2019s real estate market was firmly in favor of sellers.<\/div>\n
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This week, the Federal Reserve approved a fourth-straight rate hike of three-quarters of a percentage point as part of its aggressive battle to bring down the scorching inflation plaguing the US economy. This latest monster hike brings the central bank\u2019s benchmark lending rate to a new target range of\u202f3.75 percent to four percent.<\/div>\n
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If the American economy is plunged into a recession, market trends are bound to follow. Morgan Stanley initially predicted growth for next year but has since changed its tune by early October 2022.<\/div>\n
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\u201cIn this world, we do think that sales are going to fall steeper than we thought,\u201d said Jim Egan, Morgan Stanley\u2019s co-head of U.S. Securitized Products Research, on\u00a0Morgan Stanley\u2019s housing podcast.<\/a><\/div>\n
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Now, they\u2019re predicting that year-over-year price growth will tip negative in 2023 and finish the year at minus three percent.<\/div>\n
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\u201cWe had originally been forecasting a return to growth in 2023, but the change to the forecast that\u2019s getting the most attention is that we went from three percent year-over-year growth in December of 2023 to minus three percent year-over-year growth by the end of next year,\u201d Egan said.<\/div>\n
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\u201cSo if I buy a house today, it might be lower a year from now? That seems worrisome,\u201d said Jay Bacow, Egan\u2019s fellow co-head.<\/div>\n
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\u201cYes,\u201d Egan replied but added positives and negatives to that forecast. While that would put national prices down seven percent from their current levels, \u201cthe positive headline is that even with that decrease in home prices from today, that only brings us back to January of 2022. That\u2019s 32 percent above where they were in March of 2020.\u201d<\/div>\n

Moody\u2019s Analytics looks frosty for 2023<\/h2>\n
If the recession is coming, Moody\u2019s Analytics predicts that housing prices will fall from five to ten percent. Like Morgan Stanley,\u00a0Moody\u2019s also revised their housing forecast to trend downward in August and September.<\/a>\u00a0There are also markets that Moody\u2019s deems to be \u201covervalued,<\/a>\u201d and those areas could experience drops of 20 to 25 percent.<\/div>\n
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So, who qualifies as an overvalued market? In late September, Moody\u2019s put out a report that was carried by\u00a0Fortune.<\/em><\/a>\u00a0According to the magazine, 210 markets are vulnerable to these major plummets. Cities from coast to coast are covered, from Portland, Maine (overvalued by 33.61 percent), to Duluth, Minnesota (overvalued by 26.58 percent) to Santa Barbara, California (overvalued by 26.64 percent).<\/div>\n
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There is plenty of overvaluation happening in the western part of the country. Las Vegas, Boise, and Salt Lake City are all on the list.<\/div>\n
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Do you want to guess another city that made the list? Phoenix. It (along with Mesa and Chandler) sits at a whopping 57.47 percent.<\/div>\n
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Let\u2019s have a closer look at Arizona as a whole:<\/div>\n
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