Phoenix real estate market is getting much-needed inventory in 2022

Camelback Mountain in Phoenix, Arizona | Photo by Chris Tingom (Unsplash.com)

For many months, the real estate market in Phoenix has suffered from a chronic housing shortage. There were many buyers looking for properties to buy but not enough homes to get around.

Ditto for most major cities and metropolitan areas across the country.

But now it appears that the real estate market in the greater Phoenix area is gaining some much-needed inventory. A recent report showed a significant increase in the number of active real estate listings in the greater Phoenix-Mesa-Scottsdale area.

Phoenix Housing Market is getting more inventory

This week, researchers from Realtor.com released a housing market update with data for the country’s 50 largest metro areas. Among other things, this report showed that the real estate market in the Phoenix area has seen a significant increase in the number of homes for sale.

In fact, the Phoenix-Mesa-Scottsdale metro area experienced the second-largest inventory increase among the 50 largest metro areas in the country.

From May 2021 to May 2022, the total number of active property listings in the region increased by a whopping 67%. That was the second-biggest year-over-year increase among the nation’s largest subways. Only Austin, Texas saw a larger increase in active home listings, up about 86%.

Check out our latest Austin market update

To quote the June 2022 Realtor.com report:

“On average, active inventory in the top 50 US markets grew at double-digit rates (+14.9%) from May 2021 levels, with the largest increases in the West (+33.6%) and South (+18.3 %), led by Austin, Texas (+85.8%), Phoenix (+67.1%) and Sacramento, California (+54.6%).”

The Phoenix housing market also saw a measurable increase in the number of New Quotations, with an increase of 13.7% compared to the previous year. “New listings” in this context refers to houses that have come onto the market in the last few days.

This is good news for those planning to buy a home in the Phoenix area later in 2022. If these trends continue, which seems likely, buyers making a purchase later this year could have more properties to choose from.

Still a highly competitive real estate market

This inventory growth in the Phoenix housing market bodes well for home buyers. But don’t let that fool you — it’s still a highly competitive real estate scene. Despite the recent surge in real estate listings, the Phoenix-Mesa-Scottsdale metro area still has very low inventory by historical standards.

As of May 2022, according to the latest housing data, this market had homes for sale for just over a month. That’s well below historical norms.

In short, real estate conditions in the Phoenix area are getting better and better for buyers. But sellers will continue to prevail for the foreseeable future. It would take a major shift in supply and demand to turn the Phoenix area into a buyer’s market. And that kind of shift remains beyond the horizon.

Home price growth could slow into 2023

It’s a fairly safe bet to say that the Phoenix real estate market will see slower home price growth in the coming months. The high double-digit gains of the past 12 months are sustainable over the long term.

According to Zillow, the median home value in the greater Phoenix-Mesa-Scottsdale area has increased nearly 31% in the last 12 months alone. The average price when this article was published in early June 2022 was around $466,000.

Three years ago the median price was closer to $270,000. So we are talking about a large price increase in a relatively short period of time.

Eventually, as more and more buyers are priced out of the market, we will see a drop in demand and a general slowdown in the real estate scene. The earliest clue will likely come in the form of slower home price growth.

In fact, we are already seeing signs that property values ​​are cooling. According to the Realtor.com report mentioned above, the housing market in the Phoenix area had more discounts last month than a year ago.

As of May 2022, 17.5% of homes sold in the region had a discount. That was an increase of almost 12% over the previous year. This is further evidence that the Phoenix real estate market is gradually becoming more buyer-friendly.

As more homes come on the market later this year, price cuts could become even more frequent. This could be the start of a broader cooling trend.

Disclaimer: Housing predictions and forecasts represent an informed opinion and should be treated as such. The Home Buying Institute makes no statements about future real estate or economic conditions.

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