November 14, 2019 at 10:43am | Mark Sloat CFP
2019 has proven to be another strong year for Arizona real estate. Interest rates are down, disposable income is up, and affordability remains attractive relative to neighboring states. Home buyers waiting for prices to come down have been tragically disappointed in 2019. The average sale price per square foot is up 6.7% since last November and the median sales price is now $283,000, up $21,000 from last November’s measure of $262,000.*

Home sellers continue to enjoy moderate to strong seller’s market throughout the Phoenix Metro area with home supply hovering between 2.1 to 2.3 months, low compared to historical averages. Arizona has been one of the hottest multi-family (apartment) markets due to our rapidly growing population, combined with zero new home construction between 2008-2012. Builders are working to close the gap on the housing shortage. Single Family permits (future supply) are up 4.6% year-to-date and multi-family permits are up 6.4%, reaching a level not seen since 2007. At the time this article was written, single family homes in Gilbert, Chandler, and Scottsdale were selling in roughly 28 days at 99 % or better of asking price. This is a far cry from the 17 week and 91% list to close ratio during the great recession.**

Despite median home prices in Phoenix breaking 2007 records, this is NOT 2008! Arizona continues to be one of the fastest growing states for several reasons, home affordability being just one of them. Community leaders continue to attract high paying professional employers to the likes of Deloitte, Microsoft, Wells Fargo, Northrop Grumman, and Intel, just to name a few. Companies are fleeing less business-friendly states for the warmth of Arizona. Phoenix and other second-tier cities, including Atlanta, Dallas and Denver, have become a draw for investors and businesses relocating because of lower costs of living compared with more popular cities and a high quality of life, a selling point often repeated by Arizona economic development officials.

The bottom line. Real estate is rarely a bad investment and depends heavily on your unique situation, not timing the market. Mortgage rates remain low and home prices are increasing moderately. Relative to other markets across the US, Arizona has performed better due in part to sustained single digit gains, not double-digit growth so prevalent in California, Colorado, Washington, and Oregon over the past few years.

For 2020, we expect moderate gains between 5-7% which should land Arizona in the top 5 states for real estate growth. This growth will be driven by commercial development and our expanding economy. As a state, Arizona far more diversified economically than it was in 2007 when it's been said that $1 out of every $3 came from the real estate market, home building, or home improvement retailers.



Sources: Cromford Report & Arizona Regional Multiple Listing Service (ARMLS)
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