Get Ready for Another Hot Year in Arizona Real Estate
Despite enduring yet another unusual year, the Arizona real estate industry has remained strong. The Grand Canyon State continues to grow, no matter what challenges it faces.
With high demand, limited inventory, and rapidly rising home sale prices, real estate agents across Arizona should gear up for another booming year.
2022 Arizona Real Estate Outlook: Hot
In October 2021, the average home in Arizona was priced at $396,235, a 31.5% increase year-over-year (YoY). There’s little sign of prices stalling, though, as Zillow predicts this figure will rise another 12.7% within the next year. While home prices rose, the number of homes for sale statewide decreased by 21.5% year-over-year as of November 2021. The latest figures show that there are only 10,358 active listings in the Grand Canyon State.
And experts expect this trend to continue.
Inventory will stay sparse. While the low rates have brought homebuyers into the market, high demand and low inventory have increased prices. This is good news if you plan on selling. Buyers have adapted to virtual tours and many who are looking to relocate are comfortable making an offer sight unseen in order to seal the deal. In fact, it’s not uncommon to have a home go under contract in just a few hours because inventory is so low.
Buyers are still attracted to the housing market despite the inevitable bidding wars and high home prices. Mortgage rates remain low, and the 30-year fixed rate currently sits just above 2.5% as of writing.
The sparse supply of homes coupled with low mortgage rates will continue to attract motivated buyers into the Arizona real estate market. We expect many to strike while the iron is hot to capitalize on the current mortgage rates, which could save prospective buyers money in the long run.
On the rental side of the market, rent prices increased by a whopping 27.6% on average statewide, though not uniformly. Phoenix rent prices only increased by 6.6%, but rental prices in Mesa, Scottsdale, and Gilbert jumped by 27.7%, 38.8%, and 93.1%, respectively. This increase in rental costs is worrying to renters but also shows residents’ movement to smaller markets beyond Phoenix.
Amid all of this hot rental and residential activity, only 0.5% of Arizona homeowners fell delinquent on their mortgage as of the latest figures, and equity slipped into the negative on only 1.0% of homes statewide. Both of these figures are down from last year, which is a positive sign that the state is healing from the COVID-19 pandemic.
Despite this crazy activity, people are still drawn to the Grand Canyon State. The state has welcomed over 800,000 new residents over the last 10 years, expanding Arizona's total population by nearly 12.5%. Between the booming population and relative housing affordability, we can expect 2022 to be another strong year for Arizona real estate agents and sellers.
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