Phoenix Housing Market: Trends and Forecast 2024-2025

Phoenix, the vibrant capital of Arizona, isn't just the state's largest city, it's also a major hub for business and culture. With a booming job market and a constantly evolving skyline, Phoenix attracts those seeking a dynamic and sunny lifestyle.  The Phoenix housing market in 2024 presents a somewhat balanced picture, with a slight shift from the intense seller's market we saw in previous years.

While home prices are still slightly elevated compared to last year, the pace of appreciation has slowed down, and the market is showing signs of a more balanced dynamic between buyers and sellers.

This means that while it's not a buyer's paradise, there's more room for negotiation and opportunities for buyers to find good deals compared to the recent past. Let's delve into the specific trends shaping the Phoenix real estate landscape this year.

Phoenix Housing Market Trends in 2024

Home Sales

The number of homes sold in Phoenix has seen a slight decrease in 2024 compared to the previous year. According to Redfin data, there were 1,221 homes sold in September 2024, representing a 6.3% year-over-year decline from 1,303 homes sold in September 2023. This dip in sales volume can be attributed to several factors, including rising interest rates, a cooling economy, and a slight increase in the inventory of homes available for sale.

Personally, I think the higher interest rates are playing a significant role in this slowdown. Many potential buyers are finding it harder to afford a home with the higher monthly payments, which has consequently reduced the overall demand for housing.

However, it's crucial to note that the Phoenix housing market is still active. It's not experiencing a crash or a dramatic downturn; rather, it's adjusting to a more sustainable growth trajectory.

Home Prices

Despite the drop in sales, home prices in Phoenix have continued to inch upwards. The median sale price of a home in Phoenix was $446,000 last month, representing a 1.4% year-over-year increase. While this growth rate is considerably lower than what we witnessed in the past couple of years, it's a reminder that Phoenix remains an attractive housing market.

The median sale price per square foot in Phoenix is currently $282, which has remained relatively stable year-over-year. It's encouraging to see that the price per square foot hasn't seen any major spikes, which could indicate that the market is becoming more stable and less susceptible to rapid price fluctuations.

Housing Supply

The housing supply in Phoenix is gradually increasing, giving buyers more options to choose from. However, it's still not considered a buyer's market in the traditional sense. Inventory is slowly climbing, allowing buyers to take more time to find the right property without feeling pressured to make snap decisions.

In the past, we have seen intense competition for available homes, and buyers were often forced to waive contingencies or offer above the asking price to get their offer accepted. But, currently, there seems to be less pressure on buyers to make such hasty decisions.

Market Trends

The Phoenix housing market trends in 2024 suggest that the market is moving towards a more balanced state. While home prices are still rising, the pace of growth has slowed, and the number of homes sold has decreased. The increased inventory gives buyers more leverage, and there is less pressure on them to compete fiercely for properties.

In my experience, this more balanced market dynamic offers several advantages for buyers. They have more time to browse and compare listings, negotiate offers, and make informed decisions about their purchase. This shift from a purely seller-driven market can be highly beneficial for buyers who are looking for greater flexibility and control in their home-buying journey.

Is It a Buyer's or Seller's Housing Market?

Currently, the Phoenix housing market leans towards a more neutral territory, although it's not fully a buyer's market yet. The combination of moderate price growth, increased inventory, and a slightly slower pace of sales puts buyers in a relatively stronger position than in recent years.

Sellers, however, still have a good opportunity to secure a fair price for their property, especially if they are willing to price their homes competitively and work with a knowledgeable real estate agent.

Overall, I would say it's a decent time for both buyers and sellers to engage in the market. However, it's crucial to be aware of the prevailing market trends and work with a trusted real estate professional to maximize your chances of success.

Are Home Prices Dropping?

No, home prices in Phoenix are not significantly dropping at this time. As mentioned earlier, they are still showing a moderate increase year-over-year. While the rate of appreciation has slowed down, it's not yet indicative of a market decline.

It's essential to acknowledge that the economic outlook is uncertain, and there are various factors that could influence the direction of home prices in the coming months. But, based on current data and trends, it's not likely to see a sharp or sudden drop in home values in Phoenix.

Migration and Relocation Trends

Phoenix's migration and relocation trends in 2024 continue to be dynamic. Data suggests that a substantial portion of homebuyers in Phoenix are looking to stay within the metropolitan area (70%). This preference for staying within the city indicates that Phoenix continues to be a desirable place to live and work.

Interestingly, data from Redfin shows that a significant number of individuals are moving into Phoenix from other major metropolitan areas. For instance, people from Seattle, Los Angeles, and Dallas are searching for homes in Phoenix more than from any other location.

Table 1: Top Metros People are Moving Into Phoenix From

Rank	Metro Area	Net Inflow (Aug '24 – Oct '24)
1	Seattle, WA	2,810
2	Los Angeles, CA	2,433
3	Dallas, TX	1,789
4	San Francisco, CA	805
5	Chicago, IL	604

Table 2: Top Metros People are Moving Out Of Phoenix To

Rank	Metro Area	Net Outflow (Aug '24 – Oct '24)
1	Prescott Valley, AZ	1,382
2	Show Low, AZ	850
3	Flagstaff, AZ	756
4	Nashville, TN	164
5	Boise, ID	161

These migration patterns suggest that Phoenix remains a sought-after destination, attracting individuals seeking a more affordable cost of living, a desirable climate, and various job opportunities.

However, it's crucial to remember that this data is based on online search behavior, and not actual relocations. It gives a good snapshot of where people are looking to move, but it's not necessarily a perfect predictor of actual migration patterns.

Competition and Sale-to-List Price

The level of competition in Phoenix remains somewhat competitive but is easing compared to the past. Homes typically sell for around 97.8% of their list price and go pending after roughly 51 days on the market.

In my experience, this data highlights that while buyers have more negotiation power, they still need to present competitive offers. However, it's not as intense a race as before, which is beneficial for buyers who may have previously been intimidated by the fast-paced nature of the market.

Table 3: Sale-to-List Price & Other Market Metrics

Metric	Sep 2024	Year-over-Year Change
Sale-to-List Price	97.8%	-0.82 points
Homes Sold Above List Price	15.8%	-7.1 points
Homes with Price Drops	31.8%	-0.52 points

The decrease in the percentage of homes sold above list price and the slight increase in homes with price drops indicate that buyers are becoming more discerning and have a bit more negotiating leverage.

Impact of Climate on the Phoenix Housing Market

Phoenix, being located in a desert climate, faces certain environmental challenges that can impact home values and considerations for buyers. According to First Street Foundation's data, homes in Phoenix are at a major risk of wildfires (51% of properties) and at an extreme risk of heat (79% of properties).

Buyers and sellers should be mindful of these factors when making real estate decisions. Understanding the implications of these natural hazards can help them make informed decisions about property selection, insurance, and risk management.

Transportation in Phoenix

Phoenix's transportation infrastructure is largely car-dependent. According to Walk Score, Phoenix has a score of 41 out of 100, indicating a car-dependent environment. While public transportation options are available, they might not be the most convenient for all residents and neighborhoods.

Buyers looking to live in a more walkable or transit-friendly community might want to research specific neighborhoods with higher Walk Score ratings.

Phoenix Housing Market Forecast 2024-2025

Phoenix, Arizona, known for its warm climate and booming economy, has long been a hotspot for real estate investors and homebuyers alike. The Phoenix housing market forecast suggests a slight dip in home prices in the coming months. Specifically, Zillow's forecast predicts a -0.4% decrease in home prices by the end of October 2024, followed by a -1.6% dip by the end of December 2024.

However, the market is expected to recover slightly with a 0.1% increase by September 2025. This doesn't necessarily mean a crash, but rather a slight correction after a period of rapid growth. Let's delve into the factors influencing this forecast and explore what it might mean for potential homebuyers and sellers in Phoenix.

Before we dive into the forecast, it's important to understand the current state of the Phoenix housing market. Phoenix, Arizona has experienced phenomenal growth in recent years, driven by a multitude of factors.

The city's population has grown rapidly. From 2010 to 2020, the population increased by 11.2% to 1.6 million people. Between 2020 and 2023, it grew another 4%, adding nearly 200,000 residents. As of 2024, the population is estimated to be over 4.7 million, reflecting a 1.27% increase from 2023. This surge in population is due to factors such as:

• Job Opportunities: Phoenix has experienced strong job growth across diverse sectors. The expanding economy has attracted individuals and families seeking new career opportunities.
• Remote Work: The rise of remote work has also contributed to the influx of new residents. Many people are moving from more expensive areas to enjoy a better quality of life and lower cost of living, while still retaining their jobs in other parts of the country.
• Exurbs: The Census Bureau has noted a significant growth in exurbs surrounding major metropolitan areas, and Phoenix is no exception. This trend, likely fueled by increasing housing prices and the ability to work remotely, is contributing to the expansion of the Phoenix metropolitan area.

In addition to the population growth, Phoenix's economy has been robust in recent years.

• GDP Growth: The Phoenix-Mesa-Chandler metro area's GDP surged from $242.9 billion in 2019 to $261.7 billion in 2021, and reached $308.21 billion in 2022. This signifies a healthy and expanding economy.
• Employment Growth: Employment levels have continued to rise in Phoenix, with the unemployment rate dropping. In July 2024, the Phoenix MSA (Maricopa and Pinal counties) saw a 2.6% increase in jobs (61,600 new jobs), further solidifying the positive economic picture.
• Business Activity: The number of new business applications in Phoenix has surged by 54% between 2018 and 2022, indicating a strong entrepreneurial spirit and a dynamic business environment.
• Migration: The Phoenix region has continued to be a popular destination for migrants, further driving demand for housing.
• Decreasing Inflation: The inflationary pressures that affected the housing market in the past few years have been easing recently, bringing some relief to buyers and sellers.

The Forecast in Detail

Date	Home Price Change Prediction (Year-over-Year)
October 31, 2024	-0.4%
December 31, 2024	-1.6%
September 30, 2025	0.1%

Based on my analysis of the data, these forecasts suggest a slight cooling-off period for the Phoenix housing market. This is a normal part of the market cycle after a period of rapid growth. However, it's important to note that this forecast is based on current economic conditions and trends, and any unexpected events could influence the market in either direction.

Should You Invest in the Phoenix Real Estate Market?

Investing in real estate is a significant decision that requires careful consideration of various factors. It's safe to say that Phoenix is currently a great place for both buyers and sellers. As a buyer, however, it's essential that you evaluate all your options carefully and try to negotiate a better price if possible. The Phoenix Metropolitan Statistical Area (MSA) has been a popular choice for real estate investment due to several compelling reasons supported by factual data:

1. Strong Population Growth

The Phoenix MSA has consistently experienced robust population growth. According to the U.S. Census Bureau, Phoenix was one of the fastest-growing cities in the United States. The increasing population creates a steady demand for housing, making it an attractive market for real estate investment.

2. Thriving Job Market

Phoenix boasts a diverse and thriving job market. The city has become a hub for various industries, including technology, healthcare, manufacturing, and finance. Employment growth stimulates demand for housing, which is a key driver for real estate investment. As of the latest available data, the unemployment rate in the Phoenix MSA is relatively low compared to the national average, indicating a stable job market.

3. Favorable Economic Environment

Phoenix offers a business-friendly environment, attracting corporations and entrepreneurs. The favorable economic conditions contribute to a strong real estate market. According to data from the Greater Phoenix Economic Council, the region has seen consistent economic growth, supporting real estate development and investment.

4. Affordable Housing Market

Compared to other major cities in the United States, the Phoenix MSA offers relatively affordable housing options. The cost of living and housing prices, although rising, is still attractive when compared to cities like Los Angeles, San Francisco, or New York. This affordability makes it appealing to both buyers and renters, increasing the potential for return on investment.

5. Tourism and Lifestyle Appeal

Phoenix is a popular tourist destination, attracting visitors throughout the year. The tourism industry contributes to the demand for short-term rental properties, making it a lucrative venture for real estate investors. Additionally, the city's favorable climate and lifestyle amenities make it an appealing location for both residents and investors.

6. Infrastructure and Development

The Phoenix MSA has witnessed substantial infrastructure development to accommodate its growing population and economy. Investments in transportation, education, healthcare, and other amenities enhance the overall quality of life, making the region more attractive for real estate investment.

Considering these factors, the Phoenix Metropolitan Statistical Area presents a compelling opportunity for real estate investment. However, it's essential to conduct thorough market research, consult with real estate professionals, and assess your investment goals before making any investment decisions.

7. Strong Demand for Rental Properties

Phoenix has experienced a significant influx of residents in recent years, driven by factors such as job opportunities, affordable living, and a desirable climate. Many newcomers initially opt for rental housing, creating a robust demand for rental properties. This demand is projected to continue as the population grows.

Rental rates in Phoenix have been steadily rising due to the high demand for rental properties and the overall growth of the area. While still more affordable than some major cities, rental rates have seen a notable increase, providing a potential for a favorable return on investment for property owners.

Phoenix's lower cost of living and relatively affordable rental rates compared to major cities make it an attractive option for individuals and families looking to rent. The affordability factor contributes to the sustained demand for rental properties in the area.