Arizona Housing Market Predictions 2024
One of the most frequently asked questions in the real estate market is whether home prices in Arizona will go down in 2024. The data and forecasts show that while there might be minor fluctuations, the overall trend appears to be positive. With an expected increase in home values in major cities like Phoenix and Tucson, it suggests a stable and potentially appreciating housing market.
Hence, the Arizona housing market has its ups and downs, but it remains strong and attractive to both buyers and sellers. Keeping an eye on the latest data and forecasts is crucial for making informed real estate decisions in this dynamic market. As always, consulting with The Agave Group of Tierra Antigua can provide even more insights into the areas you're interested in.
Here's a closer look at the regional trends and forecasts for some major cities in Arizona.
Phoenix, AZ
Phoenix, the most populous city in Arizona, plays a significant role in the state's housing market. As of September 30, 2023, the expected value change in Phoenix is 0.3%. Looking ahead, the forecast indicates a slight decrease by the end of December 2023, with a value change of 0%. However, the market is expected to bounce back and grow significantly by September 2024, with an expected value change of 3.2%. This suggests that the real estate market in Phoenix is resilient and poised for growth in the long term.
Tucson, AZ
Tucson is another major city in Arizona with its own unique real estate dynamics. As of September 30, 2023, the expected value change in Tucson is slightly higher than in Phoenix, standing at 0.4%. The forecast for Tucson shows a more positive trajectory, with an expected value change of 0.6% by the end of December 2023, and a promising 3.2% expected value change by September 2024. This suggests that Tucson's real estate market is showing resilience and steady growth.
If mortgage rates go on a decreasing trajectory in 2024, prospective buyers may return to the market to increase the demand. The important thing to take away from the shortage of housing units is that economists anticipate that the price of homes may continue to rise slowly in the AZ housing market in 2024.
On the supply side, it favors the property sellers. The bottom line here is that a stark imbalance between supply and demand continues to put upward pressure on AZ home prices. This partly accounts for the somewhat bold Arizona real estate market forecast for coming years. The other factors are that the economy of Arizona is robust, but the state is struggling with elevated levels of inflation and housing price growth.
As of September, Arizona has a 4.0 percent unemployment rate, a 0% change from a year ago. The pace of population increase in Arizona is the fourth fastest in the country. A significant number of states saw a loss in population as a consequence of COVID-19, low birth rates, and migration to neighboring states. Florida, Texas, and Arizona are the three states with the most rapid population increases. Years of underbuilding are a key contributor to the low inventory.
According to a study conducted by the Weldon Cooper Center for Public Service at the University of Virginia, Arizona's population is projected to expand by 26.1% between 2020 and 2040 – an increase of 1,897,585 people. As the population is expected to rise yet there are only a few available homes on the market.
This also raises a bit of a concern that in Arizona wages are not keeping up with the rising costs of housing. When prices go up, some buyers can no longer afford to buy and drop out. The faster that pricing goes up, the more buyers tend to drop out, at least in a healthy market. Mortgage rates also play an impact here. In the past few years, interest rates have remained at historically low levels.
This is one of the causes that contributed to a countrywide increase in home-buying activity. However, rates have increased somewhat during the previous several months in 2022. If rates continue to rise, the Arizona real estate market might experience a general cooling trend. However, the persistent supply deficit is projected to outweigh this effect, ensuring that the AZ housing market will stay competitive.
Sources:
https://www.zillow.com/az/home-values/
https://www.realtor.com/realestateandhomes-search/Arizona/overview