Shoeleather Journalism in the Digital Age

Shoeleather Journalism
in the Digital Age

A snapshot of the Phoenix housing marketplace reveals optimistic indicators

Photo of Phoenix Housing
Phoenix housing: The median sales price for single-family homes rose 5.5% to $464,000 from $440,000 last year. The average sales price climbed 8.4% over last year to almost $615,000 compared to $567,000, numbers show. (File Photos/DigitalFreePress)
Interest rates interconnect Phoenix housing value and multifamily marketplace
By Terrance Thornton | Digital Free Press

The average temperature over the next five days here in the Phoenix metropolitan area is expected to be about 74 degrees, meteorologists opine.

From the cold desolate plains of Kansas, Missouri and Nebraska to the iced streets of Chicago and the brisk cold of New York that can feel downright mean at times — the Valley of the Sun is one of the places to be and be seen when the winter months come to pass.

The home of Super Bowl LVIII champions — the Kansas City Chiefs — will see a high of 41 degrees this Wednesday meanwhile the city where ‘The House that Ruth Built’ stands will see a high of 48 degrees this Friday. Those numbers don’t take into account the wild-chill factor — the true measure of cold — any Midwesterner worth their salt will tell you.

And if there is one ultimate rule in real estate, experts say, it is this: location, location, location.

As the Federal Reserve signals a pause on what has been systematic increases to interest rates over the last 18 months — the average interest rate for a 30-year fixed mortgage sits at 6.9 percent, experts say — two Phoenix Realtors are optimistic as the selling season unfolds during the early months of calendar year 2024.

“I do believe that interest rates are going to stay what they are as prices will continue to go up,” Sheryl Bowden, Phoenix Realtors president, told the Digital Free Press in early February.

“Prices in the traditional single-family market could see gains of $30,000 to $40,000 in price. We have anticipated an increase in interest rates but in some markets we have seen them drop and we have builders who are bringing on needed, new inventory. We have been growing in population and our job opportunities throughout the Valley — all of those are great economic indicators.”

Phoenix Realtors is reporting single-family homes are selling faster this today than the same time last year — down almost 12% from 77 days on the market in January 2023 to 68 days this year.

Listings climbed nearly 6% to 6,600, and closed sales were up over 2% for January. The median sales price for single-family homes rose 5.5% to $464,000 from $440,000 last year. The average sales price climbed 8.4% over last year to almost $615,000 compared to $567,000, numbers show.

Ms. Bowden says homes priced in the low- to mid-500s price range represent a great value in the Phoenix metropolitan area.

“I have been selling real estate for 40 years,” she said recalling the explosive growth of the Arrowhead Ranch area of the 1990s and early 2000s coupled with the growth of the second urban core along Tatum Boulevard at Desert Ridge happening today in north Phoenix.

“Our weather and the fabulous lifestyle you can have when you live in Phoenix is a big selling point. You are an hour from just about anything and everything you would want to do. Within minutes of amazing hiking, golf — we just have such great amenities all around.”

As a courtesy for Phoenix Realtors here are market snapshots for Avondale, Chandler, Glendale, Phoenix, Scottsdale and Tempe.

Phoenix Housing: A snapshot of the metropolitan multifamily marketplace

As the economic opportunities improve — living wage jobs, access to higher education and affordable healthcare — across the Valley of the Sun, population numbers will continue to ebb and flow affecting the multifamily marketplace, one expert says.

“The growth in the Phoenix metro and surrounding areas has been a large factor for the economic growth in Phoenix which has its effects on the rental markets,” said Ronaldo Lewis, Realtor and principal at Gilbert-based One Sky Realty. “You can tie in employment as well since companies are looking to Phoenix more as a business destination. The housing sales market is a direct economic correlation to the rental market if buying demand increases it can affect the rental demand with less potential renters.”

When it comes to historically low interest rates, Mr. Lewis points out those numbers have an indirect impact on the multifamily marketplace.

“Lower interest rates can make homeownership more accessible for some individuals, potentially reducing demand for rental units,” he explained of the macroeconomic factors at play.

“As rates are still historically on the lower end and with supply of rentals increasing in both multifamily as well as residential build for rent single family home style units increasing in popularity. The pause in rates or any decrease would theoretically and potentially add more buyers thus reducing demand in the rental market that seems to be well supplied at the moment. Therefore, for rental rates to begin to level out or increase again more of the current supply must be absorbed to handle the oncoming supply of new multi-family developments.”

On the other end of the spectrum, Mr. Lewis explains, as interest rates creep north an influx of renters could become part of the multifamily supply-and-demand equation in the coming months.

“From my perspective and what I have been hearing from other agents and seeing on the market are more properties staying on market longer and rental rates sliding downward,” he said.

“According to the Arizona Regional Multiple Listing Service, the Phoenix July 2023 median residential rental rate was at $2,250; which was the highest point in 2023. The current rate of $2,100 (Jan 2024 data) also shows the drop in rental rates. What seems to be driving this is the drop in rental rates is the supply. The number of Phoenix rental listings active on market as of January 2023 listings were 6,322. In January 2024 there were 7,214 rental listings, an increase of 12 percent.”

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