Low listings, population growth defines Phoenix housing opportunities
By Terrance Thornton | Digital Free Press
As anyone attuned to the not-so-subtle levels of hot offered by the temperatures of the Valley of the Sun as the triple-digit march to the peaks of summertime continues — they will tell you, ‘the heat is coming.’
That’s just a fact of life here in the Phoenix metropolitan area, but something else has become a local narrative: the Phoenix area continues to experience explosive population growth meanwhile the price — not to be confused with value — of single-family homes continues to grow at historic levels.
Butch Leiber, managing broker at Realty Executives, says he believes for the remainder of calendar year 2023 pricing of homes will continue to rise as population growth continues to define the tenets of any and all supply-and-demand equation contemplated.
“I think we will see prices increase and we have seen prices increases since the first of the year,” Mr. Leiber told the Arizona Digital Free Press. “We have gone up about 10% in price so far this year, but I do think the market is healthy given population growth.”
Arizona-based Realty Executives is a full-service real estate company with over 1,000 agents in 100 offices throughout Arizona providing services, including residential and commercial sales, property management, and mortgage lending.
Mr. Leiber agrees with the notion new population continues to define the overall tenets of the Phoenix housing marketplace.
“All of the experts say there is not enough housing for the population — people need a place to live,” Mr. Leiber said of a common need felt by all. “All of the construction you are seeing around the Valley is multifamily, which is giving us a bit of disparity in the housing market. Pricing in real estate is absolutely tied to the supply-and-demand level.”
Of Note: The supply and demand equation is a basic economic model that shows how the price of a good or service is determined by the interaction of supply and demand.
Mr. Leiber contends historical value appreciation rates for single-family homes through the metropolitan area of Phoenix — from the shores of Lake Pleasant to the base of the Superstition Mountains — typically hover around 2% to 3% but over the past half of 2023 those numbers are about 8% to 7% better in the aggregate.
Mr. Leiber says he has had made two key observations of Phoenix homeowners in June 2023:
- The majority of new traditional homeownership in Phoenix today is the result of historic interest rates whereas interest rates on six-figure loans eclipse at 3% in recent years, which has now created zero incentive for those property owners to purchase again.
- The majority of property owners of investor-owned homes have realized two profit centers: historic property valuations since 2008 and a stark need for places to rent in the Phoenix metropolitan area has kept capital gains in the pockets of savvy investors.
Both observations curtail robust sales programs, Mr. Leiber explains of the bear-like housing market.
“We have had the lowest amount of new listings this year compared to the last 23 years,” he pointed out. “People who bought their home in 2017 have seen the overall property value gone up 94% in the last six years.”
With mixed signals reported at the Federal Reserve, Mr. Leiber says he anticipates those interest rates — which have an indirect impact on local mortgage rates — will be in flux for the next 12 to 24 months as global and national inflation levels stabilize.
“I think we are in for a roller coaster of interest rate announcements,” he explained. “The mortgage rates follow Department of Treasury bill rates and the gap between the two is larger than usual, but nobody really knows what is happening with interest rates.”
However, Mr. Leiber says a curios thing has happened with prospective buyers in the Phoenix housing market.
“The interesting thing is that buyers have gotten use to the 6 to 7% rate — historically that is a very good mortgage rates and people need homes,” he pointed out.
Phoenix housing market prices to rise into fall 2023
What makes a place special? For Gary Shapiro, it’s the weather — and the people.
“Scottsdale has always been and will remain one of the legendary and coveted places to live and own real estate in America. People recognize its cachet worldwide,” he said of why folks continue to move to Maricopa County at high levels.
“Despite periodic hiccups, homeowners can bank on the fact that their homes will be worth more in future years than today. That’s why property owners receive so many solicitations from investors and flippers looking for opportunities to capitalize on someone’s situation. They too know the future.”
Earlier this year, Mr. Shapiro launched his own real estate firm: Shapiro Realty, Inc. and has been selling single-family properties for 52 years.
Arizona is fortunate not to be adversely affected by natural disasters like hurricanes and floods. We enjoy blue skies and palm trees versus bone shivering winters like in the rust belt,” he said. As such, there will always be high demand for our lifestyle and our homes. That demand will have a direct impact on our prices.”
Mr. Shapiro says the community of Scottsdale is poised for a soft landing of any family looking to put down roots in the Valley of the Sun.
It’s important buyers focus on their primary goal. Don’t be distracted by short-term issues,” he said.
If you find something you like and can afford, seize the opportunity. Remember, you’re not the first person to discover Scottsdale or the only person looking at that particular home. Trust your gut and go for it. There’s a lot of money coming to, or already here in Scottsdale. We have a vibrant and economically sound community making us famous as being a great place to live, work, learn, and play.”
