Median Price – Up 6%
- That 6% (April 2018 to April 2019) is very good but price increases are slowing down. Prices were up 9% the previous 12 months, April 2017 to April 2018.
Number of Houses Sold – Up 7%
- This was a surprisingly strong bounce-back because the number of houses sold had been running lower than 12-months earlier numbers since last August.
Forecast
- Solds and prices will be strong in May but I’m expecting the Phoenix real estate market will slow again after the high season ends. The rest of the year will probably look more like 2017 or 2016 than 2018. Both those years, 2017 and 2016, were hot markets, just not as hot as 2018.
Watch Out For…
- Prices didn’t fall last fall and winter because the number of new listings hitting the market fell at the same time the number of houses sold fell. If the number of new listings starts to increase, that would increase the supply of houses for sale and that would put more serious downward pressure on prices.
Real West Coast Prices Fell
Inflation-adjusted home prices on the West Coast have actually fallen slightly, at least according to Case-Shiller data for March.
| San Diego | -0.6% |
| Los Angeles | -0.5% |
| San Francisco | -0.5% |
| Seattle | -0.2% |
I’m not sure why real house prices are essentially flat in those cities but it makes me worry there’s a real risk that whatever happened to them could spread to us.
Recession Watch
The soft sales from August through March makes me think the next recession could hit house prices pretty hard – S&L bubble hard, not Great Real Estate Bubble hard.
There is no recession imminent. Q4 at the earliest.
Employment continues to grow, year over year, at around 1%. Although it’s slowed down a bit in recent months, employment is still growing at a decent clip.
Charts
Interactive versions of these 2 charts, here.
Months Supply looked like it was headed toward the normal range for a few months there but now it’s back down to 2.4 months which is super tight.
What are you seeing in your neighborhood? Let me know. Leave a comment.
4 Responses to Phoenix Housing Market & Forecast – June 3
John,
Why so much “doom and gloom”? Life is good in the PHX metro area!!! Prices continue to rise and supply is low.
I wouldn’t worry about what you see in Seattle and cities in CA occurring in PHX. It is a different market. Those areas have extremely high costs of living. We don’t. I suspect a good part of the influx to AZ is from these higher priced areas in the Western part of the US.
Business is booming here. I get the PHX Business Journal. Every week you see positive developments, including businesses relocating here, massive population and GDP growth. Wage increases are high and we are in the top 10 in many categories.
Add the simple fact that AZ is just a nice place to live with great weather, golf, an entertainment and it is a win-win scenario. Not to mention AZ is a retirement mecca.
Everyone in the media “freaked out” about higher interest rates, yet they are now a bit below 4%. Inventory is at 2.4 months and boat loads of people are migrating to the state.
For sure, at some point there will be price pressures, but over the next 3 – 12 months we should be fine.
Thanks for your posts.
Steve
Steve, I wouldn’t say markets like in 2016 and 2017 is doom and gloom. ;-)
Rents are jumping up pretty high where I am at. I am in north phoenix and houses that were renting for 1k 3 years ago are now listed for $1600 which seems a bit high. I was in California last weekend and many people were talking about taking the equity from there CA house and buying something cheaper here. One guy asked what 700k cash would buy in Arizona. He was shocked when the answer was something very nice. Seems like prices are going to keep going up until the younger Arizonians cannot afford to buy which is sad. It doesn’t seem like any starter homes are/have been built since the crash. Smallest square footage I am seeing built is about 1500. It would be great to see some 1200 sq ft starter homes being built again. For the current homes a 15-20% reduction seems around the fair value.
Interesting how One commentator Says that Conditions In California And Washington Won’t affect Prices in Arizona, But the next Commentator says Folks are moving to Arizona From California Solely because They want to cash out That equity. In other words, The equity locusts Are going to have The same affect Today That they did 10 years ago.
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