We hope this Arizona Housing Market Update for March 2022 finds you well. It has been a busy couple of years in the local residential real estate markets, especially in Gilbert and Queen Creek. The strong sellers’ market due to low inventory and high demand continue buyers scrambling for housing in the most competitive environment we have ever seen. This is the case in several markets across the country, but metro Phoenix continues to lead the national trends.

Arizona Housing Market: Factors to Consider

As 2022 has started, the pace of home sales continues to be brisk, as it has been with our previous Arizona housing market updates. Buyers in almost all price points are seeing competing offers on the table and sometimes outlandish terms offered by other interested parties. Of course, the institutional investment funds continue to gobble up an inventory of single-family housing to add to rental property portfolios, contributing to the supply problem.

1. Migration: Arizona continues to attract businesses and individuals in large numbers. Development in most metro Phoenix municipalities is off the charts and nothing seems to be slowing up demand for our new residents when it comes to demand for housing. In other words, the Arizona housing market is in demand which is keeping prices high and supply low.
2. Interest Rates: Have you heard anybody talk about interest rates this year? My guess is you have heard a lot about rising interest rates and they are already a reality. The Federal Reserve has been very transparent about its intention to raise rates to combat runaway inflation. Our first one should be this month, with likely several more to follow this year. Don’t worry, most lenders have already priced the expected Fed hike into their current offerings. After a couple of years of rates in the 2-3% range, we are now seeing quotes of 3.75%-4.25%. Still historically very low but when you’ve been spoiled with lower rates for so long, this is a pill to swallow for sure. Rate hikes combined with rising prices will price many buyers out of the market and at some point, will likely slow demand.
3. Inflation: We’re all aware of our historically high inflation rate. Supply chain issues exposed by the pandemic, shortages of materials and labor, combined with a willingness for consumers to spend some of the money they couldn’t during the pandemic are running up prices. If you did not lose income/employment during Covid then you probably have higher savings, and most people were looking to spend it. Now that prices are up and rising fast, consumers may be more conservative in their purchases. Reduce the demand and prices will come back down.
4. Buyer fatigue: We have been seeing this more and more. Shopping for homes these days is not fun at all. It’s a more stressful process than usual, with plenty of frustration, anxiety and fear included. It can be very taxing and after being beaten up for a period, some buyers give up and stay put, or rent. If you’re struggling, check out our article 5 Ways to Promote Peace of Mind During a House Hunt.

These will continue to affect our markets more than any other factors which is why we’re watching them, and the overall market trends, closely.

What does this Arizona Market Update mean for you?

Real estate is an important sector of our economy and for most people, an important part of their personal wealth. If you own property but are not currently buying or selling, then this is simply valuable information to keep you abreast of what is happening out there. If you are shopping, be aggressive, persistent, and stay focused on your goals. Go in understanding the market you are shopping in and the best strategies for success. If you are selling, make sure your agent is experienced and fully understands all your options and opportunities (there are a lot of them out there!).

We offer excellent counsel based on 18+ years of industry experience and trusted guidance. If you or someone you know has questions about our local markets or would like to discuss options, we stand ready to help.

Thank you as always and we’ll see you next time!