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Goldman Sachs Predicts Phoenix Real Estate Housing Market Crash in 2023! Are They Right??

Jan 29, 2023 | Uncategorized | 0 comments

Phoenix Real Estate has taken those of us who have been here a while on a wild ride in the last 20 years or so that I have been in the industry.  Today, the question that is on the minds of homeowners and those looking to purchase in 2023 obviously is “What will happen next?”.  Will the market, which saw values shoot up in 2021 and 2022, continue to see appreciation or are we headed to a cliff.  Many of us have a variety of unpleasant memories of the housing collapse of 2008 and the excruciatingly slow recovery in the years to follow.   It’s easy to take note of some similarities between 2008 and 2022.  Both markets were preceded by periods of extremely rapid price gains fueled by low inventory and high demand for housing.  Phoenix saw some of the fastest appreciation in the country going into 2008 and consequently felt some of the most significant equity reductions during the recession of 2008-2010.  Phoenix again saw some of the fastest appreciation in the nation over the last couple of years and when the cool down came (roughly started in June of 2022) Phoenix felt it as bad or worse than other parts of the country.  The national economy was red hot going into the recession of 2008 and the national economy was red hot going into 2022.  The collapse of the sub prime mortgage industry, among other things sent the national economy into deep recession starting in 2008.  This time it’s runaway inflation, and the Federal Reserve countermeasures that are likely pushing us towards a recession of some sort.  How long and how deep it will be this time around remains to be seen.  All this considered it’s easy to draw parallels and suggest that Phoenix is ripe for a housing crash.


So if all of that is similar this time around, what’s different?  Honestly, a lot is different this time around.  The state economy, and the economic activity in metro Phoenix is significantly different than it was in 2008.  Credit is due to state leadership for creating a much more diverse economic pallet over the last 10 years or so.  Phoenix, and Arizona for that matter, now have large manufacturing sectors and an increasingly important and diverse health care/research sector.  We recovered from the impact of the Covid 19 pandemic much faster than the rest of the country in many ways, because of the economic landscape that was created and incentivized by policy over recent years.   This will no doubt help us if the country goes into recession and perhaps lessen the blow to Arizona.  Micro chip manufacturing in particular would likely be a recession resistant industry, especially given continued shortage of chips and high demand.  The other difference this time around, and it’s a big one, is that the mortgage lending practices are completely different than they were going into 2008.  A big part of the housing collapse was due to risky loans that were relatively easy for homeowners or investors to walk away from.  That particular row of dominos is not in place this time around.


Predicting future markets is risky.  Anything can happen at anytime and nobody really knows where any of this is going to go in the future.  Phoenix real estate tends to operate in the extremes.  We look to indicators and considerations like those outlined above to make the most educations possible assessments about where things will go.  Goldman Sachs assessment seems more like a national assessment to a local market, looking mostly at the factors in paragraph 1 above without much consideration for paragraph 2, in my local honest opinion.


Our counsel to our clients always starts with.  Do the best you can in the market you are buying and selling in and try not to get too caught up in future values or not.  Overall, real estate purchases do well over the long term, so if you need to buy a home to live in, get the best deal we can in the market we are buying in.  If you have a home you need to sell, work to get the best possible results in the market you are selling in.  At Newman Realty our job is to advocate, negotiate and guide our clients to the best possible results regardless of what the market is doing and that is our focus.  Selling a house today, out of fear of a housing crash in the future is risky at best.  Postponing buying a house because the market is slowing and you fear a crash is also a little short sighted.  Our current market offers buyer’s more leverage than they have seen in many months, why let that climate potentially disappear out of fear of a possible future housing crash.  In either scenario, you may be right and you may be wrong, but you are likely going to drive yourself crazy trying to predict an uncertain future and miss opportunities that slide by.  Again, do the best you can with whatever market you are buying or selling in.


My personal opinion of the future of housing markets is a little more reserved and general.   I do think the migration that led to high demand for housing is going to remain a factor for many years to come regardless of overall economic conditions, with peaks along the way but overall AZ population will likely continue to rise with the rest of the sunbelt.  Inventory, despite interest rates and a slowdown of buyer demand, remains low on a national level and in Arizona.  It will likely take several years for enough homes to be built to accommodate overall demand.  I believe our market activity will follow the national economy to some degree.  If the country goes into deep recession, our market will slow and prices will fall.  If the country goes into mild recession then our housing market may not change much from what it is today.  Regardless, when the recovery comes, and it always does, we can expect Phoenix to be an attractive destination for residents and companies alike and demand for housing will put upward pressure on prices.


Always remember that every home, every neighborhood and every buyer or seller situation is unique.  National news and trends are great, but do not speak directly to any specific transaction.  Our commitment to our valued clients is that we will always provide honest assessments based on years of experience in all types of housing markets, always putting our clients best interests above all others.  It has been from day one and always will be.

Until next time.




Mark Newman



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