Phoenix Real Estate Market Outlook – February 2022
Real Estate is a HOT topic and something discussed around most water coolers these days. Now would be a good time to evaluate where we stand and what we think will happen going forward.
I may sound like a broken record, if you habitually read my posts, but I must give a quick glance into the past. We remain in a super low inventory status while having increased demand. We have seen low inventory for pushing 9 years now, in fact, and it’s become our ‘new normal’. We thought inventory was absurdly lean back in early 2020 (pre COVID) when 7,000 homes were active in Maricopa County, but then that number plummeted to less than 2,500 just shy of a year ago. We slowly gained housing stock and flattened out between 4-5,000 for many months, but now are sitting back down at 2,714.
The past couple of weeks have felt very reminiscent of this time a year ago with multiple offer situations & bidding wars with aggressive terms the norm. I feel for first-time home buyers and real people just looking to make a move. It’s TOUGH… on all of us!
Capital from Wall Street backed entities is astounding and the race to gain ownership by these groups is competitive. These cash offers have thrown your friends, neighbors, colleagues and alike to the curb, even when they are offering some really great terms.
Think renting might be easier… think again. Not enough housing options to go around and rental vacancy rates are the lowest we’ve seen since the early 80’s (before I was born).
While last year gave us about 30% annual appreciation, I don’t believe 2022 will be a repeat, but we are on pace to exceed expectations thus far. Also, as mortgage interest rates have moved up, many believe rates could settle back down a little come summer. It’s complicated so I will trust their assessment.
Add in high inflation and it’s quite the time to be in Real Estate!
Let’s take a look at some statistics:
- In 2020, 80% of sales were for “Owner-Occupant” Buyers versus 65% in 2021.
- 18% of Sales are from Investors (not the iBuyers), which is the highest rate since 2013.
- If we look at 1,500 – 2,000 Sq Ft Homes in the Valley in January… the Median Price in 2020 was $260,000 while 2021 saw $330,000 and now it was $430,000 for 2022. That’s a steep incline.
- Looking again at 1,500 – 2,000 Sq Ft Homes in the Valley in January, but for rent… the Median Price in 2020 was $1,600 while 2021 saw $1,875 and up to $2,190 for 2022.
- Our market is now seeing the highest number of “Flips” since 2012… back when we were coming out of the foreclosure cycle.
- There were 12% fewer New Listings to hit the market this January versus last year.
- As of December, 2021, inflation was at 7%.
- 20.7% of Sedona’s Housing is Short-Term Rental (AirBNB/VRBO).
- Overall Inventory is only 25% of “normal” figures so 75% down from where we would prefer.
- Demand is 120% of normal.
Everyone has an opinion about Real Estate, but not everyone is an expert. Hell… the “experts” are often wrong. It’s a market with many variable factors. What I do know is that we are in this market every day and will always be honest and truthful with what we believe. Sometimes it won’t be what you want to hear, but we believe it to be accurate and therefore what you need to know.