Arizona has been one of the hottest real estate markets in the United States, and its housing market remains exceptionally strong this year. While not every city in Arizona made it to the top of the list, the Grand Canyon State as a whole has shown an impressive performance in the housing sector.
Predictions published in housing market news indicate that Arizona continues to be one of the markets to watch in 2022. Here’s a detailed forecast of what to expect in the Arizona housing market predictions this year.
Arizona Housing Market Predictions: What to Expect
Home values will increase
The average home value in the Phoenix housing market was $469,500 in April 2022, representing a significant increase of 27.7%. This figure is expected to reach $598,400 by the end of the year. Many buyers will compete for the limited number of available homes in 2022, driving up the median home value. This increase is largely influenced by demand and supply constraints.
Rental properties will become more popular
Reduced profit margins, higher acquisition costs, and limited availability are pushing Arizona real estate investors towards the rental market. Long-term rental properties are becoming a more attractive alternative in today’s market, where monthly rents can help offset higher purchase prices. Additionally, the lack of inventory in the housing industry will drive more tenants to rental properties, effectively lowering the risk of vacancies.
Interest rates will increase
The Federal Reserve is expected to raise interest rates to combat inflation. This is not a question of if, but when. The only uncertainty is how much the rates will increase. Some predict more than five rate hikes, but even fewer increases will still impact home prices.
Rent will increase
Rent prices in the Phoenix housing market have increased by 8% year-over-year. The average rent for a three-bedroom home in Phoenix is now $2,345, according to Zumper. The rise in home prices has created more tenants than usual, so it’s safe to assume that rents will continue to increase over the next 12 months.
Phoenix as the Arizona real estate market driver
Real estate experts believe that Phoenix will continue to drive the Arizona real estate market. As the fifth-largest city in the nation, Phoenix is continuously growing, particularly due to the in-migration that has been happening since the onset of COVID-19. It is also one of the regions where home price increases are expected to continue. Zillow forecasts that home prices in Arizona will rise by double digits in 2022, although at a slower rate than in 2021.
Tenants occupy 36% of Phoenix’s households, making its real estate market a good blend of owner-occupied and tenant-occupied housing units for sale. Three- and four-bedroom single-family homes are the most common types of property. However, you are more likely to come across a duplex for sale in some neighborhoods.
The Broader Impact on Arizona’s Real Estate Market
The Arizona real estate market, which was intense in the previous year, is expected to continue thrilling the housing industry in 2022. The main drivers of the Grand Canyon State’s housing market are its promising job market, high quality of life, strong economy, and multiple attractions. The relatively low mortgage rates indicate that it’s an excellent time to purchase property in Arizona. The rental market is favored by the lack of new housing inventory, rising property costs, and the reluctance of homeowners to sell.
Additional Factors Influencing the Market
Job Growth and Economic Stability
Arizona’s job market is booming, with numerous opportunities in various sectors such as technology, healthcare, and education. This job growth attracts more people to the state, increasing the demand for housing. The strong economy also provides a stable environment for real estate investments, making Arizona an attractive destination for both homebuyers and investors.
Quality of Life and Attractions
Arizona offers a high quality of life with its beautiful landscapes, outdoor recreational activities, and vibrant cultural scene. The state is home to the Grand Canyon, one of the most famous natural attractions in the world, as well as numerous national parks, hiking trails, and golf courses. These attractions make Arizona a desirable place to live, further boosting the housing market.
Population Growth and In-Migration
The population of Arizona continues to grow, driven by both natural population growth and in-migration from other states. People are drawn to Arizona for its affordable cost of living, warm climate, and job opportunities. This population growth increases the demand for housing, contributing to the rising home values and rental prices.
Conclusion
The Arizona real estate market is set to remain one of the hottest in the United States in 2022. With rising home values, increasing rental demand, and a strong economy, the Grand Canyon State offers numerous opportunities for homebuyers and investors alike. Whether you’re looking to buy a home or invest in rental properties, Arizona’s housing market is one to watch this year.