Here's Zillow's forecast for the metro areas in Arizona. None of these MSAs of Arizona is predicted to see a home price decline in 2023. Rising home values and listing prices, combined with limited inventory, indicate that Arizona's housing market is tilted toward sellers. This trend is likely to continue for the foreseeable future unless inventory grows faster than demand or rising interest rates completely dampens the demand to that extent.
- Phoenix, AZ home values are forecasted to rise 2.5% between Aug 2022 to Aug 2023.
- Tucson, AZ home values are forecasted to rise 3.7% between Aug 2022 to Aug 2023.
- Prescott Valley, AZ home values are forecasted to rise 2.7% between Aug 2022 to Aug 2023.
- Yuma, AZ home values are forecasted to rise 4.6% between Aug 2022 to Aug 2023.
- Lake Havasu City, AZ home values are forecasted to rise 4.4% between Aug 2022 to Aug 2023.
- Flagstaff, AZ home values are forecasted to rise 2.7% between Aug 2022 to Aug 2023.
- Sierra Vista, AZ home values are forecasted to rise 2.6% between Aug 2022 to Aug 2023.
- Show Low, AZ home values are forecasted to rise 7.8% between Aug 2022 to Aug 2023.
- Payson, AZ home values are forecasted to rise 7.2% between Aug 2022 to Aug 2023.
- Nogales, AZ home values are forecasted to rise 3.2% between Aug 2022 to Aug 2023.
- Safford, AZ home values are forecasted to rise 2.8% between Aug 2022 to Aug 2023.
The most important thing to take away from the shortage of housing units is that economists anticipate that the price of homes will continue to rise within the AZ housing market throughout the years 2022 and 2023. On the supply side, it favors the property sellers. The bottom line here is that a stark imbalance between supply and demand continues to put upward pressure on AZ home prices. This partly accounts for the somewhat bold Arizona real estate market forecast for coming years.
The other factors are that the economy of Arizona is robust, but the state is struggling with elevated levels of inflation and housing price growth. In 17 different states, the unemployment rate is at an all-time low. Arizona has 3.3 percent unemployment. The pace of population increase in Arizona is the fourth fastest in the country. A significant number of states saw a loss in population as a consequence of COVID-19, low birth rates, and migration to neighboring states.
Florida, Texas, and Arizona are the three states with the most rapid population increases. Years of underbuilding are a key contributor to the low inventory. According to a study conducted by the Weldon Cooper Center for Public Service at the University of Virginia, Arizona's population is projected to expand by 26.1% between 2020 and 2040 – an increase of 1,897,585 people. As the population is expected to rise yet there are only a few available homes on the market.
This also raises a bit of a concern that in Arizona wages are not keeping up with the rising costs of housing. When prices go up, some buyers can no longer afford to buy and drop out. The faster that pricing goes up, the more buyers tend to drop out, at least in a healthy market.
Mortgage rates also play an impact here. In the past few years, interest rates have remained at historically low levels. This is one of the causes that contributed to a countrywide increase in home-buying activity. However, rates have increased somewhat during the previous several months in 2022. If rates continue to rise, the Arizona real estate market might experience a general cooling trend.
However, the persistent supply deficit is projected to “outweigh” this effect, guaranteeing that the AZ housing market will stay competitive long into 2023. Of course, there is also a great deal of uncertainty in the air. From escalating inflation to the conflict in Ukraine, several elements might affect the economy in the future. Consequently, it is difficult to make reliable projections for the Arizona real estate market or any other market in the United States. Source: Zillow.
