So far, 2021 has been a wild ride for Phoenix real estate. The pandemic-fueled housing market changed a lot of things; skyrocketing home prices, increased competition between buyers, the speed of snatching property off the market, and the reasons people are moving to new cities and buying homes.
At Halpern Residential, we stay on top of the real estate ebbs and flows to help you make the best decisions in your home-buying or home-selling journey. Here are the top five housing trends we’re seeing right now:
1. Suburban Migration To Phoenix Metro Continues
A study shows most recent homebuyers, approximately 62%, prefer to work remotely from their homes. Nearly half of the American workforce has switched to remote work after the pandemic. That means new homeowners will scan homes on the market for space, size, and functionality to ensure they’re suitable for work/life balance. With that mindset, city dwellers who are struggling to live in places like New York City, San Francisco, Seattle and Washington D.C., are moving to more affordable areas like Phoenix and its suburbs. A new report shows Phoenix will be one of the top three emerging real estate markets in 2022, which comes as no surprise with the number of new residents moving to Maricopa County.
2. Window Of Opportunity For Real Estate Investing
If you want to invest in rental property, the time is now. According to recent data from the Cromford Report, rental rates rose 6% across the country this past September. However, Phoenix showed the highest rental rate increase – at 14% year over year. Cromford analysts say there are more people wanting to rent than there are units available, leading to increased investor demand and competition for properties. Read our take on why the local rental market is worth the investment and where you can find the best properties.
3. Housing Inventory Is Starting To Rise
Phoenix desperately needs new housing inventory and supply simply can’t keep up with demand. Cromford data shows inventory for November is down 13% compared to this time last year. Though housing inventory is slowly improving, new home development isn’t coming online fast enough, thanks in part to lingering supply chain issues and skilled labor shortages.
Low inventory is a major reason home prices have been shooting up over the past year. Cromford data shows November’s monthly median sales price was $415,000 versus $332,000 last year – that’s a 25% increase. Home prices will continue rising though we expect they’ll cool off through 2022, just enough to feel a slight difference.
4. Interest Rates Are Low But Increasing
Mortgage rates had been at a historic row, motivating a flurry of homeowners to refinance their homes, which is now trickling down. The 30-year fixed-rate mortgage (FRM), which is the popular choice for most homeowners, is at its highest level since April, teetering around 3.45%. Redfin expects the 30-year FRM will average around 3.6% by the end of 2022, resulting in an average of $100 more per month in mortgage payments for a median-priced home.
5. Luxury Housing In Demand
We’re seeing a much higher demand for new-construction homes, especially those in high-end Phoenix suburbs. The analysts at the Cromford Report note that the higher-priced areas of the Northeast Valley, specifically Paradise Valley, are seeing a higher spike of interest than usual. “PV” as the locals call it, offers sweeping views of the Valley from secluded resort-style homes nestled along cliff sides, luxury golf courses, boutique shops and destination attractions. As remote work continues to become the norm, along with snowbirds that routinely flock down here, the luxurious suburbs that surround Phoenix can expect to see top dollar for their properties.
It’s clear that the market will continue to move on a fast track, with many of this year’s issues ironing themselves out into 2022 as we press forward. These are interesting times and we take into consideration the pandemic-induced socio-economic and environmental factors that are shaking up the market in ways they haven’t done before. Whatever life throws at your real estate journey, Halpern Residential will help guide you through and make sense of it all. We’re here to chat when you’re ready!