Arizona's housing market has been on a rollercoaster ride in recent years. While the national market shows signs of cooling, Arizona remains a seller's market in many areas. In recent years, Arizona has attracted many people due to its warm climate, bustling cities, and a relatively affordable cost of living. As we enter autumn 2024, housing prices are on the rise, and the availability of homes is changing dramatically.  Let's dive into the current trends to understand how things are unfolding.

Arizona Housing Market Trends 2024

Key Takeaways

• Home Prices: As of August 2024, the median home price in Arizona is $442,900, reflecting a 1.3% increase year-over-year (Redfin).
• Sales Activity: The number of homes sold has decreased by 7.9%, indicating a potential slowdown in buyer activity.
• Inventory Levels: There are currently 36,992 homes for sale, which is a 26.0% increase compared to the previous year.
• Days on Market: Homes are sitting on the market for an average of 56 days, a 14-day increase from last year.
• Competitive Dynamics: Only 15.0% of homes sold at or above the list price, down from the previous year.

With these figures, it’s clear that the Arizona housing market is undergoing significant changes. Let’s dive deeper into these trends and what they mean.

Understanding Home Prices in Arizona

In August 2024, the median sale price of homes in Arizona reached $442,900. This modest price increase of 1.3% year-over-year indicates a continued demand for housing in the state, even amid fluctuating economic conditions. While this growth isn't dramatic, it signifies a steady demand for homes.

Diving into specifics, areas like Show Low are experiencing significant growth, with home prices soaring by 17.9%, followed by Yuma at 16.7% and Fountain Hills at 15.4%. These statistics suggest that while some areas may be slowing down, others are seeing robust activity—driven by factors such as lifestyle preferences and employment opportunities.

Sales Data and What It Indicates

Despite the rising prices, the number of homes sold in Arizona has seen a 7.9% drop compared to the previous year, with 7,665 homes sold in August 2024. This decline can hint at a cooling buyer interest, possibly due to affordability concerns or the current economic climate impacting purchasing power. The average days on market, now at 56 days, suggest that homes are taking longer to sell, which can be a red flag for sellers.

Inventory and Housing Supply

The Arizona housing market is experiencing a significant increase in the number of homes available for purchase. As of August 2024, there are approximately 36,992 homes for sale, marking a 26.0% increase from the prior year. This surge in inventory is a critical aspect of the current market dynamics. The rise in available homes could lead to greater competition among sellers, possibly stabilizing or even reducing home prices as buyers have more options.

When examining the data, we see that 10,307 new homes were listed in August, reflecting a 4.6% increase and suggesting that construction and listings are responding to market demand. These developments are essential for eager buyers who have struggled in the past with limited options.

The Demand Side: Are Buyers Still Active?

While increased inventory is good news for buyers, it’s crucial to understand how competitive the market is. As per the latest statistics, only 15.0% of homes sold above their list price, a sharp decrease of 5.2 percentage points from the previous year. Also, 30% of homes experienced price drops before selling—up slightly year-over-year.

These figures indicate a shift in market dynamics. Buyers are becoming more discerning as they navigate through the abundant choices available, leading to a more balanced atmosphere in contrast to the fierce bidding wars noted in prior years. The sale-to-list price ratio sits at 98.1%, down just slightly from last year, highlighting that negotiation power might be shifting towards buyers.

Local and National Migration Trends

Arizona continues to be a popular destination for transplants. Recent migration data shows that between June and August 2024, many people relocated to Arizona, with Phoenix receiving 3,500 new residents. This influx can help sustain the demand for housing, but it is essential to monitor how these demographic changes affect the market in the long term.

On a national scale, the trend reveals that 26% of homebuyers searched for properties outside their current metro areas, with many considering Arizona as a desirable destination. This interest can further fuel the market, especially in regions that offer the benefits of urban and suburban living.

Conclusion on Arizona Housing Market Trends 2024

Looking at all the collected data, the Arizona housing market trends 2024 present a multifaceted perspective. While the increase in home prices and inventory levels indicates growth potential, decreased sales and competition prompt questions about buyer enthusiasm moving forward. The current landscape reflects both opportunities and challenges for buyers, sellers, and investors.

As you can see, the interplay of supply and demand continues to shape the market. Despite the slowdowns in sales and the competitive nature of home buying today, Arizona's appeal remains strong, making it a central player in the national real estate scene.

Arizona Housing Market Predictions 2024-2025

The Arizona housing market has been a topic of much discussion lately. With a median home value of $425,000 and a quick turnaround time (pending in 28 days!), it's clear there's still a strong buyer presence. But what does the future hold? Will the market experience a crash or continue to boom? Let's delve into the data and see what experts predict.

Current Market Snapshot (Aug 2024):

• Median sale price: $425,000
• Median list price: $475,028 (indicating a competitive market)
• Median sale-to-list ratio: 0.990 (close to asking price)
• Percent of sales over list price: 17.6% (indicates some bidding wars)
• Percent of sales under list price: 56.8% (higher than usual, possibly reflecting a market shift)

MSA Housing Forecasts for Arizona (September 2024, November 2024, August 2025)

The housing market forecasts for various metropolitan statistical areas (MSAs) in Arizona indicate a period of initial contraction followed by recovery in home prices. The following analysis provides insights into expected home price changes across key regions.

Overview of Housing Market Trends

• Declining Home Prices in 2024: The forecasts indicate that several MSAs will experience declines in home prices throughout late 2024. Urban areas, especially, are projected to face challenges due to a combination of economic factors, including higher interest rates and a potential slowdown in demand.
• Recovery in Home Prices by 2025: Looking ahead to 2025, a recovery trend is anticipated in various regions, with several areas showing signs of price stabilization and growth as market conditions improve and demand picks up.

Detailed Regional Predictions

• Phoenix, AZ: The largest city in the state is expected to see home prices decrease by 0.4% in September 2024 and further decline to -1.4% by November 2024. However, by August 2025, home prices are projected to recover slightly, with an increase of 0.7%, suggesting a gradual stabilization trend.
• Tucson, AZ: Tucson’s housing market is forecasted for a minor decline of 0.1% in September 2024, followed by a decrease to -0.6% by November. By August 2025, an upward trajectory is anticipated with home prices rising by 1.1%, indicating a potential rebound.
• Lake Havasu City, AZ: Home prices in Lake Havasu are predicted to decrease by 0.3% in September 2024, continuing to decline to -1.1% in November. A modest recovery is expected by August 2025 with a slight increase of 0.2% in home prices.
• Yuma, AZ: Yuma stands out with a more favorable forecast, showing an initial increase of 0.3% in September and stabilizing at 0.1% in November. By August 2025, the area is projected to experience a significant gain in home prices of 3%, pointing to strong demand in this region.
• Flagstaff, AZ: Flagstaff is expected to see home prices decrease by 0.1% in September, dropping further to -0.8% by November. However, a recovery is on the horizon with an expected increase of 1.9% by August 2025, reflecting a rebound in demand.
• Sierra Vista, AZ: In Sierra Vista, home prices are projected to decrease by 0.4% in September and remain low with a forecast of -1% in November. A slight decline to -0.5% is expected by August 2025, indicating that the housing market may continue to face challenges.
• Show Low, AZ: Show Low's housing market forecast includes a decrease of 0.2% by September and -0.8% by November. By August 2025, it is expected to recover to a growth of 2.2%, suggesting improved conditions and buyer interest.
• Payson, AZ: The Payson region is predicted to decrease by 0.4% in September and further to -1% in November, but a recovery is expected in August 2025 with a projected growth of 1%.
• Nogales, AZ: Home prices in Nogales are expected to remain stable with predictions of 0% in September, dropping slightly to -0.1% in November before a notable recovery to 2.2% in August 2025.
• Safford, AZ: Safford's market is anticipated to witness a slight decline of -0.1% in September, a drop to -0.7% in November, and a modest recovery to 0.3% by August 2025.

Will it Crash or Boom?

The data suggests a stabilization rather than a dramatic boom or crash for the Arizona housing market. Here's why:

• Price growth: While prices are still rising, the forecast indicates a slower and more controlled increase compared to the rapid escalation seen in previous years.
• Inventory: There might be a shift in the seller-dominated market. The higher percentage of sales under list price could indicate a slight rise in inventory, giving buyers more negotiating power.
• Interest rates: Rising interest rates can impact affordability and potentially dampen buyer enthusiasm.

Overall, Arizona's housing market appears to be transitioning from a white-hot seller's market to a more balanced one. This provides opportunities for both buyers and sellers to navigate the market with a more realistic perspective.

The takeaway? Arizona's housing market is likely to experience continued growth, but at a more measured pace. While a dramatic crash is unlikely, it's wise to stay informed about market trends and local economic conditions before making any real estate decisions.

If mortgage rates go on a decreasing trajectory in 2024, prospective buyers may return to the market to increase the demand.  The important thing to take away from the shortage of housing units is that economists anticipate that the price of homes may continue to rise slowly in the AZ housing market in 2024.

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.

As of April 2024, Arizona has a 3.6 percent unemployment rate, a 0% change from a year ago. 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.

Here's the median price of a home in some of the counties of Arizona

The data shows the median listing home price and listing price per square foot for various counties in Arizona. Maricopa County has the highest number of homes for sale and rent, with a median listing home price of $549K and a listing price per square foot of $286. Coconino County has the highest median listing home price of $725K, while Cochise County has the lowest median listing home price of $296K. The data indicate that the housing market in Arizona is diverse and offers options for buyers with different budgets.

Counties	Median listing home price	Listing $/SqFt	For sale	For rent
Maricopa County	$559K	$287	23,704	16,545
Pima County	$395K	$229	4,839	938
Yavapai County	$659K	$327	4,173	219
Pinal County	$396K	$213	5,582	665
Mohave County	$410K	$247	3,938	223
Coconino County	$749K	$389	1,461	136
Navajo County	$489K	$289	1,811	53
Gila County	$525K	$314	853	40
Yuma County	$341.5K	$215	842	122
Cochise County	$315K	$179	1,632	77

Arizona's housing market has over 900,000 renter households, accounting for 36% of the total number of households. According to a report from the National Low Income Housing Coalition (NLIHC), rental prices in Arizona have become out of reach for many residents. For too many low-income workers, wages have not kept pace with rising rents and home prices. Workers need to make $21.10 an hour to afford a 2-bedroom rental at a fair-market rate.

In Arizona, the Fair Market Rent (FMR) for a two-bedroom apartment is $1,097. To afford this level of rent and utilities — without paying more than 30% of income on housing — a household must earn $3,658 monthly or $43,892 annually. Assuming a 40-hour workweek, 52 weeks per year, this level of income translates into an hourly Housing Wage of $21.10.

The minimum wage in Arizona is $12.00/hr and the Average Renter Wage is $17.46. Cost-burdened is defined as spending more than 30% of one’s monthly income on housing and utilities. Neighborhoods in west and South Phoenix are the most cost-burdened. In some cases, more than 50% of households are paying 30% or more of their income on housing costs, while less than 29% of renting households are housing cost-burdened in the north.

Flagstaff MSA is the most expensive MSA where you need an hourly wage of $24.35 to afford a 2-bedroom rental. The second most expensive MSA is Phoenix-Mesa-Scottsdale, where you need an hourly wage of $22.56 to afford a 2-bedroom rental.

Between 2010 and 2018, the City of Phoenix’s median income increased by only 10%, median rent increased by over 28%, and the median home price increased by over 57% during this time. In 2018, half of Phoenix renters were considered housing-cost burdened, 25% of homeowners were housing-cost burdened and altogether 36% of the entire population is housing-cost burdened. According to a report by Phoenix.gov, 65 % of households that fall within or below the moderate-income range would require some amount of subsidy to achieve housing that is considered affordable at their income level.