It’s no secret that Arizona’s real estate market has experienced explosive growth over the past year.
Continuing on the upward trend, the median home price in metro Phoenix is predicted to hit a record-breaking $400,000 in June. That is an increase of almost $100,000 from one year ago, according to the Arizona Regional Multiple Listing Service. The demand is driven largely in part by investors, out-of-state buyers and those looking for second homes in sunny Arizona.
According to Zillow’s latest market report, a typical Phoenix abode is now worth $367,484, up 23.5% over the past year and 3% since April. Meanwhile, the local market has finally made space for an additional 1.6% of available inventory from April, where homes are listed for sale for an average of 7 days before going under contract.
But while the seasonal boost in inventory is a welcome sign that the ongoing inventory crunch may finally be starting to ease, it will take a while for the gains to immediately make an impact on a red-hot housing market in which demand for homes far exceeds the available supply of them, says the Zillow report. Phoenix has experienced one of the highest annual growth rates in the country’s largest metro areas at 23.5%, only second to Austin at 30.5%.
Ultimately, while demand for homes remains strong, limited supply is constraining sales activity — especially at lower price points, contributing to some affordability concerns. Even so, enduring demographic tailwinds, persistently low mortgage interest rates and an improving economy should continue to buoy demand, and recent signs of improved home seller sentiment suggest that some inventory relief could be on the way.