It’s been a hot summer in Arizona — in more ways than one. The housing market has been anything but predictable this year.
We have the lowest inventory in history which means the demand is outpacing the supply, causing a spike in housing prices for those buyers who are tired of waiting for interest rates to decrease. Recently, Phoenix landed on a list that is shedding some light on the luxury home market in the Valley.
A recent report published by Point2, which studies housing and real estate trends, placed Phoenix at No. 13 for the top cities with listings over $1 million. So, what is causing this trend in the metro area?
Supply and demand
The triple digits in Phoenix and rising interest rates have done nothing to deter those looking to buy a home. Even with the most recent federal rate hike that went into effect in late July, which nudged the federal funds rate to a range of 5.25% to 5.5%, houses are still in high demand due to an incredibly low inventory.
The most current data available from the Cromford report looks at annual changes from July 14, 2022, to July 14, 2023. Cromford focuses on real-time housing data for Maricopa County, Pinal County and a small part of Yavapai County. It shows 8,123 listings under contract in the Valley, representing a 6% drop from last year and 11,530 active listings for sale, a 27.4% drop from July 2022.
In a city where the median price of homes is $435,000, the number of listings over $1 million sits at a whopping 18.6%.
Natural migration to Phoenix
According to recent reports by Redfin, a tech-based real estate brokerage, almost 400,000 more people moved into than out of counties with high flood risk in 2021 and 2022, representing a 103% increase over the previous two years.
A big reason for those migrating to states like Arizona is the tax rate here is relatively low. Throw in ample days of sunshine and good weather and Phoenix makes the perfect desert oasis escape. It’s no wonder why people in nearby neighboring states such as California, where a median-priced home costs around $830,000 (nearly double the median in Phoenix), have them flocking here with more purchasing power to drive the luxury home market.
Phoenix has a lot to offer
The secret is out. We live in a state where you can get to the beach in a relatively short amount of time. Want to take a trek to the mountains? It’s only an hour and a half to get out of the metro area and into the pines.
While most of the country talks about our triple digits (this summer was no exception) we know those days are numbered and the changing seasons offer so much more with abundant snow in the high country, weekend lake trips and our beautiful Sedona red rocks. With remote work on the rise, people realize they have more options than ever before.
The uptick in the luxury housing market should not come as a surprise as the metro area continues to rise in popularity. As always, it’s especially important to work with a real estate agent that understands the complexity of this industry and can navigate both the marketing side of your home and negotiating so you can get the most out of your home sale.
Greg Hague received his first real estate license at 18 and his first license to practice law at 26. In 2018, he developed and launched 72SOLD.