The housing market in Phoenix continues to gain. All indicators show the sellers’ market maintains a strong grip, but the number of active listings has declined from 6,791 to 6,253 last month. This lower supply of homes means higher prices. And that said, the number of homes pending sale dropped from 12,376 to 9,624, which is normal behavior over this period of time.
With the holidays, the average days on market also swelled a bit from 56 last month to 64 this month. But most significantly, prices took a a significant leap from a median price of 490,000 up to 519,900 in January. Phoenix led the nation last year in year-over-year price appreciation, an amazing 30%. I believe we’ll continue to see price appreciation between now and this time next year. Experts are predicting price gains of 6 to 16%, which would not surprise me. The good news is that the increase looks like it will be this year, and in my opinion, will be closer to the normal 4 to 6% gain going into 2023.
Now, that’s a long way out and my crystal ball does get a little fuzzy at this point but that’s my view at this time, higher appreciation at the beginning of the year, slowing appreciation as we come towards the end of the year into a more normal year in 2023. So what’s different this year is that interest rates are expected to rise over the coming 12 months, about 4% at the end of the year, it should be. Since a gain of this magnitude will add hundreds of dollars to your mortgage payment, I expect buyers to flood the market as this rise becomes apparent, putting further upward pressure on prices before the gains moderate late this year due to higher interest rates.
So if you can, now is the time to buy. If you’re looking to sell, now is definitely a good time. Declining price pressure and rising interest rates will retain the seller’s market as we move into 2023. In the interim though, we may see a price spike here in Metro Phoenix due to the combined rising mortgage rates and continued high appreciation. As always, if you have any questions, reach out to us here at the Right Move Team where we find people we like, the home they love.