In this report: An update on real estate market conditions within the Phoenix metro area, as of March 2024, with a housing forecast extending into 2025.
Like many cities across the U.S., the Phoenix-area real estate market cooled down in 2023 due to a steady rise in mortgage rates. But now, as we near the spring of 2024, the Phoenix housing market has shown signs of acceleration.
Homes are selling faster and with higher price tags, compared to a year ago. And the latest forecasts for the Phoenix real estate scene predict that these trends could continue, going forward.
The message to home buyers: With forecasts calling for steady price gains across the Phoenix-Mesa metro area in 2024, it might make sense to buy a home sooner rather than later.
Phoenix Area Home Prices Rising Steadily
When it comes to home values, the Phoenix housing market has a pattern of peaks and valleys that dates back to before the 2007 recession.
But the most recent trends from the past few years can be summed up as follows:
Phoenix-area home values rose sharply during the pandemic, hit an all-time high of $482,000 in summer 2022, and then dropped significantly going into the first part of 2023.
Now, as we approach the spring of 2024, the Phoenix real estate market is posting steady month-to-month price gains. In short, this market hit “bottom” back in April of 2023 and has been appreciating gradually ever since.
The chart below shows the median home value for the Phoenix real estate market stretching back nearly a decade. Notice the sharp rise during the pandemic years, followed by the downturn in late 2022 and early 2023.
According to Zillow, the median home value for the Phoenix-Mesa-Scottsdale metro area was around $447,000 as of February 2024. That was a slight increase from a year earlier.
Realtor.com reported even bigger gains over the past year or so. In a February 2024 housing market update, the company reported that the median list price for the Phoenix metro area had risen by 11.6% over the previous 12 months.
Strong Housing Market Forecast for 2024 – 2025
That brings us up to the present. But what about the future?
Looking forward, Zillow’s prediction for the Phoenix real estate market is that home prices will rise by 6% from January 2024 to the same month in 2025.
If that forecast turns out to be even close to accurate, a sense of urgency might be warranted among home buyers. A steady rise in house prices means that those who delay their purchases until later this year, or early 2025, could end up paying more.
And that’s a legitimate concern, since the median price for the Phoenix housing market is already $100,000 more than the national average.
Even so, home values aren’t expected to “skyrocket” anytime soon. Most predictions for this market suggest that prices will rise at a moderate pace through the rest of 2024, and into 2025.
But even modest growth would give buyers an incentive to make a purchase sooner rather than later. If Phoenix-area home prices did end up rising 6% this year, as Zillow predicted, that would equal an increase of nearly $27,000 from the current (February) median price of $447,000.
Housing market forecasts are the equivalent of an educated guess and therefore far from certain. Still, with the way things are going right now, a 6% price jump in 2024 is not far-fetched.
Housing Inventory Levels Have Declined
When it comes to real estate supply, Phoenix is doing better than the national average with about a 4-month supply of homes for sale in early 2024.
But inventory levels have declined over the past year, according to multiple sources. According to the February 2024 Realtor.com report mentioned earlier, active real estate listings in the Phoenix metro area declined by -15.3% over the past year.
Home buyers who are planning to enter the Phoenix housing market later this year will have to be patient and persistent. It also helps to make a strong offer backed by comparable sales data.
Predictions for the Phoenix real estate market through 2024 and into 2025 suggest that the market could accelerate over the coming months. If mortgage rates decline later this year, as expected, more buyers could enter the market, leading to higher competition and faster sales.
Population Growth a Big Factor
The Phoenix metro area’s population has swelled over the past few years, and this has had a direct and measurable effect on the housing market.
According to a May 2023 report from the U.S. Census Bureau:
“Fort Worth, Texas, had the largest numeric population gain in 2022, with an increase of 19,170 people. Phoenix, Arizona (19,053); San Antonio, Texas (18,889); Seattle, Washington (17,749); and Charlotte, North Carolina (15,217), rounded out the top five cities by numeric growth.”
That report went on to state that the Phoenix-Mesa-Chandler, AZ metro area population rose above the 5 million threshold for the first time ever. As of early 2024, Phoenix is the tenth most populous metro area in the United States.
This trend has spurred the local real estate market by bringing more home buyers into the picture. It also reinforces those 2024 – 2025 Phoenix housing market forecasts that predict a steady rise in home prices over the coming months.
A Popular Destination for Bargain Hunters, Retirees
According to a separate Census Bureau report:
“Maricopa County, Arizona, remained the largest-gaining county in the nation, adding 56,831 residents in 2022, a gain of 1.3% since 2021. Domestic migration was the component of population change (i.e., births, deaths and migration), which made the largest contribution to Maricopa County’s growth.”
People relocate into the Phoenix area for a number of reasons:
- Cost of living: The cost of living in Phoenix is relatively low compared to other major cities in the United States. This is especially true for housing prices, which are significantly cheaper in Phoenix than in places like Los Angeles, San Francisco, or New York City.
- Weather: Central Arizona has a warm, sunny climate year-round. This is a major draw for people who are tired of suffering through frigid winters in other parts of the country.
- Job opportunities: The Phoenix area is home to a growing number of businesses and industries, with an unemployment rate that’s currently below the national average.
- Retirement: This metro area is a popular destination for retirees and has been for many decades. Retirees relocate there to enjoy the warm weather, relatively low cost of living, and abundance of activities and amenities.
This is partly why the local real estate market has experienced tight supply conditions over the years. It’s also one of the reasons why Phoenix housing market predictions suggest that prices will continue to rise for the foreseeable future of early 2025.
After all, those new residents need somewhere to live. Some of them will be long-term renters, while others will enter the housing market soon after relocating.
This population growth trend reduces supply, increases demand, and puts upward pressure on home values all across the Phoenix-area real estate market.
What to Know About Phoenix When Relocating
Here are some things you should know if you’re planning to move to and/or buy a home in the Phoenix area during 2024:
With a population of nearly 1.7 million people, Phoenix is currently the fifth most populous city in the United States. The broader metro area (also known as the Valley of the Sun or “The Valley” to locals), ranks as the tenth most populous U.S. metro with more than 5 million people.
The metro area encompasses several major cities and many smaller towns. The largest cities by population include the following:
- Phoenix: The capital of Arizona and the anchor of the metro area, Phoenix is by far the largest city with a population of approximately 1.6 million.
- Mesa: The largest suburb in the metro area, Mesa has a population of over 500,000.
- Chandler: A major technology hub in the region, Chandler boasts a population of close to 300,000.
- Gilbert: A rapidly growing suburb known for its family-friendly atmosphere, Gilbert has a population also nearing 300,000.
- Glendale: Home of State Farm Stadium (where the Super Bowl is held periodically), Glendale has a population of over 250,000.
For home buyers, the Phoenix-area housing market offers a broad mix of property types, ranging from downtown luxury condos to single-family suburban homes to desert ranches.
Phoenix is renowned for its sunny weather, experiencing more than 300 days of sunshine annually. Summers are hot and dry, with temperatures often exceeding 100°F and getting warmer all the time.
Winters, on the other hand, are typically mild and pleasant with temperatures ranging from the 40s to 70s°F. Because of this, a lot of retirees from colder climates relocate to the Phoenix area to escape the cold, which in turn increases competition within the housing market.
The desert climate of Phoenix might make it ideal for individuals seeking warm weather and outdoor activities throughout the year. But the summer peak temperatures can be brutal at times, even for longtime residents. Home buyers be warned.
Economy and Job Market
Phoenix has a diverse economy that isn’t reliant on a single industry. Major sectors driving growth include technology, healthcare, manufacturing, tourism, and construction. This diversity creates a more resilient job market and contributes to economic stability.
Major employers in the Phoenix area include Banner Health, Wells Fargo, Intel, American Express, and Arizona State University.
Many large corporations have chosen to relocate or expand in the Phoenix-Mesa area. Intel, Taiwan Semiconductor Manufacturing Company (TSMC), GoDaddy, and many others have local operations that contribute to the economy.
As of January 2024, the Phoenix-Mesa metro area had an unemployment rate of 3.4%, which was slightly better than the national average of 3.7%.
Disclaimer: This report includes Phoenix, Arizona housing market predictions for 2024 to 2025. Those predictions were offered by third parties not affiliated with the Home Buying Institute. HBI makes no claims or assertions about future real estate conditions in Phoenix or elsewhere.
Brandon Cornett is a veteran real estate market analyst, reporter, and creator of the Home Buying Institute. He has been covering the U.S. real estate market for more than 15 years. About the author