The increase in employment opportunities and the healthy economy has been keeping the housing market of Phoenix, Arizona, strong for years. However, the question is, can we expect the same to continue in 2021? The result will tell you whether Phoenix is a buyer or a sellers market in 2021.
2021 housing market predictions
Many people have been chattering
about when the next housing market crash will start, and it makes sense for the participants of real estate to look for the years predictions. To figure out what to expect in the Arizona housing market, it is essential to look at the real estate trends over time.
• Pressure on home prices to go higher
Whether you are a buyer or an investor in real estate, the affordability of the property is one thing that must be lingering in your mind. The question of what prices the Arizona housing market has in store for the buyers and the investors is critical. According to a forecast by Zillow, Arizona looks for a seller’s market all over the state with medium homes at the market going for $254,600. This has increased by 5.3$ since last year, giving us a clue that the market will be more of a seller’s oriented than it is a buyer’s market. Property prices will increase as the year progresses, making this market seller-friendly. Of course, different cities will have differences in the price increase. Phoenix, which is our point of interest, is currently among the hottest markets in the Arizona state. However, in 2021, the city is expected to increase its property prices by 0.9%. In the last month, the city had sold an average of $265,000, which is 6% higher compared to the previous year.
• Strong property investment performance
Real estate investors go on searching for relevant information that will guide them and give them a clue on what to expect concerning home prices. Before going to invest, you need to collect and analyze data about rental properties all over the state. Some of the state’s forecast on this include;
• The median price of the property will be $417,713
• Prices per square foot will be $382
• Average days on the market will be 114
Moreover, to confirm that the market will be a seller market and not a buyer market, in 2021, most people will find it affordable to rent a home instead of buying. In this case, the rental property investors will have good news to sell their properties to people.
The following are the rental return rates in the state of Arizona;
i. Traditional cash on cash returns goes for 14%
ii. Airbnb occupancy rate is 55%
iii. Monthly Airbnb rental income is $2,452
iv. Monthly traditional rental income at $1,577
• The economy will continue to thrive
The country over the years have experienced economic expansion, and experts are warning for a possibility in recession. However, it shall be noted that the recession is not equal to a housing crisis but only means that the economy is slowing down. Nevertheless, whether there is a recession or not, experts project that the Arizona housing market will remain secure, and the home value will increase in 2021. This is good for real estate investors as their property can give them a lot of money, with the house prices going high.
The Phoenix market outlook in 2021
In Phoenix the case is the same, and the predictions say that the housing prices will continue to rise through 2021. Many factors determine the increase in house value. Still, two of them are dominant, which is the increase in population and the limited supply in the real estate inventory. Due to these two factors, the home values are bound to increase hence a positive prediction on the Phoenix real estate market through 2021.
• Population growth over the past decade
Arizona was among the first three states to have a high population in 2018 and 2019. The growth was increasing in Phoenix city more than it was in other cities. According to the census report from the government, in a span of 10 years that is from 2010 to 2019, the Phoenix population had grown by 15%. This was higher than even the nation’s population growth within the stipulated period. As the population increases, so does the demand for houses in Phoenix for both purchase and rental houses. The population growth seems to be steady, and this, therefore, means that there will be pressure on the prices of homes. This will see 2021 with increase home value, which is a good thing for the real estate investors.
• Low inventory
The steady population growth comes when the home prices are still low. Phoenix homes listed for sale are currently falling short of buyer demands, and this imbalance in the supply and demand is what keeps the prices high. According to a broker named Redfin, during 2019, Phoenix had a two month supply of homes for sale, which was below the average government time of three months. As a result, fewer people would have purchased their dream homes with a significant number forced to look for houses in 2021. The increase in the demand, while there are only a few houses available, will force the sellers to hike the prices to meet the needs of the people.
A buyer or a seller’s market?
To sum up, Phoenix was and is still a seller’s market even in 2021. The demand and the supply picture above explain why the Phoenix market will always remain to be a seller’s market. For many years before, specifically from 2015 to 2018, the market was essentially a seller’s market. The city built its stronghold on the population, which was attracted at the time when the houses were so cheap. Many people relocated to the place, and this has never stopped. Reports show that the population continues to grow every year, and this means that the demand for a house will be high. This is always good news for investors who will raise prices and sell as many properties as possible.