Opinion

Joffe: What’s driving today’s Phoenix real estate market: Everything

Posted 10/4/22

Location. Location. Location. It’s the real estate mantra that drives the industry and in Arizona it still proves to be the case. I’ve been in the residential market for nearly 40 years …

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Opinion

Joffe: What’s driving today’s Phoenix real estate market: Everything

Posted

Location. Location. Location. It’s the real estate mantra that drives the industry and in Arizona it still proves to be the case. I’ve been in the residential market for nearly 40 years — specializing in Arcadia, Paradise Valley, the Biltmore area and Scottsdale.

Right now, it’s an interesting market to be sure. Rising interest rates, mortgage hikes, inflation and a possible recession have altered the market and the behaviors of our residential buyers.

However, one thing remains true: Arizona continues to be a huge growth market and people want to live, work and raise a family here. It’s always been that way — good markets and bad — and remains so today.

While many folks and those choosing Arizona for their home come from all over the U.S. — the Midwest, the East Coast and California, I’ve been seeing an interesting trend. Many of the buyers of the luxury residential market are coming from the Pacific Northwest, especially Seattle.

They are seeking sunny skies, a stable economy and a safe place to raise their families.

Surely, there are challenges, especially in the luxury market. A recent report by real estate brokerage Redfin shows that in the three months ending Aug. 31, sales of luxury U.S. homes dropped 28%, from the same period last year. That marks the biggest decline since at least 2012, when Redfin’s records began, and eclipses even the 23% decrease recorded during the onslaught of the pandemic in 2020, the report said.

Still, Arizona remains resilient and continues to prove it is a solid market.

According to CoreLogic, homeowner equity, nationally, reached new heights over the past few years. In fact, U.S. homeowners gained more than $3.5 billion in equity over the past few years. This is impressive given rising mortgage rates and inflation overall.

While the National Association of Realtors reported sales of U.S. homes fell over the summer, the year-over-year increase has boosted national median prices.

Arizona, and specifically Greater Phoenix, remains a good value for those choosing to relocate and move into larger homes. As history has proven, and with my decades of experience, I believe this to remain true.

As areas close to downtown have become more expensive — simply an effect of supply and demand — regions outside the Valley like Gilbert, Pinal County and Western Maricopa County have seen huge gains in interest.

This is not only apparent in home sales, but in the economic wins our Valley continues to gain with semiconductor, industrial, data centers and other industries seeing huge opportunities in Greater Phoenix.

It goes back to the mantra: Location, Location, Location. And fortunately, we are located in a hugely desirable place that will remain so and ripe for opportunity.