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Phoenix, the capital of Arizona and the fifth largest city in the country, is well-known for its hot, dry climate and striking desert landscape. And while living amid all that sunshine and natural beauty isn’t necessarily cheap, it’s not as pricey as you might think: The median sale price for a home here was $403,000 in January 2023, according to data from Redfin. That’s only $44,000 higher than the national median price.
In addition, the city continues to attract new residents year after year — in fact, it’s been one of the fastest growing metropolitan areas in the country for several years running. And the cost of living in Phoenix is significantly lower than in the only four larger U.S. cities (New York, Los Angeles, Chicago and Houston), according to Bankrate’s cost of living calculator. Let’s take a closer look at the Phoenix housing market.
Phoenix, AZ housing market overview
Historically, Phoenix has been considered a fairly affordable place to buy a home, especially compared to neighboring markets in much pricier California. But like many other places across the country, the city’s real estate market was white-hot for the past few years, with demand and prices skyrocketing. More recently, however, it has begun to cool down. The median sale price of $403,000 may be higher than the national median, but it’s actually down more than 4 percent over January of last year, and the number of days a home stays on the market has increased sharply, from 32 to 70.
Phoenix housing trends and stats
- Home prices in Phoenix were down 4.6 percent in January 2023 compared to one year earlier, per Redfin. The median sale price in January was $403,000.
- At the same time, homes are sitting on the market longer — an average of 70 days. That’s more than double the average number of days on market from one year earlier.
- In addition, the average home in Phoenix sells for about 3 percent below its original list price. The sale-to-list ratio in Phoenix is 96.7 percent.
- Closing costs in Arizona were on average about 1.2 percent of a home’s list price as of 2021, according to data from ClosingCorp.
Should you buy or sell in the Phoenix housing market?
If you’re a home seller
This cooling real estate market is not ideal for Phoenix homeowners looking to sell. Sales have declined nearly 18 percent since January 2022, according to data from the U.S. Census Bureau. The same study also found that 25 percent more Phoenix sellers had to cut their prices this year than last year. Bidding wars and multiple offers on every single listing are a thing of the past, and sellers might need to offer concessions in order to close a deal in the current market.
By some accounts, the market is simply normalizing after the pandemic peak, shifting from what was entirely a seller’s market to one where both buyers and sellers have some bargaining power. It’s still possible to secure a good price for your home, but sellers should be sure they understand what their home is worth in the current market, and adjust their expectations accordingly.
If you’re a homebuyer
Phoenix homebuyers are in a good position right now. More than 40 percent of homes sold in January dropped their prices, per Redfin, and on average, homes sold for about 3 percent less than list price.
But even in a buyer’s market, it’s important to budget carefully for a home purchase and shop for a property that fits comfortably within your monthly income and expenses. Bankrate’s new-house calculator can help you figure out how much you can reasonably afford. And getting preapproved for a mortgage before you embark on a search can help guide the shopping process by identifying how high of a home loan you’ll be able to qualify for.
Phoenix housing market predictions
After experiencing several years of a booming real estate market, there is some concern about the Phoenix market’s rapid decline. A report from the investment banking firm Goldman Sachs recently identified Phoenix as one of four cities in the country that may be in line for a housing crash. However, many experts say the market is simply normalizing after a particularly hot period, much like other markets around the country are experiencing.
Find a Phoenix real estate agent
Amid such an uncertain market, tapping the expertise of a local real estate agent is critical whether you’re buying or selling. With home prices dropping, interest rates continuing to increase and a continued shortage of home inventory in many places, an agent who knows the market well can help you navigate the challenges.
One of the best ways to find a real estate agent is often through word of mouth: Ask friends or relatives who have had a good experience for a referral. You might also try searching for listings in your area online or reaching out to agents whose signs you see around your neighborhood.
Yes. According to Redfin data, as of January 2023, housing prices in Phoenix had declined 4.6 percent compared to a year earlier. The city’s median home price is $403,000.
Yes. According to Redfin data, as of January 2023, housing prices in the state of Arizona had declined 3.8 percent compared to a year earlier. The state’s median home price is $406,200.
Data released last spring by Moody’s Analytics identified Phoenix as one of Arizona’s three most overvalued markets. However, this assessment was partially driven by historically low interest rates, which is no longer the case. In fact, the Phoenix housing market has since begun to moderate and prices are coming back down.