Last year was anything but normal — especially in Arizona’s residential real estate market. Median sale prices rose in Phoenix from $325,000 in January 2021 to $404,300 by October, a 24.4% increase, according to real estate website Redfin. Houses listed for sale saw fierce bidding wars with buyers willing to contort themselves to meet sellers’ demands, which include such concessions as renting the home back to the sellers for a period while they found a new house to purchase. Can this continue, or is there a potential housing market crash on the way in 2022?
Efforts to boost the housing supply through new construction also faltered as the industry experienced acute shortages. Steven Hensley, senior manager at Zonda, a housing market analysis platform, notes that the strained supply chain created material constraints that caused major sticker shock for would-be buyers of new homes.
“In terms of annual appreciation for homes, 30% is an outrageous number. Imagine the price of anything going up by 30% in one year,” Hensley says.
As with any product, housing follows the law of supply and demand. When demand is high and supply is low, prices rise in response. The Valley continues to be an attractive option for businesses and individuals, with the U.S. Census Bureau reporting that the City of Phoenix added 163,000 residents over the last decade — all of whom need a place to live.
