As a real estate expert, I have been closely monitoring the housing market in Arizona and I can confidently say that there is evidence of a downward trend in home prices. While there are still some areas that are experiencing price increases, the overall trend is showing a cooling off period. In February, Arizona home prices rose by 3.5% compared to the previous year. However, this increase is not as significant as it has been in the past. In addition, the number of homes sold only increased by 1.1%, which is a much smaller increase compared to previous years.
And perhaps the most telling sign of a cooling market is the 24.2% increase in the number of homes for sale. So why are Arizona home prices dropping? There are a few factors at play here.
The Impact of COVID-19
One major factor that has contributed to the decline in home prices is the ongoing COVID-19 pandemic. The uncertainty and economic instability caused by the pandemic have made potential buyers more cautious about making large investments such as buying a home. This has led to a decrease in demand for homes, which in turn has caused prices to drop. In addition, many people have lost their jobs or have had their income reduced due to the pandemic, making it difficult for them to afford a home. This has also contributed to the decrease in demand and ultimately, the drop in home prices.Increased Inventory
Another factor that has played a role in the decline of Arizona home prices is the increase in inventory.As mentioned earlier, there has been a 24.2% increase in the number of homes for sale. This means that there are more options available for buyers, giving them more bargaining power and potentially leading to lower prices. This increase in inventory can be attributed to a few different factors. First, the pandemic has caused many people to reevaluate their living situations and some have decided to sell their homes. Additionally, there has been an increase in new construction, adding more homes to the market.
Location Matters
While the overall trend in Arizona is showing a decline in home prices, it's important to note that this varies by location.Some areas are still experiencing price increases, while others are seeing more significant drops. For example, the Phoenix metro area has seen a 9.2% increase in home prices compared to last year. This is due to the high demand for homes in this area and the limited inventory available. On the other hand, areas such as Flagstaff and Tucson have seen a decrease in home prices.
The Future of Arizona Home Prices
So what can we expect for the future of Arizona home prices? While it's difficult to predict with certainty, it's likely that we will continue to see a cooling off period for the next few months. The impact of COVID-19 is still being felt and it will take some time for the housing market to fully recover. However, as the economy begins to stabilize and people start returning to work, we may see an increase in demand for homes and a subsequent increase in prices.Additionally, with interest rates remaining low, this could also help boost the housing market.
