By Mike Bodeen · 27 December 2021
Forecasting the future for the Phoenix Metro residential real estate market is a piece of cake! It’s the accuracy part of it that’s dicey. I like Casey Stengel’s quote: “Never make predictions, especially about the future.”
Realtor.com just came out with their top 100 metro real estate picks for 2022 for the number of sales and price appreciation. Phoenix came in at #19 while Tucson was at #21. Phoenix, they say, will have a 7.5% increase in sales and a 6.8% increase in prices. If these numbers were so, they would be quite welcome. Nationally, Realtor.com is expecting a 2.9% increase for 2022.
https://www.realtor.com/research/top-housing-markets-2022/
On the lower end of future price predictions, the Business Journal quotes Redfin Corp that nationally homes will increase around 3%, though larger in “the Sunbelt” areas.
https://www.bizjournals.com/bizjournals/news/2021/12/01/real-estate-economists-housing-market.html
The purported gold standard S&P CoreLogic Case-Shiller National Home Price Index reported last month that home prices rose 19.5% nationally, year over year (YOY), while at the same time, Phoenix sprouted 33.1% YOY. That will not happen in 2022. I think.
https://www.prnewswire.com/news-releases/sp-corelogic-case-shiller-index-reports-19-5-annual-home-price-gain-in-september-301434240.html
On the higher end of prognosticating, Zillow is predicting a 13.6% home value increase. Of course, that’s probably a lot of wishful thinking considering they just closed down their homebuying unit after losing $420 Million in just the 3rd quarter of this year with 7000 unsold homes in their inventory.
https://www.nytimes.com/live/2021/11/02/business/news-business-stock-market
And on and on and on…
Mike’s Take!
For what it’s worth, and that ain’t much, my price appreciation take is actually higher than Zillow’s and Realtor.com’s – around 15% or more for Phoenix. And that might be conservative. This assumes no major national or global issues, like more super-spreader covid related illnesses, in which case I might have to adjust that number higher😉. It also assumes mortgage rates no higher than 4%.
Increases will start out high, which is really a continuation from the present. The unknown key are the 3rd party buyers (iBuyers and Corporate residential real estate gobblers). I think these cash buyers continue through the 2nd quarter unabated. They are the real fly in our ointment. I just don’t see these corporates slowing down anytime soon.
Rents will continue to increase, but not as much as 2021, which were nearly 20%. There is a lot of multi-family rental units under construction and permitted, but affordable single family detached are more scarce.
Beyond 2022, 2023 will be the big change year—unless of course I’m wrong☹.
Snapshot readers, have a wonderfully blessed, prosperous and healthy new year! I leave you with an awesome bible verse from the prophet Jeremiah, found in Lamentations 3:22-23: “The steadfast love of the Lord never ceases; his mercies never come to an end; they are NEW every morning; great is your faithfulness.”