In a market like we’ve seen over the last year, it is difficult to predict what may happen in 2023 with the residential housing in Phoenix, AZ. Below, I have put together a list of some of the top leaders and real estate professionals, from managing brokers, mortgage lenders, developers and economists, so that you can read their thoughts and prognostications for the year that lies ahead of us. Enjoy!

Lawrence Yun, National Association of Realtors Chief Economist

I predict home prices will go up 1% next year. But it will vary by area, and some metros could see slight decreases. Our best resource for local forecasting is a “bank grade” program called Collateral Analytics. Its five-year forecast suggests more market softening we experienced in Q4 of 2022 to continue through Q1 of 2023 followed by a modest recovery and relative stability. Their forecast uses the CBSA, or Core Based Statistical Area (demographic and economic regional data) weighted heavily to affordability. Affordability is driven in no small part by interest rates, so mortgage rates are the big unknown variable.

Liz Brooks, Executive Vice President of Sales and Marketing, Belgravia Group

While higher interest rates and a fear of economic uncertainty will continue to produce significant market headwinds, there are still meaningful demand drivers and supply constraints that will lead to deal activity. Millennials have surpassed baby boomers as the nation’s largest living adult generation, and they are entering their prime spending years, getting married and starting families. As rental rates have climbed steadily for years, many millennials are now preparing to purchase homes. And, as even more existing homeowners stay put, unwilling to give up their ultra-low mortgage rates, there are fewer homes for sale; supply is likely to remain constrained for the foreseeable future.

Jeremy Collett, Executive Director of Capital Markets, Guaranteed Rate

We can forecast, but nothing is certain. The Mortgage Bankers Association (MBA) believes that housing prices will likely level off, but the higher-rate environment will mean that fewer homes will sell or refinance in 2023. By buying low in a cooled market, once prices heat up again, the steady build in home equity offers many advantages: dropping PMI (if applicable), taking out a HELOC to invest in home improvements or refinancing with more favorable terms. No matter what, I think we will see a return to seasonality, with a focus on home sales in spring and summer when people are more inclined to move.

Todd Menard, Chief Operating Officer, West USA Realty

I foresee 20,000-plus homes in active inventory (Greater Phoenix Metro), 2,200-plus new listings added to market each week, 4%-5% annual appreciation of existing single-family detached homes and 4.55-6.5% mortgage interest rates. I also anticipate Arizona’s population to increase similar to 2022 and possibly by about 10,000 more.  Arizona may be feeling a higher increase in goods since we have been one of the most affordable states for so many years. If prices increase similarly across the country, then the same should remain true. The same things have always attracted people to move here: weather, jobs (including construction trades/bio-tech professionals), affordability, recreation, entertainment, medical availability, etc. Last, neighborhoods that are within a reasonable drive (workforce housing) from business centers. North of Vistancia (NW Peoria) has 5,500 new homes currently under development. Loop 303 in Peoria, Surprise, Goodyear, Buckeye; along Superstition Freeway Gilbert/South Mesa. Casa Grande, as the electric vehicle plant, Speedway, and other major businesses begin hiring.

Monica Monson, Founder and CEO, The Noble Agency

I expect that the housing market will continue to normalize overall. Rates will continue to jump around and while inventory has grown in the broad market, it has remained relatively low in the luxury market. Two areas of the residential real estate market that may continue growth are the luxury segment and new construction. With low inventory in the luxury market and the lag in available new construction, both will continue to be desirable options for buyers relocating to the Valley or moving locally.

Danny Court, Senior Economist, Elliott D. Pollack & Company

I expect to see home price decline another 5% in 2023. The price decline from May – December. 2022 has already been a 10% decline for Greater Phoenix, so that would be roughly a 15% adjustment in total for this housing cycle before we see home prices start to rise again.

If you have any questions pertaining to the insights of the industry leaders above or want to learn more about your immediate market or neighborhood specifically, feel free to contact me at any time.