Metro Phoenix’s median home price is on track to hit $460,000 in April, double what it was five years ago.
That jaw-dropping forecast based on pending sales is one more blow to homebuyers grappling to afford a house.
Many would-be buyers in the Phoenix area are also struggling to find a home for sale, as the number of listings fell to a record low for February, according to the Arizona Regional Multiple Listing Service.
The Valley’s median home price climbed to $435,000 in January from $427,000 in December. The price is on track to reach $440,000 in February and then keep climbing by another $20,000 in April.
“I would like to tell you home prices will level out soon, but this would merely be a fool’s errand,” said housing expert Tom Ruff of ARMLS’ Information Market group. “We are just now moving into our buying season, when prices historically rise at a faster rate and peak in June.”
Metro Phoenix home sales fell almost 23% in January from December, according to ARMLS.
The drop could be due to interest rates ticking up or rising prices knocking more buyers out of the market. Sales last month were down almost 4% from January 2021.
The drop in sales could also be due to the low supply of Valley houses for sale. Listings across the Valley are basically flat from December, and 8% below February 2021’s level.
It took only 37 days for a Phoenix-area house to sell last month. That’s nine days faster than in January a year ago.
The average interest rate for a 30-year mortgage is now 3.92%, according to Freddie Mac’s weekly survey. A year ago, the average was 2.81%
The change in rates during the past year adds about $250 to the payment on a $435,000 house on which a buyer puts 10% down.
Housing analysts say metro Phoenix home prices will stop climbing when too many people can’t afford them.
But the Valley is drawing many new residents from higher-priced areas who can pay the rapidly rising prices.
Ruff cites real estate firm Redfin’s latest report that shows Phoenix gained 85,000 new residents last year, more than any other U.S. city.
Many of the people moving to the Valley are coming from San Francisco, Los Angeles, Chicago and New York, where home prices are much higher. But a lot of new residents are selling homes in those cities for high prices and could be working remotely, making the higher wages from those areas.
Higher wages in metro Phoenix are needed for people to afford to buy a house.
But what is also needed is more houses for sale.
“New listing counts have been low over the past few weeks, and there is still no sign of the supply situation improving,” said housing expert Mike Orr with the Phoenix-based Cromford report. “Dramatic increases in supply is what is needed to correct the imbalance in the market."
He said now "demand would need to collapse to get back to balance with supply.”