From significant gains to an anticipated moderation, a lot has happened in the residential real estate market over the course of 2022.
That’s according to a report based on the most recent ARMLS data released by Phoenix REALTORS outlining the state of the market and where it is expected to go in 2023, according to a press release.
“When we look at where we started—mortgage rates near all-time lows, fierce competition among buyers, homes selling seemingly faster than it takes to put a sign in the ground—it’s fair to say the tides have definitely turned, but it may that it is not so just as horrible as people think,” said Butch Leiber, recently appointed president of Phoenix REALTORS.
According to the statement, the report examined an area that includes Maricopa County and other surrounding communities in Arizona, showing that conditions of pent-up demand and a short supply of homes resulted in skyrocketing sales prices. But as mortgage rates began to rise, there was a drop in home affordability not seen in decades.
Compared to 2021, home prices increased 15% to $460,000 in 2022, single-family home prices increased 14.3%, and townhome/condo prices increased 19.6%. But pending sales were down 27% to about 76,500 in 2022, and closed sales were down 23% to about 81,000.
When considering sales price, the number of homes sold in the $500,000+ price range increased 5.5% to approximately 34,000 units. For comparison, homes priced in the $299,000 or less range were down 60% to about 8,600 units.
“While there were fluctuations across the board, one area where we did see consistency was the amount of the list price sellers received,” Leiber said in the statement. “On average, 100% of the asking price was delivered at the time of sale, representing a year-over-year decrease of just 1.3%. This still indicates a fairly strong market despite the fluctuation. Of course, if the demand is reduced in 2023, the list price received at the sale could also fall.
In terms of year-over-year inventory, the number of homes available for sale increased 134.9% from 2021 to 22. There were about 17,000 active listings at the end of 2022 compared to 7,258 listings at the end of 2021. However , new listings fell 4.9% to end the year at 109,915.
“After two years of unprecedented growth, pricing and overall activity, the market ended the year much cooler than it began,” Leiber said in the statement. “But that’s not to say that the trends we’re seeing at the national level will have the same resounding impact at the local level.”
As for what the future may hold for this year, economic headwinds, including inflation, mortgage interest rates, and the general state of the economy, will determine the state of the residential real estate market in 2023.
“Home sales may decline, price growth will moderate, and inventory will remain tight. But given Phoenix’s comfortable position as a market that continues to experience significant economic growth, it is anticipated that the larger price declines and tensions seen nationally may not have as significant an impact locally.
“However, despite some of the hurdles we are seeing, sellers and buyers are resilient. To help offset rising costs, some buyers have moved from larger, more expensive cities to smaller, more affordable areas. Others turned to the rental market, where competition and rental prices increased,” Leiber said in the statement.