What 2024 holds for metro Phoenix real estate
The Valley will see moderate home price increases in 2024 and more young people turning to single-family home rentals, real estate experts predict.
Why it matters: Last year, the real estate market saw the lowest number of home sales since 2008 as high interest rates left few options for would-be buyers and priced many middle-income families out of the market altogether.
Zoom in: Zillow senior economist Nicole Bachaud predicts that home prices may decrease marginally during the first half of the year as consumers come to terms with interest rates that are unlikely to drop to the historic lows we saw during the pandemic.
- Over the summer, more buyers and sellers will return to the market and we'll finish the year with prices slightly higher than what we're seeing now, she predicts.
The other side: Phoenix Realtors immediate past president Butch Leiber tells us he expects a bit of a "feeding frenzy" to start the year as interest rates have already dropped about 1% since October.
- He believes buyers will return to the market before sellers — who are still reluctant to let go of their 4% or lower rates — which will create a supply and demand problem that could raise prices.
What they're saying: "As long as we keep having positive population growth— unless something dramatic happens — there's no reason for prices to drop," Leiber said.
The intrigue: Bachaud tells us Zillow is predicting single-family rental homes will become the new starter homes across the country — and Phoenix is likely to lead this trend.
- Single-family home rent prices are up 43% in Phoenix since before the pandemic, but they're typically more affordable than a mortgage with a steep interest rate on a condo or small home.
What we're watching: More build-to-rent communities are likely to pop up to accommodate this growing market.
- Arizona led the nation in built-to-rent home construction this year, with the vast majority of planned units popping up in the Valley.
- There were 2,011 built-to-rent homes planned or under construction per million residents statewide as of May, the National Rental Home Council counts. Nationwide, the average was 345.
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