5 years later: How the pandemic "supercharged" the housing market
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The pandemic's lasting impact on Phoenix is perhaps most evident in our elevated home prices.
The big picture: Phoenix's market was already climbing before 2020, but when employees were given remote work options, many fled the coasts for the relative affordability of the Valley. Demand outpaced supply and prices surged.
- "The pandemic just supercharged everything," Zillow senior economist Kara Ng told us.
By the numbers: Home prices are up about 53% in Phoenix and 56% statewide since February 2020, per Zillow data.
- Nationally, prices increased 45% in the same five-year stretch. That's more than a decade's worth of typical growth, according to the real estate company.
Catch up quick: Phoenix home prices peaked in summer 2022.
- That fall, mortgage rates climbed after sitting at historic lows for much of the pandemic. The increase sidelined many homebuyers, especially first-timers, and the decreased demand brought down prices slightly.
- Yes, but: Those who scored ultra-low mortgage rates during the pandemic grew hesitant to sell, locking up supply and preventing home prices from falling significantly.
1 bright spot: Phoenix was one of the nation's leaders in issuing single-family home permits in the past five years, behind only Houston and Dallas, according to Zillow.
- This helped cap price growth and bodes well for the Valley's housing supply moving forward, Ng said.
What we're watching: Phoenix home prices are about 10% lower than at their 2022 peak, and Zillow is forecasting only a modest 1% value increase this year.
- This could help more young buyers break into the market this year, especially if interest rates cool, but "affordability will remain a challenge," Ng said.
1 stunning stat to go: The average $1 million listing in Phoenix is for homes just under 3,000 square feet — more than 600 square feet smaller than homes listed for $1 million before the pandemic.