Forecasts and predictions for the Phoenix, Arizona real estate market in 2021 predict that home prices will continue to climb through this year and into next. And that’s no surprise when you examine price-related trends for the previous 12 months.
Tight supply and strong demand have made the Phoenix housing market highly competitive in 2021, while boosting home values at the same time.
Here is a current look at real estate market trends, predictions and forecasts for the Phoenix-Mesa-Scottsdale metropolitan area in 2021 through 2022.
Phoenix-Mesa-Scottsdale Housing Market Forecast 2021
Home prices across the metro area rose substantially during 2020, and forecasts for 2021 suggest we could see more of the same. One prediction for the Phoenix housing market indicated that home prices could rise by double digits this year, as they did last year. Other forecasters see more modest growth, but agree that house values in the area will likely continue to climb.
According to the real estate data company Zillow, the median home price for Phoenix, Arizona rose by a whopping 18.7% from February 2020 to February 2021. The median had climbed to around $311,000 as of March 2021.
The chart below shows the median home value for Phoenix going back ten years. It’s based on Zillow’s proprietary measurement. As you can see, it has been a steady upward climb in recent years.
Chart: Phoenix home prices over the past decade. | Source: Zillow.com.
The company’s research team also issued a positive forecast for the Phoenix real estate market in 2021, suggesting that prices will continue moving north at a steady pace.
Limited Inventory Has a Lot to Do with These Trends
Like many other metros across the country, the Phoenix-Mesa-Scottsdale metropolitan area has received bold housing market forecasts for 2021. Those predictions are largely driven by supply-and-demand imbalances.
In short, there are plenty of home buyers within the Phoenix housing market who are seeking properties, but not enough homes to go around. This is a common condition we are seeing in many real estate markets across the United States, as of early 2021. Inventory shortages were a contributing factor in 2020 as well.
In March of this year, researchers from Realtor.com published a housing market update that showed how the total number of property listings had changed over the past year. They offered statistics for the nation as a whole, as well as the 50 largest metro areas in the U.S.
According to that report, the total number of active real estate listings within the Phoenix-Mesa-Scottsdale metro area declined by -62% from February 2020 to February 2021.
That is a significant reduction in the total number of homes for sale. This is partly why we are seeing such bold forecasts for the Phoenix real estate market in 2021. A stark imbalance between supply and demand is forcing buyers to compete fiercely, while putting upward pressure on home values across the metro area.
Quick Home Sales, as You’d Expect
The March 2021 Realtor.com report mentioned above also showed that homes are currently selling faster in Phoenix than they were a year earlier.
As of February, properties listed for sale within the Phoenix-Mesa-Scottsdale metropolitan area spent a median of 27 days on the market. That was 20% lower than the median “DOM” from a year earlier, which means homes are selling more quickly in 2021 than they were during 2020. Buyers should be aware of these trend.
The Realtor.com report also showed that the median list price for the Phoenix area real estate market had risen +17% over the previous 12 months.
All of these indicators suggest a highly competitive real estate market with strong demand from home buyers. When you combine that with tight inventory conditions, it’s no wonder why the Phoenix real estate market has positive forecasts through 2021 and into 2022.
Economists: Phoenix Market Will ‘Outperform the Nation’
At the end of 2020, the housing research team at Zillow sent a survey to more than 100 economists and real estate analysts. Among other things, they wanted to know which housing markets were most likely to “outperform the national market by the largest margin.”
In other words, they asked the survey respondents to provide their own forecasts as to which metro areas might be the hottest housing markets in 2021.
Phoenix, Arizona came in at #2 in that particular survey.
Nearly 70% of the respondents said that they expect the Phoenix real estate market to outperform the nation by the largest margin in 2021, in terms of price growth. Rounding out the top five were Austin (#1), Nashville (#3), Tampa (#4) and Denver (#5).
According to the Zillow report that followed this survey:
“An overwhelming 84% of those surveyed said Austin values would out-perform the national average, compared to just 9% who believe it would fare worse. Phoenix came in second with 69%, followed by Nashville(67%), Tampa (60%), and Denver (56%).”
Major Population Growth Is Fueling Demand
Population growth is also influencing Phoenix real estate market predictions for 2021, because it brings more home buyers into the market thereby increasing competition.
The Phoenix-Mesa-Scottsdale metro area has experienced above-average population growth in recent years. In fact, a recent analysis from the team at Freddie Mac ranked it as the second-fastest growing city in the U.S. from 2017 to 2019.
According to Freddie Mac’s population study, the ten U.S. cities shown below experienced the largest “absolute growth in population” between 2017 and 2019:
Las Vegas, NV
According to the U.S. Census Bureau, the population of Phoenix rose by 16.2% from 2010 to 2019. That was more than double the national growth rate during that same nine-year period. Other cities within the metro area have experienced even greater growth. The population of Mesa, Arizona rose by nearly 18% from 2010 to 2019, while Scottsdale experienced an 18.7% increase.
Given all of these factors, it’s logical that Phoenix real estate market forecasts for 2021 would predict additional home-price gains this year and into 2022. The lopsided supply-and-demand situation across the metro area will most likely push prices north for the foreseeable future.
Summary of Key Points
We’ve covered a lot of information in this housing market forecast report for Phoenix, Arizona. Here are some of the key points you should take away from this:
Housing market predictions for Phoenix, Arizona predict that prices will continue to climb in 2021.
This market has “shrunk” over the past year, as far as the total number of active listings.
Meanwhile, the population of Phoenix continues to climb, bringing more buyers into the market.
An imbalance between supply and demand will bolster prices through 2021 and into 2022.
A group of economists ranked Phoenix as one of the hottest housing markets in 2021.