PHOENIX – Housing has become a contentious issue in the Valley, with buyers and renters of all ages getting left behind as affordable options dried up.
How did the metro Phoenix housing market get to where it stands today?
Experts trace the current conditions back to the COVID-19 pandemic, which ended up exacerbating income inequality.
When mortgage rates fell to 3% or lower in late 2020/early 2021, there was a buying frenzy, according to Tina Tamboer of the Cromford Report, which tracks the state of the Greater Phoenix residential real estate market.
“It’s as if the market had been pinched like a hose and all that pressure built up,” Tamboer said. “And then when things reopened, we just saw the demand explode.”
How home-flipping companies roiled the Phoenix housing market
Large-scale buyers jumped into the fray, making matters worse for families looking for new homes of their own. Flipping companies like Zillow, Offerpad and Opendoor started buying up homes for cheap, fixing them up and quickly selling them for a profit, driving up prices.
“The low mortgage rates, while they were great, they didn’t do a whole lot for buyers because they were getting outbid by these large firms,” Tamboer said.
The buying frenzy led to inflated housing prices, which Tamboer said peaked in June of 2022 before the market began to stabilize.
Fast forward to today, and the housing supply is about normal for the Phoenix market. However, demand is about 20% lower than normal, in part to do relatively high interest rates.
In addition, Tamboer explained that insurance and homeowners association dues have become more expensive, helping price many first-time homebuyers out of the market.
Mo’ money, fewer problems
None of the above has been an issue for wealthy buyers, however. Tamboer said that while demand for homes under $500,000 has been suppressed, the market for the Valley’s priciest homes is thriving.
“We have growth in the luxury market, specifically over $1 million. We are seeing double-digit growth in those sales,” Tamboer said.
The shifting conditions pushed the average age of a first-time homebuyer in Arizona to an all-time high of 38 years old, according to the National Association of Realtors.
The median home price in Phoenix now sits at about $485,000, blocking out younger and less wealthy buyers.
Seniors squeezed hard by Phoenix housing market forces
It’s not only home shoppers who are struggling to find affordable options in the Valley, as the forces that drove up the price of houses did the same for rents.
Amy St. Peter, community initiatives director with the Maricopa Association of Governments, said the lack of affordable apartments has resulted in an increase in senior homelessness.
“We’re seeing older adults experiencing homelessness at a far greater rate here in Maricopa County than we see elsewhere in the country,” St. Peter said. “And that’s a trend that’s been going on for a long time.”
St. Peter said affordable housing used to make up a majority of the Phoenix market and is now practically nonexistent.
While the market has stabilized some, affordability remains an issue.
“We’ve lost 86% of our rents under $1,000 a month. We’ve lost 75% of our home sales under $300,000,” St. Peter said, citing the changes between 2011 and 2024.
She added that the urgency of the situation is critical because the National Alliance on Homelessness has predicted the number of unhoused seniors will triple by 2030.
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