The Greater Phoenix housing market bounced out of a buyer’s market into balance at the beginning of the year, but a steady increase in supply is positioned to give buyers the upper hand. With mortgage rates remaining over 7%, demand index has been remarkably stable, but the story as we enter the high season is all about inventory. According to the latest figures from Cromford/ARMLS, active listings (at 23,000+) are up about 40% versus this same time in 2024. As spring unfolds, would-be sellers will want to keep an eye on competition, price cuts and days on market.
At the end of January, the Federal Reserve maintained their target range for the federal funds rate at 4.25 to 4.5 percent, but few are expecting any changes to their policy or mortgage rates when they meet again March 18-19. If no significant changes are revealed in their updated economic reports on labor and PCE inflation, then expect home prices to remain flat and stable.
The California Factor
The eyes of the country have been focused on Southern California for the past few weeks, with devastating wildfires wreaking havoc across the region. Behind the stark imagery of the disaster—tens of thousands of acres burned—are the individual tales of homes and livelihoods lost in the blink of an eye. It is a story that is anticipated to take years to unwind, between government bureaucracy, insurance issues, environmental cleanup concerns, and reconstruction of thousands of homes and neighborhoods.
Will the fires drive natural-disaster-weary Californians to Arizona and elsewhere? It is too early to know the ultimate trajectory, but several news outlets have commented on the possible implications for the Valley and the Grand Canyon State as a whole, including:
- In “LA fires likely mean wave of renters and homebuyers headed to metro Phoenix,” AZ Central noted an uptick in requests from Los Angeles-area residents looking for Valley rentals and that high costs and long rebuilding timelines could make Greater Phoenix an appealing option.
- ABC 15’s coverage, “Could Southern California wildfires impact Arizona housing market competition?” had a more mixed opinion, with some experts anticipating a migration surge while others had yet to observe a significant change. Mark Stapp, Director of ASU’s Center for Real Estate Theory and Practice is among those who believe the fires could drive relocations, saying “It’s just going to increase competition for a scarce resource.”
- Arizona could also have an impact on how Southern California rebuilds. In “AZ businesses that offer alternate building materials getting lots of calls,” MSN reported that several Phoenix- and Tucson-based providers of fire-resistant foam, concrete, and metal have seen an uptick in interest.
