The Market is Crashing!?

Written by: Preston Richardson Date: 3/21/2023

The real estate market is an ever-changing landscape, and it's natural to be concerned about the possibility of a market crash. In recent years, the Arizona real estate market has been thriving (maybe a little too much), with steady growth and an increase in home sales. However, with increasing interest rates, the Russo-Ukrainian War, inflation, etc. it's natural to wonder what the future holds for the Arizona real estate market.

First, let's take a closer look at the current state of the Arizona real estate market. 

In May 2022, the median sale price of a home in Maricopa county was $480,000. In March 2023, the median sale price of a home in Maricopa county is $422,000. However, Homeowners who have owned their homes for ~2 years can expect a profit from selling their home of ~18%, ~4 years can expect a profit from selling their home of ~60%, ~6 years can expect a profit from selling their home of ~86%. That sounds pretty strong if you ask me.

Despite this growth, many people are still worried about a potential market crash. While it's impossible to predict the future with certainty, there are a few reasons to believe that the Arizona real estate market is unlikely to crash anytime soon.

One reason for this is that Arizona has a relatively low inventory of homes for sale. This means that there is a high demand for homes, which helps to keep prices stable. Additionally, Arizona has a strong economy, which is supported by industries such as healthcare, technology, and aerospace. This means that people are continuing to move to Arizona in search of job opportunities, which further increases demand for homes.

Another reason why the Arizona real estate market is unlikely to crash is that the state has strict lending standards in place. This fact is SO often forgotten when considering the market crash of 2008. This means that borrowers must have good credit and a steady income to qualify for a loan. This helps to prevent the kind of risky lending practices that led to the housing market crash in 2008.

Of course, there are always potential risks and uncertainties in any market. For example, if there were to be a sudden economic downturn or a significant shift in population, this could impact the real estate market in Arizona. However, these risks are present in any market, and they are not unique to the Arizona real estate market.

So, what does all of this mean for homeowners and prospective buyers in Arizona? First and foremost, it's important to remember that the real estate market is always changing. While the current state of the market may appear shaky from the outside looking in, the leading metrics in Greater Phoenix do not support continued downward pressure on price to the same degree we had seen in the last half of 2022.. However, by keeping an eye on the market and staying informed about trends and developments, homeowners and buyers can make informed decisions about when to buy or sell a home.

“But Preston, everyone on Youtube and Tiktok told me the market is crashing!” Sorry, but the data just doesn’t support a market crash when reviewing sales data. While it's natural to be concerned about a potential market crash, there are several reasons to believe that the Arizona real estate market is unlikely to experience a significant downturn in the near future. With a low inventory of homes for sale, the least amount of new listings coming to market in 23 years, cash buyers who have retreated, and strict lending standards, the market is well-positioned to continue steady growth. Of course, there are always potential risks and uncertainties, but by staying informed and making informed decisions, homeowners and buyers can navigate the market with confidence.