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Are Phoenix Housing Prices Going to Go Down?

Wondering when will this crazy Phoenix market end? How are things looking? Or thinking "I'm just going to wait until prices start coming down before I buy something." Join Gene Patent from Clutch Properties to see the data behind the Phoenix housing market and what it means to you.





Hey guys, so I just wanted to really quickly, in the next couple of minutes, discuss the current state of the market and address some common questions that I'm getting right now, and of course, they're around:

  • When will this crazy market end?

  • How are things looking?

  • "I'm just going to wait until prices start coming down before I buy something."

I kind of want to put some data in front of you guys because you know, there's a lot of people out there that will just talk and they don't really put anything behind what they're saying.

I'm very much into data and analytics and there's a local company here that provides a lot of this information on the Phoenix real estate market, and I wanted to pull up some of these stats and show you guys what's going on.

Impact of Supply and Demand on Pricing

So one of the first things I want to show is really what's happening with supply. Anytime that prices are going up in a healthy market, it's a supply and demand issue.

So as you can see here, this is our active listing count. Starting back in September 2017 and going all the way until now, you can see that right now we're below 4800 active listings, which is the second-lowest it's ever been. The only time that has been lower was February of last year, and it's the lowest it's ever been in January.

So January, normally we see a bigger bump in supply and we didn't see that really last year and we're seeing it even less this year. So supply continues to be extremely constrained. What does that translate to? What do those numbers mean?

So that means that today we have less than 17 days of inventory, which means that if new listings stopped coming on the market today, it would take a little bit over two weeks for everything that's currently on the market to be sold.


That's insane. Normal levels are about 2-3 months of supply.

So we are way, way below normal levels of supply. That of course, you know, translates into increasing prices. You can see this going all the way back to 2000. You know, we had our kind of run-up prior to the crash, I'll address that in a minute.

And then it's been steady on the rise since then and then in 2020 we saw this crazy appreciation as you guys know, we saw over 30% appreciation in many areas from 2020 to 2021 and really we're on the same trend this year.

It might not be as much as last year, but just in January, we saw 2 to 2. 5% in one-month price inflation. So nobody has a crystal ball, nobody can confidently tell you for 100% what's going to happen. But I'm a data guy and based on the data and I agree with what Cromford Associates are reporting, we're going to see another minimum 15-20% in price appreciation this year.


I want to address foreclosures because this is something that comes up all the time. People are like, "well, you know, people are gonna can't pay their bills anymore. They're gonna foreclose." Well, that may have been the case when property values were plummeting because there was no equity, but now everyone has equity. 

So even if they need to sell, they can, even if they can't pay their bills and they need to sell, they can do it and walk away with a profit. But even that isn't really significant because if you look at the levels of foreclosure notices right now, we're at historic lows like prior to the crash, we were sitting at about 1000 you know, 800 notices of trustee sales per month.

Of course, you know that this was the crash year and then post-crash, we were at 500 to 600. Those are normal.

We're less than 100 right now, 27 so far in February, and 200 in January.

Even if those were to quadruple, that would only bring us to normal levels and we are at such low inventory, even if those homes were to foreclose, which they're not because people can just sell them. That would still do nothing because all that would do is introduce a little bit more inventory to an already overheated market and you know, it wouldn't really have an impact on prices.

Is this a Housing Bubble?

Now to address what happened in 2007/2008 because this comes up all the time. Are we in another bubble? I addressed this last year during a webinar that I did on this, nothing much has changed from an economic perspective since last year. But let me just review it really quickly.

So if we look at what was happening, prior to the crash, you saw the blue line is supply and the red line is demand. And what we saw in 2005/2006, was an inversion of supply and demand. So supply was actually much higher than demand, yet prices were still going up. This is a major red flag, this is a flag that people are paying more purely out of speculative reasons.

And that didn't make sense. But people were kind of going crazy and people kept buying and buying and buying, of course, you know lenders were issuing loans to everybody whether they're qualified or not. So people were getting mortgages, they couldn't afford, and that ultimately caused the crash and the subsequent decrease in prices. Since then the industry has normalized.

We're actually under-building for the population that we have so new builds aren't helping the supply issue. Lenders are very stringent right now with their underwriting standards so they're not giving away loans like they were before. And as you can see in the current situation, the supply and demand dynamics are correct for increasing prices.

So you have demand higher than supply. When demand is higher than supply, you're going to have increasing prices. It's basic economics guys.

Risk of Waiting to Buy a Home

And if you're looking to buy a home and you're waiting for those prices to go down, you're gonna be waiting for a long, long time years, maybe longer.

And then they're going to come down over levels of future value, not present value. So if you're waiting for prices to come down below today's level, they may never do that. And you guys are gonna get priced out.

Client Example of Being Priced Out

I'll give you an example of something that happened with a client of mine last year. This client was looking at a specific type of home with a specific type of budget, it was very competitive, we lost a few offers and this person then decided they're gonna wait.

And so we waited and a few months later, those homes are now 10% more expensive than they were when we were looking. And my client was effectively priced out of the type of home that he wanted. So now the decision becomes, does he just not buy anything or does he adjust his expectations and/or adjust his budget?

So if you want to avoid that happening to you um you know, I would suggest you guys do something now because what does another 15 to 20% on a home versus today's price mean to you? Put that in your calculator and think about it.

Advice on buying

I can tell you guys that it's better to [purchase], especially if you're renting. Take that money that you're paying down somebody else's mortgage with and invest in something.

Buy a property.

Maybe it's not the best property that you would want. If the market were suddenly to take a dive. Because it's not gonna.

Get something now and then you can at least ride the appreciation wave over the coming year and potentially sell in the future, make that profit and reinvest it into something that you like better.

In Conclusion

So you know like like in any market, you know you have to make sure you consider your information and get your facts. I put up a lot of facts in front of you guys so do it that way you will. But I'm available for questions. Feel free to give me a call at 480-371-0888. I almost always answer my phone or shoot me an email at