Phoenix & Prescott Real Estate 2022

A look at how the real-estate bubble bust is affecting two hot markets in Arizona.

Yes, the Phoenix and Prescott Arizona markets we’re two of the hottest markets for residential real estate appreciation for the past few years.

Phoenix & Prescott Real Estate 2022

When I first started writing about the irrational exuberance in the housing market, quite a few homeowners in both of these areas commented how far off base my opinions were.  Well, a few months later and a couple of Federal Reserve interest rate hikes,  have made the 180 degree turn in the 2022 housing market not only undeniable in these two markets, but also in many markets throughout the West.

I produced a few graphs today that clearly show how the residential real estate market has done an about-face in both Phoenix and Prescott Arizona. When looking at these graphs keep in mind these are facts, the interpretation of them, well that’s my professional opinion.

Yes, although my California real estate broker’s license is still active, I’m retired, and  not taking on any new clients. So, unlike opinions by others active in the real estate industry,  I’m not looking to influence anyone to sell or purchase a property.  I’ve been in the residential real estate industry for over three decades,  and have seen pullbacks, downturns and busts before.  Our current housing bubble bust has its own set of unique factors driving this downturn.

I believe the number one factor in creating our current dilemma  was what, can only be called irrational exuberance in the housing market for the last 2 years.  This irrational exuberance combined with artificially low interest rates, created a frenzy the likes of which I’ve never seen before.  Now, add to this, some factors, none of us has seen before  like the highest inflation rates in 40 years,  and the government stepping in with a heavy hand to prevent the free market from operating in a normal manner by mandating eviction moratorium, mortgage payment moratoriums and combined with restrictive lockdowns and unprecedented handouts.

I’m sure many still think that all these moratoriums have  expired or have been revoked.  Well, that’s not the case, at least in California. On January 25, 2022, the Los Angeles County Board of Supervisors voted to extend the COVID-19 Tenant Protections Resolution through December 31, 2022, unless repealed or further extended by the Board.  I believe there are other cities in California as well, that have extended eviction moratorium.  Although currently tenants affected by these moratoriums have to pay a small percentage of their original rent,  this amount usually well below the landlords cost to maintain the rental unit.  What’s really kind of laughable, well actually very sad, is the fact that when these moratoriums were put into place and then again upon extension, it’s always emphasized that the tenant owes the full rent once the moratorium finally  ends. Yes, do you really believe that tenants who owe tens of thousands of dollars in past rent are ever going to pay?

Okay, let’s jump back to the current state of the residential real estate market in Prescott Valley and Phoenix Arizona. I’ve generated three graphs for each one of these locations.  These graphs look at today’s current situation versus the  housing market last year.  What we’re looking at here is the  number of weeks supply, number of active listings, and lastly, number of listing price reductions.  When looking at these graphs keep in mind we’re just coming out of the seasonally, hottest time for real estate activity.  Yes, I feel as we enter fall and winter the  the decline in housing values will only escalate.

• Data provided by Redfin, a national real estate brokerage.

PRESCOTT VALLEY

Homeowners should understand, that just because you don’t have to sell at any time in the near future, you’re going to escape this downturn. Just like many didn’t sell their homes as prices escalated, yet their homes became worth more because of demand. In today’s market, the same is true,  now lower sold prices turn into depreciation for existing homes.

Always keep in mind, that purchasing or selling a home is a major lifestyle decision, and as such, should not be rushed into. So, by all means, if you’re considering purchasing or selling real estate in today’s market, do your own homework and draw your own conclusions! But, also consult with your legal & financial advisors prior to making your moves.

My opinions here are just that, opinions!  The fact that I’ve been in the residential real estate market for over three decades, does not mean that my opinions are going to be any more accurate then your mother-in-law’s opinion, though I sure hope they are!

Phoenix & Prescott Real Estate 2022

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