When it comes to the Arizona real estate market conditions, it’s important to remember a few truths: Everything, from demand, to interest rates, to supply, has its own season. Arizona is its own unique market. And, forecasts for Phoenix real estate done by anyone outside of the market should be labeled more as conjecture rather than fact.
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There is no truer analysis of Arizona’s real estate market than what is being seen and felt here, on the ground, in transactions involving homebuyers, sellers and real estate professionals. It is in those deal-making conversations and actions where the true reality of Arizona’s real estate market lies.
Which means, national reports that attempt to analyze the health of the Phoenix metro market from afar — such as the one recently published by financial services company Goldman Sachs — can be completely short-sighted and sometimes entirely wrong. Perhaps most importantly, that erroneous analysis has the ability to negatively impact the mood and moves of Phoenix buyers and sellers if it goes unchecked.
And since we have seen the ripple effect of the recent Goldman Sachs analysis on the decisions being made by buyers and sellers locally, we felt it was time to pull apart some of the statements that were made and lend data and on-the-ground experience to the picture.
For starters, the Goldman Sachs report suggested that Phoenix is among four markets across the country that will experience catastrophic dips, like the ones experienced in the 2008 crash — a crisis in which Goldman Sachs influenced and helped to create. Back then, as now, they are disconnected from the truth on the ground. Put simply, this type of prediction for the Phoenix market borders on “clickbait,” and fails to have a basis in the reality we are experiencing in the local marketplace. Not only is the report light on reliable data, it is completely disconnected from what local analysts, real estate professionals, as well as finance professionals are seeing in their day-to-day work. Simply looking at the real data can help to stop the spin of the report.
At Halpern Residential, in addition to relying on our earned experience as real estate practitioners in the Phoenix market, we pull insights from the Cromford Report. Prepared by mathematicians who analyze and report data and who are disinterested and uninfluenced by outcomes, the Cromford Report is considered the local gold standard of data-driven real estate market analysis.
In response to the Goldman Sachs report, the Cromford Report was essentially apoplectic, noting that the report was full of “irresponsible” predictions, “weird and unlikely” forecasts and “far-fetched” ideas that “bear little comparison to the real world.” Oddly, the predictions included in the Goldman Sachs report contradict the data it actually cited.
While Goldman Sachs predicts catastrophe for Phoenix, the reality is the market is actually headed in a different direction, according to the Cromford Report data. Of the 17 largest cities in the Phoenix markets, four are buyers’ markets, three are balanced and 10 are considered sellers’ markets. Furthermore, during the Great Recession, Phoenix area housing lost nearly 60% of its value. According to the Cromford report, from May of 2022 to December of 2022, we saw a 13% dip in pricing with prices stabilizing in the new year. The disparity between Goldman’s alarmism and the truism of the data should call into question the veracity of their report.