Arizona housing forecast 2015 & beyond

We can’t see the future, but we can chart trends that portend what’s ahead.

major variables…

Interest rates – the big one. Everyone has been expecting rates to rise as the Feds slow the printing presses – printing money has been floating mortgage rates on a sea of cash, keeping interest rates ‘artificially’ low. Yet the latest rumors suggest rates will stay low until at least next summer.

Supply – new construction in Arizona is lagging. Well-respected local private economist Elliot Pollack blames much of the slow housing recovery in Arizona on the lack of rebound in construction saying we’ve only gained ‘about 8 percent of the construction jobs we lost – normally by this time we’d have gotten back about half…’

Demand – new construction may be lagging, but resale listings have kept pace with what has been lackluster demand. However, over the fourth quarter we’ve seen improvement. Local housing guru Mike Orr recently observed that the dollar volume in sales is now outpacing 2013 and ‘is currently outranking 6 of the last 10 years…only beaten by 2005, 2006 and 2012.’  (Cromford Report) See chart below:


More help on the way: The recent loosening of lending standards should help those younger, first-time ‘millennial’ buyers who would like to buy, but have delayed a home purchase, in part, because of stringent loan criteria.

At the other end of the buying spectrum it’s been a banner year in the luxury market sector, as high net worth folks diversify.

5-Year Forecast

forecasting by the smart guys…

Institutional buyers of mortgage-backed securities have sophisticated forecasting tools at their disposal for risk management e.g. ‘bank grade’ automated valuation models, or AVM’s.

Their best in class algorithms not only closely approximate individual property values, but also provide 5-year forecasting, based on a host of factors.

The price forecasts below be are based on models developed by Collateral Analytics (CA), a leading company in the risk management business. Forecasts are driven primarily by employment growth and home price affordability, which are the two most important factors in housing markets (Collateral Analytics).

Collateral Analytics (CA) AVM has consistently had the highest ranking for accuracy in the industry.

Russ Lyon Sotheby’s International Realty currently has an exclusive on the use of CA’s ‘bank grade’ tools tailored for the residential market in Arizona.

Below is an Arizona cross-sampling of CA’s 5-year forecast charts for select zip codes and cities within Core Based Statistical Areas (CBSA) – a geographic area defined by the U.S. Office of Management and Budget (OMB) based around an urban center of at least 10,000 people and adjacent areas that are socioeconomically tied to the urban center by commuting (Wikipedia).

By the way, we can generate these ‘bank grade’ AVM’s and 5-year CBSA-Zip Forecast charts for your property of interest anywhere in Arizona where MLS data has been integrated into Collateral Analytics database. Note some locations are still in process.

In the Forecast Charts below, the CBSA, city and respective zip code(s) are indicated along the top. Dates track along the bottom horizontal axis. In this 15-year look-back and 5-year look ahead, the median price trend is shown on the vertical axis.

Cutting to the chase: It’s plainly visible looking beyond the vertical dotted line (2015 through 2019) that projections across Arizona are for modest housing market appreciation over the next five years, staying shy of the 2006 / 2007 market peak in most areas, but forecasting new heights in some locations (see 85018 – Arcadia and 86005 – Flagstaff).



Paradise Valley:








Tucson & zip code 85718:


Again, for a ‘bank grade’ Interactive AVM valuation and 5-year forecast for your property, or a property you may be interested in contact your Russ Lyon Sotheby’s International Realty agent.