Phoenix home prices are dropping more than almost any city in the West

The Phoenix housing market is kind of a weird one. Compared to many other cities in the western United States, Phoenix’s home prices are a bargain. But those of us who live here have seen home prices shoot up and up and up over the past half-decade. “Affordable,” after all, is a relative term.

But Phoenix homes might finally be getting more affordable, at least relatively speaking. In November, a housing study found that nearly all Arizona homes lost value over the previous year. Now, a new study from the banking site GOBankingRates used Zillow data to show that downward trend might have some legs.

According to the study, home prices in Phoenix have dropped the second-most of any major city in the West. Year over year, Phoenix home prices have dropped 4%, just behind homes in Denver (4.2%). No other major Western city even reached a 3% decline in prices. Some cities — including San Francisco, Albuquerque and Salt Lake City — saw home prices rise, bucking a national trend.

Among cities that saw dips, Phoenix’s average home value was the lowest at $402,796.

So why don’t homes feel affordable here? For one, much of the new housing stock that has come online in Phoenix in the last decade-plus has been aimed at the wealthy, not the middle- and lower-class families currently squeezed by the market. Another reason is that, compared to several years ago, these houses are expensive as hell.

According to Zillow, the average home price in Phoenix was $233,820 eight years ago. Values skyrocketed during the pandemic, reaching a peak of $450,587 midway through 2022. The market has softened since, but it hasn’t really come back to earth.

So, while homes are comparatively easier to come by in Phoenix, they’re still out of reach for many. If you’re looking to buy a home, it’s better now than it was a year ago. But the home you buy won’t rapidly increase in value as it might have in the recent past.

According to an expert interviewed by GOBankingRates, if you’re in the market for a home, you should buy when it’s right for you — not when it’s right for the market.

“Trying to time the market rarely works out,” said real estate broker Cari McGee. “But they also need to know that things aren’t like they were a few years ago when home prices were going up quickly. Today, even with modest price gains, you probably won’t be able to resell your home in a year or two and make a profit like you could a few years ago.”