Forecast shows slower home value growth in metro Phoenix

After months of rises, one forecast shows metro Phoenix home values reaching only 3.6% growth over the next 12 months while COVID-19 is still with us.

Wall Street looks strong, but Zillow looked at “main street.”

“A lot of small businesses are still struggling, they actually cover a lot of the employment of Americans,” Zillow economist Jeff Tucker said.

He explained that “main street” workers typically have jobs in restaurants, hotels and the service industries that have suffered big losses since executive orders from governors — including Arizona Gov. Doug Ducey — closed them in order to stop the spread of the coronavirus.

Those jobs started a comeback last month, but, “If that starts to peter out in the August jobs report, that would be an indication that recovery is not reaching all corners of America, and that will eventually drag down the housing market,” Tucker said.

He added home construction and inventory are slowly coming back, but he predicts a 5% drop in home sales this winter.

“That’s not plummeting by any measure,” Tucker admitted. “On the other hand, if we get a great vaccine that’s widely distributed quickly, I think that would definitely steer us toward a more optimistic scenario.”

Still, metro Phoenix home values are up 9.9% year-over-year to $307,114 and interest rates are near historic lows.

Tucker foresees no housing market in America will plummet like during the great recession and its excessive inventory and foreclosures.

In metro Phoenix, Zillow reports, as of the week ending Aug. 15, the number of homes on the market was down 27.2% from last year.

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