Phoenix’s Housing Market During the COVID-19 Pandemic: Exploring the “New Normal”

Homeownership is an essential part of the American Dream and one of the most important tools for anyone in the 21st century to build wealth. Unfortunately, the COVID-19 pandemic has introduced a level of uncertainty to a market that has been largely stable since the last recession. This has proven to be a major roadblock affecting multiple generations of Americans in their quests to develop wealth. A particularly interesting case study through this crisis has been the housing market of Phoenix Arizona. When the challenges presented by the pandemic began to unfold, thousands of home listings and sales were canceled all the while newly unemployed Arizonians began to worry about meeting their mortgage payments. However, this disruption didn’t last long, several months after the beginning of the pandemic housing prices quickly began to swell. Many listings continue to be sold for tens of thousands of dollars above the asking price which has led investors to ask: how have Phoenix homes been able to seemingly ignore the economic downturn? Today we are living in the hottest housing market since early 2007, and many expert opinions on the state of the market conflict with one another. Some expect housing prices to crash, others believe this growth is sustainable. A complex web of interconnected financial and human systems has led us to the position we are in today and several important questions have been left unanswered. What forces have driven the market to such dramatic heights? Who have been the winners and losers in the Arizona housing market during the pandemic? And what can be expected to happen in the near future as the “new normal” served to us by COVID-19 unfolds? The purpose of this thesis is to explore these questions and identify the underlying factors that have created the current market conditions. It will begin with an analysis of relevant supply and demand factors, then move to identify groups of winners and losers, to finally develop a prescriptive outlook for challenges facing Phoenix’s housing market.