Tempe has made a name for itself in the technology space since the development of Tempe Town Lake.
Tech giants like Opendoor, Amazon, Microsoft and Align Technologies all call the East Valley home, and many have opened new headquarters in Tempe in the last year alone. That boom has benefitted the city’s economy, but it’s also impacting its housing prices in a real estate market that can’t keep up with the demand.
According to data from Zillow, the home value index in Tempe as of April 2022 was $481,590. In April 2021, that number was just $378,000 – an increase of 27.3%.
At the same time, Tempe’s population is growing as people move into town. The city’s 2020 population counted 180,823 residents. In 2021, that increased to 184,118.
Tina Tamboer, Senior Housing Analyst with the Phoenix-based Cromford Report, said that it’s not far out of line with what’s happening across Maricopa County.
“The Tempe housing market is similar to the rest of Greater Phoenix in that the market is still very hot, but not as hot as it was two to three months ago,” she said. “What that means is the days of buyers pressured to waive appraisal contingencies and overlook repair needs are dwindling fast. It’s moved from a highly aggressive and stressful seller market for buyers, to a less frantic environment with fewer competing offers and more negotiable sellers. This is not a buyer’s market, just a much weaker seller’s market at this stage.”
Tamboer said south Tempe is becoming more unattainable for the average buyer with a median sales price of $720,000 according to the Arizona Regional MLS. Tempe as a whole clocked in with a median sales price of $515,000.
She pointed specifically to Tempe’s tech success and the development around the lake as a reason for Tempe’s increased home values, in addition to Arizona State University, which could serve to make the city much more dense than it is currently.
“The development of Tempe Town Lake has been a huge success for Tempe,” said Tamboer. “It’s an employment corridor, an entertainment district and a university campus. With so many players in the real estate game these days, it’s not simply population and housing units anymore. Now we must take into consideration the proliferation of short-term rentals, which remove existing homes from supply that would be occupied by residents and make them only available to tourists and temporary residents.”
Based on the data Tamboer said she is seeing, inventory will likely remain low for some time.
“Prior to 2020, it was common to see 250-350 active listings in Tempe at this time of year with 200-300 under contract,” said Tamboer. “Last year, 2021, there were only 97 active with 257 under contract on June 1st. The market was not fueled by excessive demand, but a severe lack of supply. This year on June 1st, there were 135 active and 178 under contract, so supply is rising, but still very low, only this time demand is below normal as well.”
Sindy Ready, 2022 treasurer for the Arizona Realtors Association, is an ASU grad and spent several years in Tempe. Now, she works to sell homes in the bustling city and has seen it evolve over the years.
“For us in Arizona, the southeast Valley is a mini Silicon Valley,” she said. “For years, that really meant mostly Intel with three plants, and that's down in the Chandler area but it all kind of filtered back into the Tempe area. So now what’s happening is Tempe is starting to get its own global reputation for being an area that is a really good opportunity for companies to get young workforce members.”
She said south Tempe in particular has become an attractive area for buyers due to its suburban sprawl in an urban setting, larger lots and proximity to good schools for young families. Half of the available inventory in Tempe is in its southern neighborhoods.
“What’s happening in the market is that south Tempe has been known for either larger homes on larger lots or a little bit less expensive housing or condos farther from campus and a little bit less expensive,” said Ready. “Now that the market has started increasing in general across the Valley, then all the prices are starting to move up. That south Tempe area is still a good value. I mean, all the prices have gone up.”
One caveat for Tempe’s tech boom, she said, is that many employees are moving from much more expensive states like California, Washington and Oregon, and their expendable income is boosting Tempe’s home values. According to Ready, 57% of homes sold so far year-to-date in Tempe have been over the asking price.
She said that it will likely stay a seller’s market for some time due to the low supply and high demand, but rising interest rates may provide some relief for anxious buyers.
“I think it's gonna stay really steady,” said Ready. “I mean, our market has always been a strong relocation market over the years, but I do think supply and demand is going to be a piece of this puzzle for years.”
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