Why Home Prices Are Still Rising and What It Means for You

by Jeff Hernandez

Despite high mortgage rates, home prices continue to climb.

The Case-Shiller Index reported a 3.8% annual increase, and the Federal Housing Finance Agency recorded a 4.2% gain nationally.

With such growth, many buyers are left wondering: Is this a bubble, or should I wait for rates and prices to drop?

Let’s break down the key factors driving these trends and what they mean for both current and future homeowners in Scottsdale, Paradise Valley, and Arcadia.

Why Are Home Prices Still Increasing?

The answer lies in supply and demand.

While higher mortgage rates have cooled the pace of sales, they haven’t significantly impacted prices because demand for housing continues to outstrip supply.

This is especially true in Scottsdale’s luxury market, where inventory is tight, and high-end buyers are still actively competing for prime properties.

Demographics Are Driving Demand

Generational trends play a big role in why prices remain elevated:

Gen X Homeownership: This group is steadily increasing its housing market share, absorbing much of the supply from Baby Boomers.
Millennials Entering Prime Buying Years: Homeownership for Millennials jumps from 33% at age 30 to 55% by age 40. With many Millennials still under 40, demand will only grow.
Gen Z on the Horizon: As the largest generational cohort after Millennials, Gen Z will further fuel demand in the coming years.

In short, younger generations are entering the market faster than new homes are being built.

The Supply Shortage: A Long-Term Challenge

At the current pace of homebuilding, the U.S. will face a 5-million-unit shortfall over the next decade.

This gap between supply and demand ensures that home prices will continue to rise, even if mortgage rates remain elevated.

For homeowners, this is great news as equity continues to grow.

For buyers, the longer you wait, the more expensive it may become to enter the market.

What This Means for Buyers and Sellers

These national trends are even more pronounced in certain parts of the Phoenix metro area.

Despite market fluctuations, luxury homes in these areas are still in high demand, offering unique features and prime locations that attract buyers regardless of market conditions.

For Buyers: Acting sooner rather than later can help secure a property before prices increase.

For Sellers: Rising prices and strong demand create an excellent opportunity to maximize your property’s value.

How I Can Help

Whether buying your first home, upgrading to a luxury property, or considering selling, I’m here to guide you through every step of the process.

With decades of experience and a deep understanding of Scottsdale’s luxury market, I can help you navigate today’s trends and make confident decisions.