The Phoenix SFR Market: The Good, the Bad, and the… Boring
The Phoenix SFR Market: The Good, the Bad, and the… Boring
By Rob Jafek, Principal | Boomerang Capital Partners, LLC
The Phoenix single-family residential market heading into 2026 is less dramatic than it has been in recent years, but that goes both ways: maybe no sizzle on the upside but also no nasty spice on the downside. That may disappoint headline writers, but for buyers, sellers, and long-term investors, it is arguably a healthier setup. The story breaks cleanly into four parts.
The Good
The most constructive development for housing is simple: rates are lower, and the direction of travel matters. Mortgage rates have drifted down from their peaks, and just as importantly, the spread between the 30-year mortgage and the 10-year Treasury has been tightening. That spread had been unusually wide, reflecting risk premiums rather than pure rate levels. A narrowing spread signals normalization in mortgage finance, even if rates remain well above pandemic lows (and not moving lower fast enough in my opinion).
Phoenix is also benefiting from real job growth, not just population churn. The region continues to attract high-paying, durable employment anchored by advanced manufacturing and technology. Taiwan Semiconductor Manufacturing Company has become the headline example, but it is not alone. Apple, Amkor, and a growing semiconductor and supplier ecosystem are anchoring thousands of well-compensated jobs (thank you: California). This matters because housing demand driven by income growth is fundamentally different from demand driven by speculation.
Finally, December sales were genuinely better, even if the comparison set is forgiving. Existing-home sales nationally jumped off a very low base, which does not mean the market is hot. It does mean the floor appears to be forming. Phoenix, as a rate-sensitive market, tends to respond early when affordability improves at the margin.
The Bad
Buyer sentiment remains weak. This is not a mystery. Housing affordability is still strained, memories of rapid price run-ups are fresh, and many households remain cautious about the broader economy. Surveys consistently show buyers are hesitant, skeptical, and slow to commit, even when inventory improves, or sellers offer concessions.
In Phoenix, buyers have more leverage than they did two years ago, but that leverage has not yet translated into enthusiasm. People are participating, but few feel urgency. Sentiment is adapting, not accelerating.
The Ugly
I would put the lack of ugly in the category of the good, but it is worth examining separately; there really is not an ugly chapter right now.
There is no obvious excess leverage, no widespread distress, and no forced selling wave. Inventory has risen, but not explosively. Prices have softened in pockets, but not collapsed. For pundits or buyers looking for a dramatic shoe to drop, this market may feel frustratingly uneventful. And, specifically to those buyers sitting on the sidelines waiting for a dramatic drop to create a buying opportunity, I have bad news for you: your wishes are unlikely to come true as there are far too many of you.
The Boring
The forecasts for 2026 price growth are remarkably aligned and remarkably dull, although they point to different reasons for their conclusions.
The National Association of Realtors projects roughly 4% national price growth, supported by employment gains and still-limited supply. Realtor.com forecasts about 2.2% growth, with mortgage rates averaging near 6.3%. Fannie Mae expects continued positive but slowing appreciation, with its House Price Index rising modestly through 2026. The Case-Shiller indexes traded on the CME predict a 3.3% increase; the CME is my personal preference because people have risked actual money on their forecasts, much in the same way fix and flippers do. Other models, including Redfin, cluster around 1% to 1.5%.
For Phoenix specifically, stronger job creation and above-average population inflows argue for results toward the upper end of those ranges. At the same time, national conditions point to moderation and certainly not a return to the rapid run-ups of the early 2020s.
TLDR
Phoenix SFR in 2026 is shaping up as a market defined by normalization. Rates are helping rather than hurting, jobs are real and high quality, sentiment is cautious but stabilizing, and prices are expected to grow slowly. It may not be exciting. That may be exactly what makes it investable. We referred to this before as a ‘grind’ market, and incoming data continues to support that forecast. Sticking to the basics - knowing your markets, not swinging at every pitch, keeping your networks and feelers out, doing your homework, and being comfortable taking your time - will lead to the opportunities which are certainly out there.