Phoenix’s housing market in August 2023, like the desert sun it sits under, is seeing a particular shine on solar homes. This unique subsector of the housing market offers a lens into both the evolving preferences of homeowners and the broader economic shifts at play in the city.
In August, the median price for a solar home stood at $470,000, a slight uptick from July’s $460,000. Delving deeper into the solar segment, homes with owned solar systems fetched a median price of $547,000, while those with financed systems averaged $456,000. Leased systems and prepaid solar lease systems stood at $435,000 and $552,400, respectively. Compared to the median price of all resale homes in Phoenix, which was pegged at $435,000, it’s evident that solar homes, especially those with owned systems, command a premium.
This premium is telling, especially considering 561 solar homes were sold in August alone, accounting for a respectable 9% of the total resale volume. The majority of these sales—55% to be precise—were homes with owned solar systems, signaling a clear preference among Phoenix homeowners. Such homes often deliver better long-term value and eliminate monthly lease payments, increasing their appeal.
However, while the numbers look promising for this month, the historical context provides an intriguing contrast. The median price of solar homes has dipped by 5.58% from August 2022, a slightly sharper decline than the overall resale market’s 2%. On the flip side, the volume of solar home sales has surged by an impressive 30% year over year. This juxtaposition suggests that while solar homes are becoming more accessible and popular, the market is adjusting to cater to a broader demographic, reflecting in the softer median prices.
The backdrop to these nuanced shifts in the solar home landscape is the broader health of Phoenix’s housing market. Inventory levels, for instance, are staying low, oscillating between 11,000 to 12,000 homes. Such a tight supply—just 1.92 months worth—indicates a seller’s market. But before sellers start celebrating, there’s a wrinkle: foreclosure rates are negligible at 0.5%, thanks largely to the meager inventory.
Yet, the elephant—or should we say, the sunlit house—in the room remains the mortgage rates. At 7%, they’re giving many potential buyers a pause. The nostalgia for sub-5% rates isn’t just sentimental; it’s economic. Lower rates would likely catalyze a flurry of activity: sellers, no longer shackled by the prospect of higher monthly payments, would list their homes, drawing in eager buyers. The dance would be frantic, keeping inventory perpetually low and the market competitive.
But as it stands, with rates defiantly high, Phoenix finds itself in an unusual stasis: low inventory paired with tempered demand. Sellers are hesitant, and buyers are calculative.
So, what does this mean for the Phoenix resident, especially one eyeing a gleaming solar panel atop their future home? For one, it’s an affirmation of the growing relevance of sustainable solutions, even in the realm of housing. The increasing sales volume of solar homes, despite broader economic headwinds, is a testament to that.
However, like the desert adapting to the relentless sun, Phoenix’s housing market—solar and otherwise—is evolving under the weight of macroeconomic forces. For now, the equilibrium holds, but as anyone in Phoenix will attest, the only constant under the desert sun is change.
You can download a graphical version of the solar home sales statistics for September 2023 at: https://www.phoenixhomebuying.com/wp-content/uploads/2023/09/Maricopa-Solar-Stats-Sep-2023.pdf