All across the country home prices seem to be increasing and this is especially true if you live in a major metropolitan area such as Phoenix. The quarter 2 home prices from last year compared to this year are up by 10% and there is no reason to believe prices won’t continue to rise in the near future. When talking about the housing market in any particular area most people tend to focus on a couple of different numbers such as year over year price changes. That is the 10% number I just gave above. On top of that new home builds tend to be an indicator of economic growth in an area and may suppress home prices for a short amount of time before an economy that is ready for such homes tips over the inventory and home prices sky rocket again.
Employment growth statistics are given in 3 year running averages so as to not overreact to the numbers. 1 big manufacturing plant in a metro could boost employment statistics numbers in a given quarter by much more than it should be given credit for and thus cause a large overreaction in the market and eventually a correction. The current 3 year running employment growth shown in the Phoenix-Scottsdale-Mesa metropolitan area is 2.6%. This is certainly not the highest in the country but it is a solid growth number that should continue as Phoenix offers many companies a friendly environment to work in and qualified upper educated individuals from the state universities Arizona State University, Northern Arizona University, and University of Arizona. Phoenix is also home to a couple of the larger for profit colleges including University of Phoenix and Grand Canyon University.
New construction is measured in a similar fashion to the employment numbers using running 3 year totals to deflate overreaction in the market. The Phoenix metropolitan area has seen an increase in permits of 55,045 over the past 3 years. This is certainly one of the higher numbers although dwarfed by some cities such as Houston (possibly due to Hurricane Harvey rebuilds) and the mega metropolitan areas such as New York City (114,720) and Dallas Fort-Worth (114,370). However, Phoenix is right in line and ahead of many of its similarly sized and competitive markets like Philadelphia (34,118), Tampa-St. Petersburg (34,699), Raleigh-Cary (36,004). All of these cities are showing great growth and Phoenix is right there with them already home to several large corporations and inviting more to come all the time.
Existing Home Sales
Existing home sales in Phoenix are on the rise. Every price category for homes saw an increase in sales except for homes prices $0-$100k. The largest growing sector of existing homes increased 11.8% and that was among homes priced over $1M. This tells us that not only is the Phoenix market supporting new jobs, but that the jobs are higher quality and higher paying.