When Will Phoenix Housing Market See End To 'Runaway Prices'?
Supply and demand is the most common reason given for rising Valley home prices, but one expert thinks it might also have to do with who is moving here.
Based on data from the real estate site Redfin and the employment platform LinkedIn, Steven Hensley said metro Phoenix is attracting wealthy buyers from out of state that are used to higher prices. And they’re OK with spending $500,000.
“So we have these converging forces of outside buyers and local buyers sort of fighting over the same homes but the outside buyers have a lot more purchasing power,” he said.
Hensley, an adviser with the research and data firm Zonda, shared price and supply data with the Maricopa Association of Governments Economic Development Committee.
“And it really is becoming a concern long-term especially for the lower-income earners who are local here in Arizona, they’re going to have a difficult time purchasing homes moving forward,” he said.
In May 2021, he said the median sales price of a new house was $410,000 while the median price of an existing home was $360,000-370,000.
“It’s just sort of like runaway prices at the moment and that’s because there's just so much demand and we do not have enough supply in the marketplace right now to meet all that, and builders are not going to be able to quickly build their way out of this,” Hensley said. “It’s going to be a pressing issue for at least the next few years in our opinion.”
Hensley said the Valley is on track to build about 35,000 homes in 2021. During the 2004-2006 period, it was about 60,000 per year. For years, developers and homebuilders have complained about a lack of skilled labor. More recently, the cost of materials, including lumber, have increased significantly.