Metro Phoenix is the “hottest” housing market in the U.S., according to a respected, national real estate expert.
But the new “hot” definition for housing is much different than during the boom when Valley prices climbed a crazy 50% in a year and new homes shot up at triple the pace they are going up now.
Real estate analyst John Burns is calling metro Phoenix hot now because prices aren’t expected to drop like they are in other big U.S. cities. He said that is due to the area’s sturdy job and population growth and shortage of new homes.
“Metro Phoenix is the Goldilocks of U.S. housing,” Burns said at the Land Advisors Organization’s annual real estate forecast in December. “It’s not too hot, and it’s not too cold.”
“Employment growth for metro Phoenix has been incredible,” Greg Vogel, founder and CEO of Land Advisors, said. “We have added 350,000 jobs, far surpassing the 150,000 we lost during the crash.”
He said people and companies from states with high-cost housing and taxes, especially California, will continue to move to the Valley this year.
It’s been more than a decade since the economy, stocks and housing bottomed out. The long upward ride has most economists looking for a downturn or even a recession this year or next.
But Burns doesn’t see the housing market pulling the U.S. economy as it did during the Great Recession of 2008.
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He also thinks metro Phoenix will fare better in an economic slowdown or recession than other parts of the U.S.
Lower interest rates for home buyers, an undersupply of new homes built and projected stronger than average job and population growth in the Valley are why.
“It won’t be a housing-led recession this time,” he said. “Phoenix always fares better in downturns not tied to housing.”
Housing starts, job data and other market indexes are important to tell the story of the economy but can get a bit wonky.
Vogel and Burns found a new economic indicator to track growth that everyone can easily understand: what it costs to rent a U-Haul truck to move to different parts of the U.S.
“U-Haul costs are an interesting sign that shows where people are moving,” Vogel said. “The prices to rent the trucks are based on demand.”
Another reason metro Phoenix is being called the hottest U.S. housing market.