Neither COVID-19 nor the big job losses tied to it are slowing rising housing costs in metro Phoenix.
The median home price is poised to hit a new record, and rents climbed faster here than in many other big U.S. cities in 2020.
Home prices and rents kept climbing as the Phoenix area lost more than 51,000 jobs last year.
How? It’s the Valley’s population growth fueling housing price increases.
Metro Phoenix grew by about 90,000 people in 2020 and will grow slightly more this year, according to Land Advisors Organization’s recent forecast.
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It’s clear not all of those people moved here for jobs. Many brought their jobs with them during the pandemic and are working from homes and apartments that likely cost less than what they paid in the West and East coast cities from which they moved.
Many of the new residents likely still are making the higher wages from where their jobs are based.
Economists are looking at ways to track this trend, which is making housing less affordable for people who make Arizona wages.
Metro Phoenix’s median home price was expected to hit a record $338,000 in January, according to ARMLS’ Information Market. The number comes from ARMLS' pending sales index for January; the median price will be announced by mid-February.
That’s almost $50,000 higher than the area’s median price pre-pandemic in January 2020.
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Despite significant drops in demand during April and May, home sales across metro Phoenix topped 102,000 last year.
That’s only about 2,000 less than in the boom year of 2005, which holds the record for Valley home sales.
Rents climbed 4.7% during 2020, according to research from Thomas Brophy of Colliers International.
That’s four times as fast as rents climbed nationally.
Rents in San Francisco, Los Angeles, New York and Chicago dropped fast last year as people moved away from higher-cost areas.
Land Advisors CEO Greg Vogel is forecasting the Valley will grow by 90,000 people annually until 2030, and then by 86,500 a year until 2040.
He said 630,000 new homes and apartments will need to be built to house that many new residents.
The vast undersupply of homes for sale in the Phoenix area is pushing up prices. And rents are climbing because occupancy rates are still rising despite the almost 50,000 new apartments built in the Valley during the past five years.
Rick Palacios Jr., director of research at John Burns Real Estate Consulting, is forecasting Valley home prices will climb 11% this year and then 7% in 2022.