Metro Phoenix home prices and rents keep climbing, and here’s a big reason why.
Phoenix drew a higher percentage of new residents than any other major U.S. city between 2010 and 2020, according to the latest census data released last week.
And West Valley suburb Buckeye grew more swiftly than any other city in the country.
The heady growth explains why the Valley’s median home price hit another record high in July, single-family home rents climbed higher here than anywhere else in the U.S., and apartment rent hikes during the past year are second only to Boise, Idaho.
Economists and housing market watchers have been citing metro Phoenix’s population growth as the driver behind the area’s rising housing costs for the past few years. The new census data proves it.
“The growth the census data demonstrates comes as no surprise. We’ve long known that Phoenix is a top destination to live and work,” Phoenix Mayor Kate Gallego told my colleague Geoff Hing.
Hing’s analysis of the census data shows Phoenix grew by more than 160,000 people from 2010 to 2020, an increase of 11.2%.
The second fastest growing big U.S. city was Houston with a 9.8% population gain.
Buckeye grew by nearly 80% to 91,000 residents during the decade.
Among cities with at least 50,000 people, the West Valley suburb of Goodyear made the top 10 list for growth with a 46% increase in its population.
Metro Phoenix’s median home price hit $405,000 in July, according to the Arizona Regional Multiple Listing Service's latest data.
That’s up $90,000 from a median home price of $315,000 in July 2020.
Higher home prices are propelling more would-be buyers to rent Valley homes.
Metro Phoenix’s growing single-family rental market, including homes and condos but not apartments, led the nation for rent increases during the past year, according to the latest data from CoreLogic.
Valley home rents jumped 16.5% for the 12 months ended in June, which is the most recent data available.
The median rent for a Valley home is about $1,811.
Las Vegas was second with a 12.9% increase in single-family rents, and Tucson was third with a 12.5% increase.
“For would-be homebuyers who have been either priced out of the market or unable to find a home in today's supply-constrained market, detached rentals are overwhelmingly preferred and remain in high demand,” said Molly Boesel, principal economist at CoreLogic.
Most new Valley residents rent before buying, a trend pushing up all rents.
The average asking rent for a metro Phoenix apartment shot up 21.6% since July 2020, according to the national research group RealPage. It shows the Valley’s average rent is now $1,483.
Though a big jump for longtime Valley renters, the average rent is still $66 below the U.S. average. That’s another reason why metro Phoenix is drawing so many new residents.
Despite soaring housing costs, metro Phoenix is still more affordable than the East and West coasts and several major U.S. cities in between. People from those areas who are no longer tied to a city for their job can move here and buy or rent for less.
New residents from California, Seattle, Denver, Chicago and New York flowed into metro Phoenix during the past few years. Home sales records show the trend, though it’s harder to track in rentals.
Though the growth is good for the Valley’s economy, the increase in housing costs has many of the area’s residents struggling because their incomes aren’t keeping pace.