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Top 3 Reasons Phoenix is America’s Hottest Housing Market

03-13-2017About MortgagesEddie Knoell

NAR recently predicted that Phoenix would be the hottest housing market in the US in 2017. We could chalk it up to our awesome springtime weather, or we could talk about a few of the more compelling reasons why the Phoenix Valley real estate market is expected to do so well in 2017.

1) Moderate prices

One of the reasons the Phoenix market is expected to outpace other US housing markets this year is because unlike what’s happened in other real estate markets like Seattle, Portland and LA, our housing market has been making more moderate price gains over the last few years – in the range of 5% annually, compared with 10% in Seattle Plus, due to the extreme low prices to which our local real estate market plunged in 2005/2006, our market was already priced much lower than other comparable urban markets. These two factors taken together mean that Phoenix is among the most reasonably priced major markets in the nation, certainly one of the most reasonably priced in the West.

2) Rising rents

There has been a shortage of affordable rental housing in Phoenix for many years. And although Phoenix is expected to add more than 10,000 rental units in 2017, these are mainly in the higher end of the rental market. How tight is the market for affordable rental housing? According to Valerie Iverson of Arizona’s Housing Alliance, there are currently five renters in the market for every one unit of affordable rental housing. This means fierce competition and rising prices; in 2016, rents went up at 4.6% and are expected to outpace that in 2017.In addition, median rental prices and the monthly payment cost of purchasing a median priced home are now roughly on par, making buying more attractive. Millennials, in particular, are now seeing the value of using their housing money to build equity, rather than spending the same amount of money and getting nothing back in return.

3) Job growth

Ultimately, both the rental and purchase market depend on the strength of the Phoenix region’s job growth to support them, and the Phoenix Valley is no slouch in this regard. A recent study by WalletHub ranked Scottsdale as the best place in the United States to find a job, based on job opportunities and other criteria, and four other Phoenix-area suburbs, including Chandler, Tempe, Gilbert and Peoria, were also ranked in the top 20 of nationwide job markets.

Phoenix wages are also rising more quickly than most other job markets in the nation. In 2016, the Bureau of Labor and Statistics found that wages in Phoenix rose at 2.9 percent. This is the same pace as Seattle, and faster than the Bay Area. Rising wages and more moderately priced housing make the Phoenix Valley very attractive for job seekers and home buyers in the region.

So the next time someone asks you, “what makes Phoenix’s housing market so hot?” You’ll be able to tell them it’s not just the weather!