In Phoenix, Arizona, the only thing hotter than the desert weather is the current housing market. A steady stream of new residents lured by the mild winters, lower cost of living, outdoor recreation, and a rebounding job market have turned up the heat on the Arizona capital’s demand for housing.
Phoenix is America’s fifth most populous city, with a population of about 1.73 million, which is expected to double by 2040. While Phoenix was a popular destination for newcomers during the pandemic, even before 2020, the city had been seeing new residents arrive in droves. In 2019, Phoenix attracted 50,000 new residents – more than any other city in the United States. That was the fourth year in a row that Phoenix was able to claim that title. The trend continued in 2020, with approximately 57,000 new arrivals, many of them transplants from California, and other pricier states.
That surge in new residents, combined with historically low interest rates, has created unprecedented demand for real estate. According to Redfin, In May of 2021, Phoenix home prices were up 31.9% compared to last year, selling for a median price of $376K. On average, homes in Phoenix sell after 22 days on the market compared to 35 days last year. There were 2,485 homes sold in May of this year, up from 1,853 last year. The average home in Phoenix is selling for 1.35% above asking price, while more sought-after properties can sell for 6% above asking in about six days. Many homes are getting multiple offers, often with waived contingencies.
For real estate investors, while the buy-in may be competitive, there is a lot of opportunities to recoup their investment. Phoenix has a huge base of renters who are paying increasingly more every year. According to Rent Café, the average rent for an apartment is $1,252, with a 10% increase in just the past year. With the steadily rising population and the shortage of inventory, with only about five weeks’ worth of supply on the market, this is a market that will offer a lot of opportunity for the foreseeable future.