With the release of our latest annual Local Leaders list—the ranking of the top 50 new-home markets ranked by closings, and the top 10 builders in each market—BUILDER takes a closer look at a few of this year’s fastest-growing markets on the list. Today we focus on the fourth fastest-growing area, Phoenix.
Rising from its post-recession ashes, Phoenix ended 2016 with its best year for sales and volume since 2006. Realtor.com predicted the area to be 2017’s top market, expecting to see price gains of 5.9% and sales growth of 7.2%. Attributing the comeback to a tighter new home market, a steady growth in sales and price increases, and less foreclosures, sunny Phoenix ranks fourth on BUILDER’s list of the country’s fastest growing markets in the country this year.
Much of the jump is driven by job growth, primarily in the tech industry. The Sonoran desert city that houses Frank Lloyd Wright’s architecture school and former winter home, Taliesin West, recently welcomed a handful of job-creating digital giants including Yelp, Weebly, and Quicken Loans, who set up outposts in downtown Scottsdale over the past few years. In February, Intel announced plans to invest more than $7 billion on what’s being billed as the most advanced semiconductor factory in the world, just outside the city in Chandler, Ariz. The high-volume factory, which is expected to reach completion in three to four years, will create 3,000 high-tech, high-wage jobs for process engineers and equipment technicians, as well as facilities support engineers and technicians. As result, the multifamily market in the area is heating up as many are willing to relocate to take advantage of the new jobs.
According to former Phoenix builder and current principal at the Citadel Land Advisory Group Larry Kush, home building is really thriving in suburbs like Chandler and Gilbert, where large lots are available at affordable price points.
“Everyone keeps talking about how millennials want to live downtown, but from what we’ve seen, millennials buy homes for the same exact reason boomers buy homes. They want a backyard with a pool where their kids can play, and they want to be near the good schools,” says Kush. “In Phoenix, living the ‘American Dream’ is much more feasible than it is in California, where they’d have to sacrifice at least one or two of those features.”
Metrostudy reports that new home starts are up 12% year-over-year, and the market median home price has increased by 10%. Rapidly appreciating land is pushing builders to build for higher prices, though affordability in Phoenix still remains high compared with many other states in the country.
“If builders can find a way to deliver more lots in some of these key submarkets in the suburbs–especially at the more affordable price points where demand is highest–then happy days will be ahead,” says Ryan Brault, Metrostudy’s regional director for Arizona. “Of course, we must pay heed to the impacts of rising interest rates and changing government policies that could affect those entry-level buyers disproportionately. That said, strong job growth, migration trends, and unemployment rates mean the arrow is pointing up for Phoenix.”
Ken Peterson, vice president of sales and marketing for Shea Homes Arizona chose Gilbert for the division’s new community, The Reserves, citing demand and the growing trend for larger homes with indoor-outdoor capabilities.
“Home buyers get the full package, thanks to the large lot sizes where they can build their dream home and enjoy plenty of outdoor space for their families to play and grow,” he says.
Courtesy Shea Homes Arizona
