The housing market has been on absolute fire, especially since the Covid-19 pandemic.
That’s true nationally, and it’s true in the Phoenix metro.
The Business Journals conducted an analysis of housing data from Seattle-based Zillow Group Inc., using a weighted formula that takes into account pricing and value changes over a five-year, one-year, six-month and one-month period, ending July 31, 2021. The result is 25 housing markets we’ve identified as having seen the most momentum since the summer of 2016, with more weight in our formula given to price changes during the past six months and one year — when the pandemic-induced housing frenzy kicked into high gear.
The analysis took into consideration about 75 U.S. large metropolitan statistical areas that had complete data available.
In the Phoenix metro, median home prices have shot up a whopping 73% over the past five years, with the past year alone seeing a 30% bump.
From January to July, home values rose 17%, and in July prices rose by 3%, putting the median home at $390,733, according to the data. That outperforms the country as a whole, which saw prices rise 44% over the last five years and 17% over the last year.
Of the 75 markets analyzed in the data, Phoenix ranks third in housing momentum, beating out such fast-growing markets as Tampa, Florida; Las Vegas; Atlanta; San Diego; Los Angeles; Nashville; Denver; among others.
Topping the list is Boise, Idaho, which saw a whopping 127% growth over the last five years and 44% in the last year. Seeing explosive growth of its own, Austin, Texas came in at No. 2 on the list, with 70% growth in median home prices over the past five years and 41% in the last year alone.
When the pandemic first hit home in the United States in March 2020, there was an immediate slump in homebuying activity as shelter-in-place orders and other government mandates were issued. Schools, offices and other public spaces closed, and everyone hunkered down for a wildly uncertain future.
Predictions that the U.S. housing market would come back in the summer and continue into the fall of last year came true — and then some. Eighteen months after Covid-19 was officially declared a pandemic, residential real estate markets across the country have been breaking records month over month. Inventory is the tightest it’s ever been, and household formation among millennials and low interest rates have put the market into overdrive.
More recently, there’ve been some early indicators of a cooling off, though it’s too early to say with certainty how much. Cities seeing the most population growth and tightest inventory may not notice much of a difference at all. Investors are also still very much in play, looking to convert single-family homes into rentals with all-cash offers.
The national picture
The national median home-sale price rose 16% year over year, to $380,271, in August, according to data this week from Seattle-based Redfin Corp. It’s the 13th consecutive month of double-digit price gains but the lowest growth rate since February.
Seasonally-adjusted home sales in August were down 6% from August 2020, according to Redfin. Active listings were down 19% from the year prior. The typical home that sold in August went under contract in 16 days, which is about half as much time as the same month a year before, Redfin says.
“When it comes to home prices in this market, what goes up stays up,” Daryl Fairweather, Redfin chief economist, said in the recent August report. “That’s especially true in the Sun Belt. Home prices are up more than 20% from last year in Austin and Phoenix.
“Even with these steep increases, homes in these areas are still relatively affordable, so these and other hot migration destinations are going to continue to attract homebuyers from the coasts,” Fairweather said. “As workers change jobs en masse and enhanced unemployment benefits come to an end, we could see even more households relocate for affordability in the coming months.”