Why Phoenix Isn’t The Hottest Market In The U.S. — Or Is It?
More than 100 national real estate experts and economists picked Austin, Texas, over Phoenix as the hottest housing market in 2021, but local experts aren’t so sure they know what they’re talking about.
These national economists surveyed by Zillow Group Inc. (Nasdaq: Z), expect home values in Austin to grow faster than Phoenix.
But at this point, it’s really just splitting hairs, said Chris Glynn, a senior economist at Zillow.
“Both are incredibly hot markets with strong similarities — relative affordability compared to some other large markets, great cultural attractions and the amenities and services of world-class cities,” he said, adding great weather and year-round outdoor living to the list.
“If there is a difference,” he said, “it may come from questions over how long the recent run of rapid home value growth in Phoenix can last.”
Phoenix has been growing aggressively for a long time, and Austin may have a bit more room to run in this regard, he said.
“This may explain why panelists expressed a higher degree of confidence in Austin outperforming the U.S. than Phoenix in 2021,” Glynn said.
Both are consistently in the top 10 best performing metros across the U.S., not only before the coronavirus pandemic, but are leading in the rebound back, he said.
Both cities have seen major job announcements and corporate relocations.
“Where Austin leads, particularly in multifamily, is in the amount of units under construction and in deliveries which has continued to put pressure on occupancy and rental rates, which, in turn, has seen that demand spread to people buying homes,” Brophy said.
Meanwhile, Julie Rohr, a luxury residential specialist with Christie’s International Real Estate, said she is working with an affluent buyer from Austin who “cannot wait to get out of that city and relocate to Arizona.”
The secret is out, she said, whether we like it or not.
At nearly all price levels, demand is strongly exceeding supply, Rohr said.
“That does not mean that sellers can put highly unrealistic price tags on their homes,” Rohr said. “Buyers have done their homework.”
For homes priced under $1 million, contracts and back-up offers are happening within hours — not days — of coming to market, she said.
“However, Phoenix will sell three times the number of homes than Austin,” he said.
With 5,400 active listings on the Arizona Multiple Listings Service, metro Phoenix is seeing average monthly sales of 8,781 homes, giving the area a supply of 2.5 weeks, which is near historic lows, Mishkin said.
Keith Burton, a Realtor with The Rider Elite Team in Scottsdale, said homes are still more affordable in Phoenix than Austin.
The average home price in Austin is $492,009, compared with $438,734 in Phoenix. The median price is $370,000 in Austin and $335,000 in Phoenix.
“Phoenix is the No. 1 market in the U.S. if you use the data on inventory, sales and job growth,” Burton said