By Mike Bodeen · 26 December 2017
Five Reasons Why
2017 is almost history. For the Phoenix Metro area, it was, by most accounts, another consecutive, solid, and successful year for residential real estate. Can 2018 match 2017?
Yes. And more!
There are a number of “solid” reasons why I believe we’ll surpass 2017’s positive year, but what often begins on a high note, can run afoul too. Or, too much of a good thing can create its own problems. If that were to happen, we’ll see signs of it ahead of time, though we won’t be able to do much about it. I’m not seeing that for 2018.
There are Five Reasons why (not in any particular order) I believe we’re looking at a continued strong and healthy Phoenix real estate market this next year:
1) Strong population growth has returned to Arizona and the Valley.
According to U.S. Census records Arizona is now the 6th largest state population-wise in the country surpassing 7,000,000. Arizona ranks #7 in population growth and #6 in percentage growth. Why? For all our warts, people want to live here — and this will continue to increase. I will hand it to Arizona which has been among the most forward of states planning for long range growth. Our valley freeways are a testament to that. Though often commute crowded, they’re improving, not crumbling. I was driving back from the east valley the other night on I-10, and it was striking how clear our freeway striping and signage was. Last year, Phoenix was tops in U.S. population growth. We are now the 5th largest U.S. city at just over 1.6 million, recently surpassing Philadelphia. So, the bottom line question is where will all these people live? The bottom line answer is that they will own and rent homes. More will be needed.
https://www.bizjournals.com/phoenix/news/2017/05/25/phoenix-tops-us-in-population-growth-more-than-la.html
2) The new tax law act is passed. Phoenix Real Estate Wins!
There has been a lot of pre-tax law chatter that real estate would be decimated by the new tax act. I see a win – in Phoenix anyway. Because of our lower to moderate home values, mortgage interest will continue to be deductible for most all Arizona property owners. Yes, the standard deduction increases from $12,000 to $24,000 (for married couples) and this may convince some renters to stay renting rather than ownership with a mortgage, but the upside for home-ownership remains strong. And the $10,000 deduction limitation for state and local taxes? This will have virtually no impact for a state that has some of the lowest taxes in the U.S. Review a recent and excellent article about tax law changes regarding real estate, which this article can’t do justice to in our quest for brevity and clarity.
https://apiexchange.com/articles/2018-tax-law-impacts-real-estate-owners.pdf
(Next week we’ll look at three more of Mike’s positive 2018 reasons for a continued healthy real estate market)
– Mike