By Mike Bodeen · 13 January 2020
AND HOW DID OUR 2019 PROGNOSTICATIONS TURN OUT?
Last week we looked at how our crystal ball predictions came in for Phoenix Metro housing in 2019. This week we’ll finish out our prognosticating for rentals and new home construction.
First is what we wrote one year ago about residential rentals followed by our 2020 predictions:
2019 Rental Supply and Pricing: Down and Up! Our state and Valley population continues growing. New home construction (see below) is not adding enough supply of homes for the demand. Homeowners seem to be holding onto their homes longer as well. Since I think that home prices will keep rising this year, along with mortgage rates, it follows that rentals will remain in high demand and scarce supply. Rents will continue to increase!
We nailed this one, but honestly this was not too hard to predict. Rents rose about 9% this past year.
“…rental crisis deepens further, rental prices escalate higher and could match the rate of housing appreciation in double digit territory.”
2020 Projections for Rentals: Ditto Plus Plus for 2020 except that the rental crisis deepens further, rental prices escalate higher and could match the rate of housing appreciation in double digit territory. Can anything slow the advance? Not likely. Although builders are being creative constructing all new single family detached rental communities, condos and apartments, it’s not enough and I doubt they will land in a more affordable rent price range. Sadly, our new $12.00 minimum wage which is now among the highest in the nation, will likely get sucked into renters paying higher rents.
2019 Projection for New Home Construction and Pricing: Up! Over the past 7-8 years, the Valley has seen tens of thousands of multi-family properties developed, especially in urban areas. This has enabled Phoenix metro to somewhat contain single family detached housing prices at a strong but reasonable level. Builders have bought up much infill land and developed much needed rental supply. This will continue unabated through 2019.
New Home sales and prices rose 3.5%.
2020 Projection for New Home Construction and Pricing: Pricing will rise, and the number of new homes to be built will rise, but what might hold back new home construction is the lack of available labor pool. Good article on new homes is below. A number of builders are wanting to scale down into the more affordable range, but that’s dicey because land values and infrastructure costs continue to rise.
https://www.bizjournals.com/phoenix/news/2019/12/26/year-in-reviewhousing-industry-still-finding-it.html