By Mike Bodeen · 25 October 2021
A picture (or chart) is worth a thousand words! And the two Cromford charts we’re showing you this week prove that point. Both charts form bookends of a larger Phoenix Metro problem we’re facing today, which is housing affordability.
Not too many years ago, as in one or two, we professionals would tout Phoenix’ housing affordability for one of the main reasons why out-of-state folks were leaving (especially) California for Arizona. And we were (still are) right about that.
According to 2,000,000 annual one-way U-Haul moving customers, Arizona ranks #5 for migration growth. And California? Well, the “fire, and now rain” state ranks #48, which is dead last (recently supplanting Illinois) since U-Haul doesn’t do from Hawaii or Alaska. I spoke with a local U-Haul distributor earlier this year who said that the same size truck rental that costs $100 from here to California will cost you $1,000 from California to Arizona.
https://azbigmedia.com/business/arizona-ranks-no-5-for-migration-growth/
But I digress…
Getting back to the charts, you’ll note the similar median price trajectories between rents and home sale prices. Prices bottomed out in 2011 (homes) and 2013 (rentals). In both cases 2019 saw the explosive growth (spike) of each take place.
The other topic we used to tout about was the growth of jobs in Arizona due in large part to companies that are relocating here because of affordability, a good labor pool, and business friendly governing.
Since the recovery from the housing Crash, many would be buyers have remained on the sideline feeling like it was better for them to rent. And for many of them, they couldn’t buy because of their damaged credit from the Crash. Unfortunately, the strategy of waiting, for many, has backfired as rents were (are) increasing monthly.
There must either be a large expansion of housing inventory, or an improbable decrease in demand for balance to happen. Though we are seeing an incrementally slow retreat for sales, that will put more pressure on rents.
And that friends is a disaster.
Market data referenced in this article comes from The Cromford Report.