Greater Phoenix Residential Market
September 1, 2021
Purchase Price and Monthly Rent Rise Again but Monthly Increases Slow Down
The Great Migration to Cities in Maricopa & Pinal Counties
Pinal County: From Losing People to Fastest Growing AZ County
July Results for Maricopa County
These July results are for the sale of single-family resale homes in Maricopa County (Greater Phoenix). The data was compiled from ARMLS. Once again strong demand to own or to rent a single-family resale home pushed both median purchase price and median monthly rent to new record highs. For the fourteenth consecutive month, the median purchase price set a record high. It was $450,000 in July 2021. This is $100,000 or 29% higher than July 2020. However, there was something different about July’s median purchase price compared to every other month this year. July’s median purchase price was only $5,000 higher than the previous month’s median purchase price. The month-over-month average increase this year, excluding July, is $13,000. Median monthly rent in July 2021 hit a new monthly high. It reached $2,225. This is $375 or 20% higher than July 2020. July’s 2021 rent was $35 higher than May 2021. The previous couple of months had rents up about $100 per month. The number of sales in July 2021 were 6,054. This is significantly lower than the 7,282 number of sales in July 2020. For the entire year thus far, sales are 3,608 or 9% higher than last year. July 2021 new monthly listings of 7,023 were one more than July 2020, but 296 or 4% less than June 2021. Thus far this year, new monthly listings are 1,550 or 3% higher than last year. Estimated months of supply indicates that we are still in an extremely strong seller’s market. There is about a two-week supply of listings under $450,000. There is about a one-month supply for listings between $450,000 and $1,000,000. For Pinal County July 2021 median purchase price and median monthly results see Chart Two.
Net Migration Accounts for Eighty-One Percent of Maricopa County’s Population Growth
The two main categories the U.S. Census Bureau uses for population change within a county are natural increase or decrease and migration increase or decrease. If a county has more babies born than deaths, then there is a natural increase in the population. If more people move into a county than leave, then there is net migration or an increase in the population. Consistently for years, both natural increase and net migration have increased annually the population of Maricopa County. These annually increases have been so high that Maricopa County’s has led all counties in the nation in absolute population growth for five consecutive years. However, over the years there has been a percentage change in how the population in Maricopa County has grown. According to data compiled from the Census Bureau, 81% of the population growth in 2020 was from net migration and 19% from natural increase. In 2017, 68% of the growth was from net migration while 32% from natural increase. The last time the population grew more from natural increase than net migration was in 2011. In 2011, 55% of the increase was from natural increase while 45% was from net migration. See Chart Three.
When comparing Maricopa County’s large percentage decreases in natural increase compared to the large percentage increases in net migration one might think that perhaps there are a lot less babies being born recently than in 2011. This is partially true. In 2020 there were 52,573 babies born in Maricopa County. That is 806 less babies born than the 53,379 born in 2011. Why then the large percentage decreases in natural increase compared to net migration over the years? The answer is an aging population and covid related deaths in 2020. Deaths in Maricopa County in 2020 were 36,247. This is the highest number in ten years. There were 10,317 less deaths in 2011 than in 2020. So, while births have decreased somewhat over the years, there has been a much greater increase in the number of deaths leading Maricopa County in 2020 to have the lowest annual natural increase in ten years. See Chart Four.
Pinal County: From Losing People to Fastest Growing AZ County
When it comes to population growth a lot has changed in Pinal County. They went from losing population to the fastest growing county in Arizona. According to data compiled from the Census Bureau the population of Pinal County declined in 2011. That year they had negative migration of 3,567 people with a natural increase of 2,546 for a population loss of 1,021. See Chart Five. Now let’s move forward to 2020. In 2020 Pinal’s population increased by 19,283 for a growth rate of 4.2%, which made them the fastest growing Arizona county, percentage wise. This is more than double Maricopa County’s growth rate of 1.9% and Pinal County gained more people than every other Arizona County except Maricopa County. One reason Pinal County is attracting people is jobs. Pinal County is becoming a manufacturing hub for electric vehicles and parts. Lucid Motors has a manufacturing facility in Casa Grande and Nikola has a facility under construction in Coolidge. Thus, many people that migrate to Pinal County do so because of jobs. Ninety-five percent of Pinal County’s 2020 population increase came from net migration. For more information on what is happening in Pinal County go to https://pinalpartnership.com/
The great migration we are experiencing to cities within Maricopa and Pinal Counties from other states should continue. Some people come here for job opportunities, while companies come here for people opportunities. Some people move here for retirement. Some of these people are baby chasers. They’re parents and grandparents that want to be close to their children and grandchildren and enjoy warm weather. Others come here because of the cost of living. Because of this great migration to our cities, real estate agents should consider targeting people in the cities from which people are moving from. Use social media. Make and post videos on topics such as why people are moving to your city. Own your city, own your subdivision(s). Real estate agents’ network with agents from those cities people are moving from. Many that migrant here come from cities with more expensive homes. Many of these buyers pay cash. The number of these buyers has created an oversupply of buyers in our markets competing for an undersupply of available inventory. Thus, the reason for July being the fourteenth consecutive month of record-breaking purchase prices. Even though sales have slowed, and inventory may be increasing a little, it is still a powerful seller’s market. At any one time in Maricopa County there are only around 50 active single-family resale listings priced under $250,000. This is out of approximately 1,400,000 single-family resale homes. There is only about a two-week supply of homes for listings under $450,000. Competition for homes by first-time homebuyers and move-up buyers is fierce. Even with the fierce competition my advice is for them to not give up. Recently an agent who I work with, brought me an escrow. This was their eighth offer. His clients, a young couple of first-time homebuyers, are finally, under contract! In the last edition of this Journal, I made two predictions. One wrong, one right. I said the Phoenix Suns will be the NBA champions. The other was that the median purchase price would end close to $450,000. It did. Note: Starting soon will be a monthly call for real estate agents to go over trends and strategies for competing in today’s residential marketplace. To receive notification, email me at FWilcox@gcta.com The information in this report is deemed accurate but real estate agents, buyers and sellers should verify any information contained in this report before buying or selling.