Phoenix-Mesa-Scottsdale, AZ CBSA

Transcription

1 MARKET REPORT Phoenix-Mesa-Scottsdale, AZ CBSA The Valley housing market is expanding, and although not at the levels seen pre-recession, new home construction is picking up pace, reaching the fastest level seen in the last decade. Home prices are climbing aggressively, but the Valley remains one of the most affordable markets in the West. Meyers Research data indicates May sales activity was the best market performance in years, preceded by robust activity in March and April. While buyers flocked to urban areas in Phoenix, Tempe, and Scottsdale during the early recovery years, home buyers are now pushing the outward boundaries of the Valley, trading location for affordability, fueling sales. Strengthening permit activity. Permits are up 18% for the first half of the year compared to a year ago, totaling 11,88 permits. In comparison, only 1, homes were built per year between 29 and 211, with 6, homes constructed during peak years High demand fueling SF rental prices. Single-family rental prices had the 2ndhighest increase in the US during the month of April, up 5.5% YOY, according to CoreLogic. High demand and steady employment growth are driving continued rent increases. Increased Valley visibility. Phoenix is a go-to destination for homebuyers looking to move from other major metro areas. About 23% of out-of-state buyers looking in Phoenix during Q1 were from Los Angeles, while also the top pick for Denver residents. MEYERS INDEX EMPLOYMENT SUMMARY 691 CBSA 582 AZ 61 USA 2.6% 55,4 jobs added YOY 3.9% Unemployment 2.6% 58,827 jobs to be added YOY 4.1% Unemployment 2,92,5 total jobs 2,146,99 total jobs July 211 June 218 July F SUPPLY TYPE PROJECTS REMAINING UNITS PERMITS YOY CHANGE PEAK PERMITS Single-Family ,67 22, % 6,926 Multifamily 17 4,2 1, % 37,924 Totals: ,69 32,51 3.3% 98,85 TOP CITIES Active New Home Projects 1 Phoenix 52 Mesa 44 Buckeye 41 Peoria 37 Scottsdale 1

2 Economy JOB GROWTH year over year Summary July 218 Job Growth: 55,4 new jobs 172,92 115,28 57,64-57,64-115,28-172,92-23, Job Forecast: 58,827 new jobs F Total nonfarm employment in the Phoenix- Mesa-Scottsdale, AZ metropolitan statistical area increased 2.6% from the same period last year to 2,92,5 payrolls in July 218. There are approximately 55,4 more jobs than July of last year. The local unemployment rate decreased to 3.9% in July 218 compared to 4.% in the previous month. July s jobless rate is lower than it was this time last year when it stood at 4.%. Forecasts from Moody s Analytics show that the region s unemployment rate will finish the year at 4.1%. UNEMPLOYMENT RATE July 218 Unemployment: 3.9% Moody's Analytic 218 Forecast: 4.1% F Key Highlights Phoenix metro is ranked 15th in the US for tech talent on CBRE s annual Scoring Tech Talent report, with a labor pool of 83,93, or 4% of its total employment. Industry growth is expected to continue, with the university system graduating more students than local companies can hire. Phoenix added 12,65 tech jobs between , while adding 24,718 tech degrees between , the 9th highest of the top 5 markets, and above Seattle and Austin. The 53-acre Lotus Project near Loop 22 and Kyrene Rd in Chandler is expected to break ground mid-august, featuring industrial components in its first phase, and a mix of industrial and office during the second phase. Upon completion, the project is projected to create 1,5 to 2,5 jobs. 2

3 EMPLOYMENT BY SECTOR Key Highlights 6.% 15.3% 9.1% 11.4% 1.9% 1.7% 6.2% 3.1% 16.9%.2% 19.2% Construction (CON) Education & Health (EH) Finance (F) Government (G) Hospitality (H) Information (I) Manufacturing (M) Other (O) Professional & Business Services (PBS) Natural Resource Mining (NRM) Trade, Transport & Utilities (TTU) Iron Mountain, a Boston-based storage and information management services company, has broken ground on a 55, square foot, 48MW data center in Phoenix. The first phase of the project, located at 48th and Van Buren streets, is expected to be completed in June 219, adding 24MW of capacity. Increasing e-commerce activity is fueling the industrial market with 1.83M square feet delivered in Q2, double the amount of Q1 deliveries, pushing the market to record low vacancy rates. JOBS BY SECTOR (YEAR-OVER-YEAR) 16,275 13,2 9,765 6,51 3,255-3,255 CON EH F G H I M O PBS NRM TTU 3

4 Community POPULATION GROWTH 218E Population Growth: 1.5% 5,63,17 4,71,515 4,339,86 3,978,25 3,616,55 3,254,895 2,893, Population Growth: Summary There are approximately 1,721,594 households in the region which is up 1.4% year-over-year. Forecasts show that household formation is expected to increase by an annual growth rate of 1.5% for 218. Median household income in the area increased 1.1% from the previous year to $56,217. Incomes are forecasted to increase 1.1% for the year in E POPULATION BY AGE Key Highlights 218 Median Age: 36 year 1,95, ,14 657,15 438,7 219,35 6 ETHNICITY month Under to to to to to to to % Others 3.% Two Plus 2.% American Indian.2% Pacific Islander 3.% Asian 4.1% Black 54.1% White 23.5% Hispanic 85+ Invest In Education organizers are proposing nearly doubling income-tax rates on Arizona s highest earners as a way to fund an additional $69M for public schools. The campaign has gathered more than 27, signatures, well above the 15,642 valid signatures needed to get their measure on the ballot. Kroger, the parent company of Fry s Food & Drug Stores, announced a partnership with autonomous vehicle company Nuro to deliver groceries from it stores. While no official announcement has been made on where the delivery program will be launched and tested, Nuro has been actively recruiting new hires in the Valley. Arizonans have an average credit score of 669 (fair), ranking in the bottom third of all US states and DC, managing 3.4 credit cards with an average balance of $6,389. 4

5 HOUSEHOLD INCOME 218E Median Household Income: $56,217 6,6 57,2 54,34 51,48 48,62 45,76 42, E Key Highlights Passenger traffic at Phoenix Sky Harbor International Airport stayed relatively flat YOY, up just.2% in June to record 3.77M passengers. Stagnant traffic patterns are typical at Sky Harbor during the summer months. HOUSEHOLD GROWTH 218E Household Growth: 1.5% 1,845,76 1,713,92 1,582,8 1,45,24 1,318,4 1,186,56 1,54, E 5

6 Supply PERMITS 218LTM Total Building Permits: 32,51 Single-family 39,8 31,84 23,88 15,92 7,96 E/P RATIO E/P Ratio: 1.8 Total Permits/Job Growth 15,81 7,54 35,27-35,27-7,54-15,81-141,8-176,35-211,62-246,89-282,16-317, Total Permits Non-Farm Annual Growth E/P Ratio F Multifamily 218LTM E/P Ratio HIGHLIGHTS In the Phoenix-Mesa-Scottsdale, AZ region, total residential building permit activity increased 14.3% year-over-year to an annualized rate of 32,51 units in July. In the twelve-month period ending July, singlefamily building permit issuance increased 12.9% to 22,79 units while multi-family permit issuance increased 17.4% to 1,422 units. Land transactions remained strong during the month of June, posting $16M in total sales according to a Colliers International study, although a decline from the $22.8M spent in May. Single-family residential dominated activity, accounting for nearly $17M in transactions, with KB Home, Maracay, and Brookfield Residential closing deals during the month. Maracay will be building 394 homes in south Phoenix near Dobbins Rd and 7th St. Avance will be a gated community featuring plans ranging from 2, to 5, square feet. Models are expected in early 219. NUMBER OF LISTINGS DAYS ON MARKET July 218 # of Listings: 18,526 June 218 Days on Market: 62 days 48,925 39,14 29,355 19,57 9, CM

7 NUMBER OF ACTIVE PROJECTS Total 544 Detached 469 Attached 75 Total Number Of Projects Jan. 215 Apr. 215 July 215 Oct. 215 Jan. 216 Apr. 216 July 216 Oct. 216 Jan. 217 Apr. 217 July 217 Oct. 217 Jan. 218 Apr. 218 July 218 Sep. 218 ACTIVE BUILDERS top 15 results RANK BUILDER # OF YTD SALES % MARKET SHARE # OF PROJECTS AVG PRICE AVG SALES 1 Lennar % 52 $37, D.R. Horton, Inc % 21 $29, PulteGroup Inc % 29 $374, Taylor Morrison % 26 $465, Meritage Homes % 32 $359, Richmond American Homes % 28 $349, Fulton Homes % 15 $368, Shea Homes % 24 $473, K. Hovnanian Homes % 14 $372, Garrett Walker Homes % 12 $258, KB Home % 13 $266, Robson Resort Communities % 5 $356, Mattamy Homes % 11 $378, Beazer Homes % 9 $286, Ashton Woods Homes % 9 $373,

8 Sales NEW HOME MARKET ANNUALIZED Summary Change from 217:.% Total Home Closings: 19,635 71,675 57,34 43,5 28,67 14,335 July 218 Detached: 18,15 31-year Historical Average: 19,222sales July 218 Attached: 1,53 New home closings in the Phoenix-Mesa- Scottsdale, AZ metropolitan area experienced a.% year-over-year decrease to an annualized rate of 19,635 units in July. Of those home closings over the past 12 months, 1,53 were attached closings and 18,15 were detached closings. Existing home closings for the same period posted a year-over-year gain of 13.7% to an annualized rate of 124,996 units. Of those home closings over the past 12 months, 2,84 were attached and 14,192 were detached. EXISTING HOME MARKET ANNUALIZED Change from 217: 13.7% LTM Total Home Closings: 124,996 2,9 16,72 12,54 8,36 4,18 July 218 Detached: 14, year Historical Average: 8,98 sales July 218 Attached: 2,84 Key Highlights Nearly 5% of potential homebuyers from outside Arizona searched for homes in Phoenix during Q1 according Redfin, with residents from Los Angeles, Seattle, and Denver leading the charge. This is the first time Phoenix has topped the list for drawing the most prospective homebuyers looking to move from other major metros. Green Street Communities has broken ground on Campus Grove and Acacia Court, located in Arcadia and Central Phoenix. Campus Grove features homes priced from the $6Ks, while homes at Acacia Court will start from the $9Ks LTM 8

9 Prices NEW HOME NEW DETACHED MEDIAN HOME PRICE Change from 217: 2.4% July 218 Median Detached Closing Home Price: $39, ,52 33,2 272,88 242,56 212,24 181,92 151,6 NEW ATTACHED MEDIAN HOME PRICE Change from 217: 7.6% 31-year Historical Average: $188, LTM July 218 Median Attached Closing Home Price: $3,75 353,9 318,51 283,12 247,73 212,34 176,95 141,56 31-year Historical Average: $164, LTM Summary The median closing price for a new detached home in the Phoenix-Mesa-Scottsdale, AZ region increased 2.4% year-over-year to $39,273 in July while the median closing price for a new attached home increased 7.6% from the same year-ago period to $3,75. Homes priced between $24, and $32, experienced the most closing activity over the past year. The new home affordability ratio for a detached home reached 43.6% in July. Key Highlights Despite recent mortgage rate hikes, few homebuyers are halting their searches for new homes based on a Redfin study, with only 5% reporting they d call off their search if rates rose above 5%. Nearly one-third of buyers are more willing to adjust their criteria regarding size and location. Statesman Group launched its first phase at The Luxe in Desert Ridge near Deer Valley Road, between 52nd and 56th street, with 5% of the initial 3 units pre-sold. In total, The Luxe will have condominiums ranging from 1,63 SF to 2,3 SF, with pricing from the $5Ks. 9

10 NEW HOME CLOSINGS BY PRICE RANGE Detached Attached 7,325 5,86 4,395 2,93 1,465-8K 8K-16K 16K-24K 24K-32K 32K-4K 4K-48K 48K-56K 56K-64K 64K-4.9M DETACHED AFFORDABILITY New Existing

11 EXISTING HOME EXISTING DETACHED MEDIAN HOME PRICE Change from 217: 4.2% 272,25 242, 211,75 181,5 151,25 121, 9,75 July 218 Median Detached Closing Home Price: $253, year Historical Average: $152, LTM Summary The median closing price for an existing detached home in the Phoenix-Mesa- Scottsdale, AZ region increased 4.2% yearover-year to $253,149 in July while the median closing price for an existing attached home increased 5.9% from the same year-ago period to $177,895. Homes priced between $16, and $24, experienced the most activity over the past year. The existing home affordability ratio reached 49.5% in July. EXISTING ATTACHED MEDIAN HOME PRICE Change from 217: 5.9% July 218 Median Attached Closing Home Price: $177,895 23, 21,25 172,5 143,75 115, 86,25 57,5 31-year Historical Average: $111, LTM Key Highlights Single-family rental prices in Phoenix recorded the second-highest increase in the US during the month of April, up 5.5% YOY. High demand and steady employment growth are driving continued rent increases. Low inventory and pent-up demand is reducing housing affordability across the US and Phoenix is no different. While still one of the most affordable markets in the West, Maricopa County is at its least affordable for the average wage earner since 3Q8. 11

12 EXISTING CLOSINGS BY PRICE RANGE Detached Attached 49,7 39,76 Median Attached New Home Price: 29,82 19,88 9,94-8K 8K-16K 16K-24K 24K-32K 32K-4K 4K-48K 48K-56K 56K-64K 64K-5M DETACHED AFFORDABILITY New Existing

13 Distress HOUSING TRANSACTION VOLUME BY TYPE Summary 154,1 123,28 92,46 New Existing Foreclosure Sale Foreclosure NOD Foreclosures in the Phoenix-Mesa-Scottsdale, AZ area have declined over the past year. There were 11,479 notices of default sent out in the region in the twelve-month period ending July which is a 29% increase year-overyear. The region experienced 211 foreclosures in July. Over the past twelve months, there have been 3,36 foreclosures in the area which is lower than it was this time last year. 61,64 3, LTM NOTICES OF DEFAULT & FORECLOSURE July 218 Total Foreclosures: 3,36 13,77 11,475 9,18 6,885 4,59 July 218 Notices of Default: 11,479 Key Highlights Phoenix is among a handful of cities that saw an increase in foreclosures during the first half of the year, up about 5% YOY, according to Attom Data Solutions. Nearly half of all active foreclosures are tied to loans originating in 29 or later and are a result of more recent distress triggers. Still, despite the increase, the 5, foreclosure filings through June-end are a small fraction of the 74, foreclosures during the peak of the housing crisis. 2, LTM 13

14 Market Health ECONOMY YR AGO JUL. 218 % CHANGE Job Growth (12-Month) 62,3 64,66 55,62 51,9 55,4 2.6% Unemployment Rate COMMUNITY Median Age Median Household Income 53,678 54,313 54,948 55,582 56, % SUPPLY Days on Market N/A N/A E/P Ratio % Number of Listings 21,264 21,459 19,985 21,162 18, % Total Permits 22,42 28,583 29,312 28,424 32, % SALES Attached Existing 14,154 15,589 17,915 17,134 2, % Attached New 944 1,183 1,722 1,69 1,53-4.9% Detached Existing 76,61 82,16 92,5 89,286 14, % Detached New 11,897 15,312 17,915 16,897 18,15 7.1% Total Investor Sales 2,75 2,511 1,972 2,99 1, % 14

15 PRICES YR AGO JUL. 218 % CHANGE Affordability (%) % Attached Existing Median $144, $155, $169,9 $168, $177, % Attached New Median $268,956 $281,137 $31,259 $279,378 $3,75 7.6% Detached Existing Median $213,95 $226,25 $239, $242,95 $253, % Detached New Median $292,99 $299,538 $35,616 $32,15 $39, % DISTRESS Foreclosures 5,917 4,777 3,583 3,988 3, % Notices of Default 1,825 9,526 8,778 8,88 11, % *Current year-over-year job growth and unemployment rate are as of Jul

16 Appendix ABOUT Meyers Research, a Kennedy Wilson Company, combines experienced real estate and technology advisors with leading data to provide our clients with a clear perspective and a strategic path forward. Based in Beverly Hills, we are home to 8 experts in 1 offices across the country. DEFINITIONS AND METHODOLOGY All information presented involved the assembly of data sources that we consider to be reliable, including the Bureau of Labor Statistics, CBRE- EA, Nielsen Claritas, Public Record Data, Moody's Analytics, Great Schools, U.S. Bureau of the Census, Zillow, various regional Multiple Listing Service providers, Meyers Research and Zonda. We do not guarantee any data accuracy as all information is subject to human errors, omissions, and/or changes. to interpret the strength of the market. Such metrics include price appreciation, sales activity, permit activity, demographic growth, household income levels, school scores, and affordability. Definitions CM - Current Month E - Estimated F - Forecast LTM - Last 12 Months Meyers Index The Meyers Index is a proprietary index that produces a score ranging from to 1, for a geographic area. A higher index score captures the desirability of housing development for the selected area and is calculated using specific data sets weighted An international real estate investment and services firm with a success proven legacy. Experienced real estate and technology advisors. A comprehensive research platform with real-time information all in one place zonda@meyersresearchllc.com (877)