Metrostudy has released the results of their 4Q17 survey of the Phoenix housing market, and it shows affordability pressures rising even as the market hits decade high levels. Some of the findings include:
• In 2017, New Home Starts were up 10.3% over 2016 levels, and 4Q17 starts were the highest fourth quarter numbers since 4Q06.
• Demand continues to be very strong at the sub-$300k base price points, and shows no signs of waning. More builders have aggressively focused their attention there.
• Higher Land, Materials and Labor Costs are pushing production into the higher price points: The $200-250k price tranche jumped by 24.4% in YOY starts volume while the sub-$200k range dropped by 25.1%.
“The year-over-year change in quarterly starts by price range continues the story of dominance in volume within the $200-300k base price range,” said Ryan Brault, Regional Director of Metrostudy’s Arizona market. “The $200-250,000 price tranche jumped by 24.4% in YOY starts volume while the sub-$200,000 range dropped by 25.1%. Much of that is due to significantly higher land, materials, and labor costs over a year ago making it increasingly difficult to build new detached or townhome product at such low price points. Healthy increases in starts activity in the $300-350k, $350-400k, and especially the $500-750k range shows that there has still been plenty of demand for moveup and more luxury product, as well.”
The chart below shows YoY starts by price range.
